The Bear Cave #186
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Even More Problems at Roblox (RBLX)” and “Problems at Oddity Tech (ODD)” and our next premium investigation comes out Thursday, September 21.
New Activist Reports
Blue Orca Capital published on FMC Corporation (NYSE: FMC — $9.41 billion), an American chemical manufacturing company. Blue Orca alleged that the company “has concealed from investors that it has suffered a recent string of stunning legal defeats around the globe that have enabled competitors to now launch competing generics at prices up to 80% below the price of FMC’s flagship insecticide product.” As a result, Blue Orca predicted that “sales and margins are set to collapse.”
Grizzly Research published on PDD Holdings (NASDAQ: PDD — $126 billion), a Chinese online retailer. Grizzly Research alleged that the company’s shopping app TEMU “is cleverly hidden spyware that poses an urgent security threat to U.S. national interests.” Grizzly Research said it “engaged numerous independent data security experts” to analyze the TEMU app and found “extensive data exfiltration unbeknown to users.” In addition, Grizzly Research added that the financials for PDD Holdings “are notoriously unreliable” and noted the company has had no CFO since 2018 and high turnover in its VP of Finance position.
Sunshine Research published on ChargePoint Holdings (NYSE: CHPT — $2.02 billion), an EV charging station company. Sunshine Research noted the company faces competition from the Tesla supercharger network and insiders have been “aggressively selling in recent quarters.”
Bleecker Street Research published on SmartRent (NYSE: SMRT — $614 million), an enterprise smart home software platform. Bleecker Street noted that the company’s largest customer was also its largest investor and that the company “used a Croatian supplier that had a known security vulnerability.” That has led to real-world consequences according to Bleecker Street, including a sexual assault after a SmartRent lock was allegedly hacked. Bleecker Street also spoke to former employees who allegedly described the company as a “mess” with a “broken culture.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Renew Energy Global (NASDAQ: RNW — $2.11 billion) resigned after one and a half years “to pursue an opportunity outside ReNew.” The company has had three CFO resignations and seven board resignations since its August 2021 SPAC merger, and has fallen ~45%. The Bear Cave previously called Renew one of “The Five Worst SPAC Deals Still Above $5” and noted that the SPAC sponsor also had a SPAC that merged with Romeo Power (RMO), which later fell ~95%.
CEO of AssetMark Financial Holdings (NYSE: AMK — $2.06 billion) resigned after two and a half years and also departed the board. The company is roughly flat since its July 2019 IPO.
CFO of Phibro Animal Health Corp (NASDAQ: PAHC — $509 million) resigned after three years.
CFO of Xylem Inc (NYSE: XYL — $22.9 billion) “entered into a Transition Services Agreement” after three years with the company. The company’s CEO also “entered into a Transition Services Agreement” this week after nearly ten years with the company. Last month, Spruce Point Capital criticized the company and its recent large acquisition over concerns about accounting irregularities and overstated synergies.
President of the Materials Group of Avery Dennison Corp (NYSE: AVY — $14.6 billion) resigned after five months to “accept another opportunity.” The company’s Chief Accounting Officer also retired this week after thirteen years and the company’s CEO retired in August after seven years.
Alejandro Weinstein resigned from the board of Procaps Group (NASDAQ: PROC — $429 million) after seven months “based on disagreements with the board regarding the strategic priorities and direction of the company.” Two additional board members also announced resignations earlier this year and the company has fallen ~60% since its September 2021 SPAC merger.
Kevin Kabat resigned from the board of AlTi Global (NASDAQ: ALTI — $885 million) “effective immediately” after eight months. In addition, another board member and the company’s CFO resigned earlier this year and the company has fallen ~25% since its January 2023 SPAC merger.
Chief Accounting Officer of SiriusPoint Ltd (NYSE: SPNT — $1.71 billion) announced his retirement after about three years. The company has had five different CEOs and three different CFOs in the last five years.
Former Stanford President Marc Tessier-Lavigne resigned from the board of Regeneron Pharmaceuticals (NASDAQ: REGN — $90.2 billion) after nearly twelve years “due to potential conflicts that may arise as he becomes more involved with other companies.” The Bear Cave’s author, Edwin Dorsey, extensively criticized the leadership of President Tessier-Lavigne on TheyMustResign.com, a site dedicated to advocating for the resignation of Stanford’s leadership.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Disney’s wildest ride: Iger, Chapek and the making of an epic succession mess” (CNBC)
“By 2019, Iger had personally selected every member of the board, which is surprisingly lacking in media and entertainment experience. Iger is personally close with several of them, including Nike Executive Chairman Mark Parker and General Motors CEO Mary Barra. In addition, the wife of another director, Michael Froman, then vice chairman of Mastercard and now president of the Council on Foreign Relations, had been housemates with Iger’s wife, Willow Bay, at the University of Pennsylvania.”
“SEC Charges Fluor Corp. for Accounting Improprieties” (SEC)
“The Securities and Exchange Commission today announced that Irving, Texas-based Fluor Corporation will pay $14.5 million to settle charges stemming from the company’s improper accounting on two large-scale, fixed-price construction projects. Five former and current officers and employees also agreed to settle related charges for causing Fluor’s violations…
The SEC’s order found that Fluor, a global engineering, procurement, and construction company, bid on the two projects relying on overly optimistic cost and timing estimates and subsequently experienced cost overruns that worsened over time. Fluor then failed to sufficiently maintain internal controls to account for the projects in accordance with the percentage of completion accounting method under U.S. generally accepted accounting principles (GAAP).”
“Ray Dalio tries to silence tell-all that pierces veil of ‘benevolent business titan’” (New York Post)
“Hedge fund titan Ray Dalio — who has famously promoted ‘radical transparency’ as a management mantra — hired a team of high-priced lawyers to threaten the publication of a new book that claims to reveal some ugly truths about the investment firm he started.
The new book by reporter Rob Copeland, ‘The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend,’ is slated for release by Macmillan Nov. 7. But earlier this year, Dalio and Bridgewater – the behemoth fund he founded – threatened the publisher with multibillion-dollar lawsuit, according to letters obtained by On The Money.”
Tweets of the Week
Until next week,
The Bear Cave