The Bear Cave #176
New Activist Reports, Recent Resignations, and Tweets of the Week
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 this Thursday, July 6.
New Activist Reports
Akram’s Razor published on Vicor Corporation (NASDAQ: VICR — $2.39 billion), a manufacturer of high-performance power modules used in equipment automation, transportation, and AI datacenters. Akram’s Razor alleged that Vicor “has serious execution issues” and has fallen behind competitor’s offerings, antagonized its key customers like Nvidia, and “effectively squandered a decade of technological superiority in the datacenter space.” Akram’s Razor wrote,
“Not only is Vicor not an AI winner; it is an AI loser. The boom in AI datacenter demand is accruing to its competitors, like Monolithic Power. Vicor is now being shut out entirely. The result is its revenue is likely to decline over the next two years.”
Akram’s Razor has a strong track record of commentary on technology names and in May 2021 was critical of the social media platform Yalla Group (NYSE: YALA), which later fell ~80%.
Fuzzy Panda Research published on Xponential Fitness (NYSE: XPOF — $855 million), a franchisor of boutique fitness brands. Fuzzy Panda alleged that the founder of Xponential Fitness, Anthony Geisler, previously “was CEO of a reverse merger, pink sheets, pump & dump that used boiler rooms.” Fuzzy Panda also alleged that Mr. Geisler’s “arrest records show that he was arrested for pulling a gun and threatening to kill a court appointed process server.”
Fuzzy Panda further highlighted potentially false statements by Mr. Geisler. For example, Mr. Geisler claimed Xponential Fitness never “permanently closed” any stores, but Fuzzy Panda claimed to have found over 30 permanently closed locations. Fuzzy Panda also used the company’s Franchise Disclosure Documents to estimate over half the company’s franchised locations are losing money, all while insiders have sold over $167 million of stock in 2023.
J Cap Research published on American Lithium (NASDAQ: AMLI — $430 million), an early-stage lithium mining and exploration company. J Cap called American Lithium “nothing more than a vehicle to move money from hopeful capital markets to insiders and stock promoters” and said the company “will never find a commercially viable lithium deposit.” J Cap alleged that the company has transferred over $100 million to related parties or stock promoters, including a $12 million asset purchase partly owned by Jason Shull, a party “named in several securities-fraud actions.”
NINGI Research published on Symbotic (NASDAQ: SYM — $23.7 billion), a supply chain automation company that works closely with Walmart. NINGI Research said Symbotic “is not the cutting-edge company it claims to be” and claimed the company’s products “lack innovation, while competitors introduced similar solutions decades ago.” In addition, NINGI Research highlighted questionable claims by the company and noted a high level of executive turnover including departures of the company’s “chief executive officer, chief human resources officer, chief technology officer, head of machine learning, and chief accounting officer.”
In March, The Bear Cave said “recent executive departures, a nosebleed valuation, the company’s reliance on a handful of customers, and a looming lock-up are among an assortment of issues that should concern shareholders” and concluded “Symbotic is more bark than bite and has a long way to fall.”
Night Market Research published on SmartRent (NYSE: SMRT — $764 million), an enterprise smart home software platform. Night Market alleged the company’s “new revenue recognition policy materially inflates 1Q23 revenue and full year 2023 guidance” and said, “the 30% rally on what appears to be a misunderstood 1Q23 revenue and earnings beat puts the stock at near-term risk.”
In February, Guasty Winds Musing also published on the company and raised concerns that a large portion of the company’s revenue was coming from its own investor base.
Bleecker Street Research published on 374Water Inc (NASDAQ: SCWO — $308 million), a wastewater management and purification company. Bleecker Street said the company has “lots of big claims, an even bigger valuation, and not much to show for it.” Bleecker Street noted that the company went public through a reverse merger and was recently added to the Russell 2000 index. Bleecker Street also found that the company’s chief of business development, Danny Bogar, previously “supervised the compliance practices” at the Stanford Group Ponzi scheme and “was barred from the securities industry."
