The Bear Cave #184
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium article was “Even More Problems at Roblox (RBLX)” and our next premium investigation comes out Thursday, September 7.
New Activist Reports
The Friendly Bear published on B. Riley Financial (NASDAQ: RILY — $1.38 billion), an investment bank and financial services company. The Friendly Bear alleged that B. Riley “overstated its 2Q23 earnings by ~$28 million pre-tax due to an extremely inflated mark on an OTC holding called BEBE, a publicly traded company that is clearly impaired.” The Friendly Bear found that B. Riley spuriously carries its equity holdings in BEBE “at almost 2x the value that it just bought it for in the open market and ~3x higher than the prevailing market price” and said this fits a pattern of “consistently aggressive” accounting at B. Riley. The Friendly Bear concluded, in part,
“If B. Riley is hiding bad marks like this in observable public securities, how can investors trust any of the marks at this company?”
Last month, The Friendly Bear raised similar concerns about B. Riley’s involvement in Applied Digital (NASDAQ: APLD) and called the situation “one of the worst governance situations” on the public markets. (The Friendly Bear and The Bear Cave have no affiliation.)
White Diamond Research published on Pulse Biosciences (NASDAQ: PLSE — $388 million), a maker of cardiology technology that can “deliver nanosecond pulses of electrical energy.” White Diamond called the company “a joke,” alleged its primary product was “impractical and not novel,” and noted the company has attracted de minimis interest from independent professional healthcare investors.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Fidelity National Information Services (NYSE: FIS — $32.4 billion) “is leaving the company to pursue other opportunities” after just ten months. In May, the company’s Chief Accounting Officer also resigned after two years “to pursue other opportunities.” In January, a board member also resigned after just three weeks “after a former employer asserted that his service on the board would violate certain non-competition agreements.”
CFO of Mirati Therapeutics (NASDAQ: MRTX — $2.59 billion) resigned after a little over one year “to pursue an external opportunity with another biotechnology company.” The company has had three different CEOs and five different CFOs in the last five years.
CFO of Hain Celestial (NASDAQ: HAIN — $1.06 billion) was “terminated without cause” after one and a half years. In November 2022, the company’s Chief Accounting Officer also resigned after just four months “to pursue another opportunity.”
CFO of Kaman Corporation (NYSE: KAMN — $618 million) resigned after two years “to pursue another opportunity outside the company.” In July, the company’s Chief Accounting Officer also resigned “to pursue another professional opportunity” after three years.
CFO of PRA Group (NASDAQ: PRAA — $717 million) “accepted a CFO role at a larger public company and is leaving the company” after seven years. In July, the company’s Chief Compliance Officer resigned after nine years and the company disclosed the departure was “not due to a disagreement with the company or management related to its operations nor the company's settlement in 2023 with the U.S. Consumer Financial Protection Bureau.” In March, the company’s Vice President of Global Operations “retired” and that same month the company’s CEO was “terminated without cause.” In addition, in November 2021 the company dismissed KPMG as its auditor and engaged Ernst & Young.
CFO of WSFS Financial (NASDAQ: WSFS — $2.33 billion) was “terminated without cause” after seven years.
Ms. Luyao Han resigned from the board of iQIYI (NASDAQ: IQ — $4.43 billion) after just ten months. In 2022, three more board members departed and the company’s CFO resigned as well.
Chief Medical Officer of Exelixis Inc (NASDAQ: EXEL — $7.00 billion) resigned after about one and a half years. Three board members have also departed this year including 26-year tenured member Lance Willsey who, in May, resigned “effective immediately… in connection with a personal matter that occurred more than a decade ago.”
Vice President of Compliance of Freedom Holding Corp (NASDAQ: FRHC — $5.72 billion) resigned after nearly two years. Last week, Hindenburg research alleged that the company “brazenly skirts sanctions, shows hallmark signs of fake revenue, [and] commingles customer funds.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Elon Musk’s Shadow Rule” (New Yorker)
“Musk was also growing increasingly uneasy with the fact that his technology was being used for warfare. That month, at a conference in Aspen attended by business and political figures, Musk even appeared to express support for Vladimir Putin….”
“Food bankruptcies surging as companies struggle with shift in consumer habits, access to cash” (FoodDive)
“A spate of recent bankruptcies upending the food and beverage space is likely just the beginning of the failures as more companies are expected to collapse in 2023 amid changing consumer tastes and challenges raising money to fund their cash-intensive businesses.”
“Heineken Sells Russia Business…for $1” (WSJ)
“Beer giant Heineken said it sold its Russia business, which includes seven breweries and 1,800 employees, to a Russian packaging and cosmetics company for the symbolic sum of about $1.
Russia recently moved to make it tougher for companies to leave the country, passing a decree in April that allows the state to take temporary control of the assets of companies or individuals from what Moscow calls ‘unfriendly’ states.”
Tweets of the Week
Until next week,
The Bear Cave