The Bear Cave #181
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Hershey (HSY)” and “Problems at XP Inc (XP)” and our next premium investigation comes out Thursday, August 17.
New Activist Reports
Muddy Waters Research published an update on Vivion Investments, a privately owned European real estate investment company. Muddy Waters is short the company’s bonds and wrote that “the crux of our short thesis has been that Vivion’s property valuations (and financials) are untrustworthy.” For example, one of the company’s properties was deemed unfit to hold asylum seekers and described as “prison-like.” That property is now being used to partially underwrite a proposed bond exchange to extend Vivion’s debt maturities.
Muddy Waters originally published on Vivion in December 2022 and alleged the company’s “controlling shareholders have used bond sale proceeds to unduly enrich themselves.” Following the Muddy Waters report, the Financial Times also found “clerical errors” in the company’s financial statements.
Last month, Scorpion Capital announced it was filing a petition to invalidate a drug patent owned by Harmony Biosciences (NASDAQ: HRMY — $2.01 billion), a pharmaceutical company targeting rare neurological diseases. Scorpion alleged the company misled the patent examiner regarding its ~$200k/year stimulant drug and that it did not deserve a patent because it was “an obvious variation” of an already patented molecule.
Scorpion Capital previously published on Harmony Biosciences in March and called the company “one of the most thoroughly corrupt healthcare schemes in recent years.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of Nikola (NASDAQ: NKLA — $1.79 billion) “has decided to step down due to a family health matter and will be returning to Europe” after nine months. In March, the company’s CFO “retired” after five years and in December 2022 the company’s Vice President of Sales departed.
CFO of ACELYRIN Inc (NASDAQ: SLRN — $2.38 billion) resigned “through mutual agreement” after nine months. The company is roughly flat since its May 2023 IPO.
CEO of Eve Air Mobility (NYSE: EVEX — $2.27 billion) resigned after about one and a half years. In December, a board member resigned “effective immediately” and this week another board member disclosed their intent to resign. The company is down ~15% since its May 2022 SPAC merger.
CEO of RB Global (NYSA: RBA — $10.6 billion) resigned “due to a disagreement with the company about her compensation as Chief Executive Officer” after three years. This week the company’s CFO was also “terminated” after one year and in March the company completed its large acquisition of IAA.
CFO of Equity BancShares (NYSE: EQBK — $426 million) disclosed “his decision to resign from his role as CFO of the company and his roles at Equity Bank effective the day after the company files its Form 10-Q for the quarter ended June 30, 2023” after three years. The company’s Chief Credit Officer also resigned last week after nearly two years. The bank’s President also resigned in May after nearly two years and the bank’s Chief Operating Officer resigned in April after nearly three years.
CFO of Confluent (NASDAQ: CFLT — $10.3 billion) resigned after three years. The company is down ~25% since its June 2021 IPO.
CEO of Riverview Bancorp (NASDAQ: RVSB — $120 million) was “placed on a paid administrative leave from his positions pending an internal investigation [that] does not involve the company's financial condition” after five years.
CEO of Daqo New Energy Corp (NYSE: DQ — $2.80 billion) resigned after five years and also departed the board “with immediate effect due to personal reasons.”
Chief Human Resources Officer of Premier Inc (NASDAQ: PINC — $3.28 billion) resigned after just four months according to her LinkedIn.
Hiroshi Nomura, board member of Roivant Sciences (NASDAQ: ROIV — $8.89 billion), resigned after one year “to focus on other business affairs.” In February, Executive Chairman Vivek Ramaswamy “stepped down effective immediately, to imminently pursue an outside opportunity.” Mr. Ramaswamy is now a candidate in the 2024 Republican Party presidential primaries. In addition, in November 2022 another board member resigned “effective immediately, to focus on other ventures” and in September 2022 a fourth board member resigned with a one-day notice. The company is up ~20% since its October 2021 SPAC merger.
Chief Accounting Officer of Dynatrace (NYSE: DT — $13.9 billion) resigned after one and a half years. In June, the company’s Chief Revenue Officer also resigned.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Judge’s Fictional Thriller Sparks Real-Life Courtroom Drama” (WSJ)
“Dondero sees parallels between himself and Graham, one of the villains in the second novel. The novel describes Graham as a ‘well-known wealthy playboy and high-flying Dallas hedge fund manager,’ and as ‘a real piece of work…a ton of people hate him, don’t trust him, and can’t figure out how on earth he manages to make so much money in both good times and bad times.’”
“Trucking Giant Yellow Shuts Down Operations” (WSJ)
“The 99-year-old company is known for its cut-rate prices and has more than 12,000 trucks moving freight across the country for Walmart, Home Depot and many other smaller businesses. What Yellow couldn’t deliver—despite swallowing rivals, getting union concessions and securing a government bailout—was consistent service for customers or profits for investors.”
“Carl Icahn’s Firm Slashes Dividend in Half After Activist Pressure; Stock Slides” (WSJ)
“Carl Icahn made a multibillion-dollar fortune as an activist investor, bullying companies into changing their businesses. Another activist has now forced him to do the same…”
Tweets of the Week
Until next week,
The Bear Cave