The Bear Cave #191
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Coca-Cola (KO)” and “Even More Problems at Rumble (RUM)” and our next premium investigation comes out this Thursday, October 19.
New Activist Reports
Kerrisdale Capital published on Joby Aviation (NYSE: JOBY — $4.32 billion), an electric aircraft development company. Kerrisdale called the company “a combination of an aerospace science project and air taxi delusion.” Kerrisdale argued that cars and helicopters are better suited for short-distance travel than Joby’s electric air taxi and said the company is “on a path to almost certain failure.” Kerrisdale also argued the company’s proposed 100-mile range, cost assumptions, and battery lifecycle are nonsensical and concluded,
“Joby still exists only due to SPAC boom froth, silly assumptions, naïve demand forecasts, and ever-changing timelines. Joby is on track to run out of cash within two years, and will still need billions. Our target price: $0”
In October 2022, Bleecker Street Research also published on Joby Aviation and said the company had “some of the most egregious guidance of any SPAC we have seen.”
Viceroy Research published documents concerning Medical Properties Trust (NYSE: MPW — $2.97 billion), a Birmingham-based REIT that owns hospitals typically in long-term sale-leaseback transactions. Viceroy shared a recently unsealed False Claims Act complaint against Steward Health Care, the largest Medical Properties Trust tenant, that alleged Steward engaged in a kickback scheme “to direct expensive and profitable procedures to Steward’s central Florida Hospitals.” The complaint also alleges Steward “understood certain elements of the deal should not be put in writing over concerns they would raise questions about violations of [Anti-Kickback Statutes].”
Medical Properties Trust is currently engaged in litigation against Viceroy, which has published extensively on problems at the company.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of Dollar General (NYSE: DG — $24.4 billion) resigned one year after being promoted into the role and also departed the board. The company is down ~50% over the last year.
Stephen Bardin, CFO of Atai Life Sciences (NASDAQ: ATAI — $213 million), “went on parental leave” after a little over one year. The company’s prior CFO resigned after two years and the company is down ~90% since its June 2021 IPO.
CFO of OPAL Fuels (NASDAQ: OPAL — $1.34 billion) resigned after two and a half years “to pursue another professional opportunity.” In June, a member of the company’s audit committee resigned after one year and the company is audited by BDO LLP. The company is down ~20% since its July 2022 SPAC merger.
CEO of Olaplex Holdings (NASDAQ: OLPX — $1.05 billion) resigned after nearly four years and also departed the board. In August 2022, The Bear Cave published on Olaplex and wrote that the company “faces aggressive new competition and waning social media support. With shares priced to perfection, the company’s future looks less than perfect.” The company has now fallen ~90% since its October 2021 IPO.
CFO of TrueBlue (NYSE: TBI — $453 million) resigned after 18 years “to pursue other opportunities.” The company’s prior CEO resigned in August 2023 and his predecessor resigned in June 2022 following “an investigation, led by outside counsel, into allegations regarding his conduct.”
Vice President of Strategy at Agiliti (NYSE: AGTI — $731 million) was “terminated without cause” after a little over one year. Last month, the company’s CEO was also “terminated without cause” after just seven months. The company is down ~50% since its June 2019 IPO.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“FTC Proposes Rule to Ban Junk Fees” (FTC)
“The Federal Trade Commission today announced a new proposed rule to prohibit junk fees, which are hidden and bogus fees that can harm consumers and undercut honest businesses. The FTC has estimated that these fees can cost consumers tens of billions of dollars per year in unexpected costs…
As the public comments made clear, consumers are fed up with hidden fees for everything from booking hotels and resort fees to buying concert tickets online, renting an apartment, and paying utility bills. Many consumers said that sellers often do not advertise the total amount they will have to pay, and disclose fees only after they are well into completing the transaction. They also said that sellers often misrepresent or do not adequately disclose the nature or purpose of certain fees, leaving consumers wondering what they are paying for or if they are getting anything at all for the fee charged.”
“Statement on Final Rules Regarding Short Sale Activity” (SEC)
“Today, the Commission is voting to adopt rules to broaden the scope of short sale-related data available to regulators as well as the investing public. I am pleased to support this adoption because it will enhance the transparency of this important area of our markets…
Investment managers that carry large short positions in equity securities will be required, within two weeks after each month, to report those positions and related short sale activity to the Commission. The threshold for reporting will be met when an investment manager’s short position in a particular equity security of a reporting issuer is at least $10 million or the equivalent of 2.5 percent or more of the total shares outstanding on average during a month.”
“AMC Entertainment CEO Adam Aron Says He Was Victim of Blackmail Plot” (WSJ)
“Law enforcement asked Aron to keep the matter confidential during their investigation and court case, he said. After the extortionist was sentenced in July, Aron said he informed AMC’s board, which reviewed the matter with outside counsel at law firm WilmerHale.”
“Tesla whistleblowers filed a complaint to the SEC in 2021, but the agency never interviewed them. Here’s what the complaint said” (CNBC)
“‘Were Tesla to accurately categorize its goodwill repairs as warranty repairs, it would likely need to restate earnings for every quarter since at least 2017,’ the tipsters wrote in their submission.”
Tweets of the Week
Until Thursday,
The Bear Cave