Iceberg Research re-initiated a short on Eos Energy Enterprises (NASDAQ: EOSE — $518 million), a clean energy storage battery company. Iceberg noted the stock is up over 300% from its 2022 lows and the company appears to rely on one client for nearly all its revenue, a client that appears to have recently switched to a different vendor. In addition, Iceberg said the company will likely need to raise more equity sometime after July 17, the earliest it can do so under its previous share sale agreement.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of Ambipar Response (NYSE: AMBI — $538 million) resigned after six months as part of “a strategic management reorganization.” The company is roughly flat since its March 2023 SPAC merger.
CFO of Enovix Corp (NASDAQ: ENVX — $2.85 billion) resigned after a little over two years and entered into a “separation agreement” that included “cash severance in an amount equal to nine months' of base salary” among other benefits. The company’s Chief Commercial Officer and Chief Technology Officer departed in February and the company’s CEO departed in January.
CFO of BRC Inc (NYSE: BRCC — $1.09 billion) resigned after three years “to pursue other opportunities.” The company’s Chief Operating Officer also resigned after two years “to pursue other opportunities.” In June, the company’s Executive Chairman resigned after about a year “due to urgent family medical needs and his desire to spend the vast majority of his time with his family.” In April, the company’s Chief Retail Officer resigned after a little over one year “to pursue other opportunities.” The company is down ~50% since its February 2022 SPAC merger.
Chief Accounting Officer of LiveWire Group (NYSE: LVWR — $2.39 billion) resigned after a little over one year. Last month, LiveWire’s CEO also resigned after about three and a half years. The company is up roughly 20% since its September 2021 SPAC merger after being spun out of Harley Davidson (NYSE: HOG).
General Counsel of PetIQ (NASDAQ: PETQ — $446 million) was “placed on administrative leave pending further investigation” after four years after the company became aware of “a domestic incident that is the subject of an ongoing investigation involving law enforcement.”
General Counsel of AdaptHealth Corp (NASDAQ: AHCO — $1.63 billion) resigned after five and a half years “to pursue other opportunities.” In May, the company’s CEO “mutually agreed” to depart after two and a half years. In addition, the company’s Chief Operating Officer resigned in March 2023 and the company’s Chief Accounting Officer resigned in May 2022. In June 2021, Jehoshaphat Research raised concerns about AdaptHealth’s accounting for acquisitions.
Richard K. Smucker, 75, resigned from the board of J.M. Smucker Company (NYSE: SJM — $15.1 billion) after over 45 years and is transitioning “to a non-voting Chairman Emeritus role.” Mr. Smucker is the brother of Timothy P. Smucker, who served as a director of the company for nearly fifty years, and the uncle of Mark T. Smucker, who currently serves as a director and CEO of the company. Richard K. Smucker is a great-grandson of Jerome Monroe Smucker, who founded the Smucker company selling apple butter from the back of a horse-drawn wagon in 1897.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“The Biotech Edge: How Executives and Well-Connected Investors Make Exquisitely Timed Trades in Health Care Stocks” (ProPublica)
“In 2021, the agency accused Matthew Panuwat of insider trading. Five years earlier, he had learned that his own company, a biopharma operation called Medivation, was about to get acquired. But instead of buying shares in his employer, he bought options in a competitor whose stock could be expected to rise on the news. The agency says he made $107,000 in illicit profits.”
“The Spying Scandal Inside One of America’s Biggest Power Companies” (WSJ)
“On a late spring day in 2017, a private investigator parked outside a fitness center in an Atlanta strip mall and covertly recorded video of a personal trainer as she entered her business. Forty-five minutes later, the investigator took photos as the woman returned to her car, stowed her gym bag and drove away. He next followed her for 25 minutes to the home of her then-boyfriend, Tom Fanning, who, as chief executive of Southern Co, had for years been one of the energy industry’s most powerful figures.”
“SEC Charges Stockbroker and Friend with Insider Trading” (SEC)
“The Securities and Exchange Commission today announced insider trading charges against Jordan Meadow, a registered representative for a New York-based broker-dealer, and Steven Teixeira, the Chief Compliance Officer of an international payment processing company, in connection with their trading based on material nonpublic information that Teixeira obtained from his girlfriend’s laptop while she was working at home during the COVID-19 pandemic.”
Tweets of the Week
Until Thursday,
The Bear Cave