🐻The Bear Cave #19🐻

New Activst Reports, Stock to Watch (PLMR), SEC News, and Tweets of the Week

Jun 22, 2020

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New Activist Reports

Marcus Aurelius Research published on health insurance tech company, Benefytt Technologies (NASDAQ: BFYT — $264 million). They pointed to a recent $225 FCC fine against robocallers and wrote,

“FCC documents lead us to conclude that a significant portion of these robocalls were used to generate “leads” for brokers within BFYT’s network to sell policies to unsuspecting consumers.”

Marcus Aurelius Research has published four (1, 2, 3, 4) prior articles on the company, which was previously called Health Insurance Innovations.

Prescience Point Capital Management published a critical report on Enphase Energy (NASDAQ: ENPH — $5.85 billion) and opined that over $200 million of its revenue is fabricated. In response to the report Enphase stock fell 24%.

In 2019, J Capital Research also scrutinized Enphase’s accounting. Enphase stock is up around 4,000% since 2017.

Hindenburg Research published on the Chinese lender Wins Finance Holdings (NASDAQ: WINS — $540 million). Hindenburg called the company an “obvious Pump and Dump” and “a zero in short order.”

Alta Fox Capital took an activist long 5.2% stake in Collectors Universe (NASDAQ: CLCT — $305 million). In addition, Alta Fox nominated six new directors and wrote a thoughtful letter outlining its campaign.

Stock To Watch: Palomar Holdings

Palomar Holdings (NASDAQ: PLMR — $2.02 billion), a catastrophe insurance company, is up approximately 350% since its April 2019 IPO. Over this same time period, Palomar insiders have sold nearly $15 million in stock and the company has seen four notable departures.

This February, one of Palomar’s board members, Geoffrey Miller, resigned. This April, Palomar disclosed that another board member, George Estes III, would retire from the board and not be nominated for reelection. This June, Palomar’s chairman, Ryan Clark, announced that his fund had exited its Palomar stake and he would step down.

In addition, the company announced Andy Robinson, Palomar’s Chief Risk Officer, would be stepping down as of August 1, 2020.

The company was profiled in a recent Value Investors Club short pitch.

Shares currently trade for 7x book value and 54x profits.

SEC News

AmTrust Financial and former CFO pay $10.5 million (SEC Release)

“According to the SEC’s complaint, AmTrust (OTC: AFSIA — $2.83 billion) and Pipoly failed to properly disclose the company’s process for reporting management’s best estimate of loss reserves in its filings with the SEC.”

Argo International pays $900,000 over disclosure issues (Settlement)

“This matter arises from Argo Group International Holding’s (NYSE: ARGO — $1.14 billion) failure to disclose… that it paid over $5.3 million to its then Chief Executive Officer, President and member of its Board of Directors, Mark E. Watson III, in the form of a wide range of perquisites and personal benefits.”

Ares Management pays $1,000,000 over illicit trading (Settlement)

Ares Management (NYSE: ARES — $9.66 billion) entered into a settlement agreement with the SEC because of its failure “to implement and enforce certain of its written policies and procedures… to prevent the misuse of potentially material nonpublic information.”

“SEC Chief Urged to Drop U.S. Attorney Bid Amid Political Battle” (Bloomberg)

“U.S. Securities and Exchange Commission Chairman Jay Clayton was surprised and dismayed by the political battle that quickly erupted over his pending nomination to be the top federal prosecutor in New York.”

What to Read

“20-Year-Old Robinhood Customer Dies By Suicide After Seeing A $730,000 Negative Balance” (Forbes)

The note found on his computer by his parents on June 12, 2020, asked a simple question. “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?”

Justice Department Charges Former eBay Staff With ‘Cyberstalking Campaign’ (WSJ)

“The attacks included sending the couple threatening Twitter messages and packages that contained live cockroaches, a funeral wreath and a bloody-pig mask.”

“Short Sellers Made $2.6 Billion Off Wirecard’s Plunge, but Not Without Scars” (WSJ)

“Before Wirecard revealed more than $2 billion of cash was missing from its business on Thursday, investors who bet on stocks to decline had made it one of their most popular targets. That set up what may have been one of the biggest paydays for short sellers on a single stock in years.”