The Bear Cave #175

New Activist Reports, Recent Resignations, and Tweets of the Week

Jun 25, 2023

Welcome to The Bear Cave! Our last premium articles were “Problems at Palantir Technologies (PLTR)” and “The Bear Cave’s Ultimate Guide For Bears” and our next premium investigation comes out Thursday, July 6.

New Activist Reports

Gotham City Research published on SES-imagotag (Paris: SESL — EUR2.64 billion), a French electronic retail labeling company. Gotham City Research raised concerns about SES-imagotag’s relationship with China-based BOE Technology Group, which is SES-imagotag’s “largest shareholder, largest supplier, one of the largest customers, JV partner, and on the audit committee.” Gotham City Research obtained BOE Technology Group’s Chinese financial filings and determined that SES-imagotag was inflating its financial results through round-tripped transactions and a spurious joint venture.

Pig Farmer Capital, a new anonymous short activist, published on Enovix Corp (NASDAQ: ENVX — $2.18 billion), a next-generation battery company. Pig Farmer said the company’s “battery innovation is not that innovative” and said that it faces fierce competition with incumbent lithium-ion battery companies. Pig Farmer Capital also alleged the company is “a classic case of SPAC financial engineering whereby insiders create immense wealth out of thin air” because the SPAC that merged with Enovix was affiliated with Enovix shareholders.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Electronic Arts (NASDAQ: EA — $34.2 billion) decided to “step down” after a little over one year.
CFO of Companhia Brasileira de Distribuicao (NYSE: CBD — $992 million) will depart after about two and a half years. The company has had four different CEOs and two CFO transitions in the last three years.
CFO of Leggett & Platt (NYSE: LEG — $3.84 billion) was “terminated without cause” after almost four years.
CFO of Bicycle Therapeutics (NASDAQ: BCYC — $760 million) resigned after six years. In March, the company’s Chief Medical Officer resigned after just two and a half years.
CEO of Mercury Systems (NASDAQ: MRCY — $2.03 billion) “delivered a letter to the Board resigning from his positions of President and Chief Executive Officer” after nearly sixteen years and was “removed without cause” from the board. In February, the company’s CFO stepped down “to accept an opportunity at a private company.” In July 2022, GlassHouse Research called Mercury Systems “a deteriorating roll-up that is set to implode” and alleged the company prematurely recognized revenue among other alleged accounting issues.
Chief Operating Officer of DISH Network (NASDAQ: DISH — $3.21 billion) resigned after a little over one year. The company’s Chief Commercial Officer also resigned in January after just three years.
Vice President of Broadband Solutions at Belden Inc (NYSE: BDC — $3.87 billion) was “terminated with immediate effect” after two and a half years. In February, the company’s CEO resigned after three years “for personal reasons” and also departed the board.
Chief Human Resources Officer of REV Group (NYSE: REVG — $766 million) was “terminated” after four and a half years. In April 2023, the company’s General Counsel was “terminated” after almost five years and in January 2023 the company’s CEO “mutually agreed” to depart the company. In addition, the company’s COO and CFO both departed in 2020.

Data for this section is provided by VerityData from VerityPlatform.com

What to Read

“Justice Samuel Alito Took Luxury Fishing Vacation With GOP Billionaire Who Later Had Cases Before the Court” (ProPublica)

“In early July 2008, Samuel Alito stood on a riverbank in a remote corner of Alaska. The Supreme Court justice was on vacation at a luxury fishing lodge that charged more than $1,000 a day, and after catching a king salmon nearly the size of his leg, Alito posed for a picture. To his left, a man stood beaming: Paul Singer, a hedge fund billionaire who has repeatedly asked the Supreme Court to rule in his favor in high-stakes business disputes.”

“SEC Charges Audit Firm Marcum LLP for Widespread Quality Control Deficiencies” (SEC)

“The Securities and Exchange Commission today charged audit firm Marcum LLP with systemic quality control failures and violations of audit standards in connection with audit work for hundreds of special purpose acquisition company (SPAC) clients beginning at the latest in 2020. The SEC’s order also found that Marcum’s deficiencies were not limited to SPAC clients, but they reflected systemic quality control failures throughout the firm. Marcum agreed to pay a $10 million penalty to settle the charges.”

“Canceling a Digital Subscription Is Hard. That’s Changing.” (WSJ)

“The lawsuit against Amazon isn’t the first such action taken by the FTC. The government agency has also investigated the difficult subscription-cancellation process for cosmetics, newspaper and gym businesses, as well as phone and internet service providers.”

“Creativity in short-selling” (Upslope Capital Presentation)