The Bear Cave #195
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at LifeStance Health (LFST)” and “Problems at Progress Software (PRGS)” and our next premium investigation comes out this Thursday, November 16.
New Activist Reports
Hindenburg Research published on EHang Holdings (NASDAQ: EH — $784 million), a Chinese flying car company. Hindenburg called the company “a fatal accident waiting to happen, both for investors and for passengers” and raised numerous concerns about the company’s purported 1,300+ unit order book. For example, the majority of the company’s orders are from a pre-IPO investor that no longer appears to support the company, and the company’s second-largest customer, Prestige Aviation, “is an Indonesian entity that was formed with $34,000 in registered capital one day prior to its announced partnership with EHang.” Hindenburg also said the company’s aircraft “is outmatched by competitors” and wrote, in part,
“EHang’s insiders & key stakeholders haven’t reported a single stock purchase since inception. Instead, they have reported selling more than 28 million shares, including share sales in September 2022 at prices as low as $4.21-$6.17, 59%-72% below current levels.”
In February 2021, Wolfpack Research called the company “an elaborate stock promotion, built on largely fabricated revenues based on sham sales contracts.”
Citron Research published on Apellis Pharmaceuticals (NASDAQ: APLS — $5.57 billion), the makers of Syfovre – a drug that can help delay or prevent some cases of blindness. Citron published conversation excerpts from the American Academy of Ophthalmology conference that showed doctors raised concerns that Syfovre patients have too many adverse reactions. In addition, some doctors argued that Medicare should not pay roughly $25,000 per year for Syfovre in some cases because it “just slows the progression of retina lesions in an elderly patient.”
Spruce Point Capital published on e.l.f. Beauty (NYSE: ELF — $5.25 billion), a popular makeup and skincare company. Spruce Point called the company “one of the most richly valued stocks in the cosmetics industry” and alleged the advertising firm used by the company, Movers+Shakers, has ties to the NXIVM cult. Based on those concerns, Spruce Point “urges retail partners including Target, Walmart and Ulta Beauty to reevaluate their connections with e.l.f.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of MarketAxess Holdings (NASDAQ: MKTX — $8.45 billion) resigned after two and a half years “to accept a position at a private company that provides technology solutions within the commercial bank sector.” In April, the company’s CEO departed after 23 years and two board members have departed this year as well.
CEO of Air Transport Services Group (NASDAQ: ATSG — $979 million) departed “effective immediately” after three and a half years and was replaced by the company’s Chairman, Joseph Hete. The company is down ~50% in the last year.
CEO of Bumble (NASDAQ: BMBL — $1.95 billion) departed after four years and will become Executive Chair. In addition, a board member resigned and the company has fallen ~80% since its February 2021 IPO.
CFO of Array Technologies (NASDAQ: ARRY — $2.12 billion) “separated” from the company after four and a half years. In April, the company switched auditors from BDO LLP to Deloitte and in September 2022 Jehoshaphat Research criticized the company for its “bill-and-hold revenue recognition policy in which a company books revenue on product that is still sitting in the seller’s possession, or even in a third party supplier’s warehouse.” In October 2022, the company’s Chief Operating Officer also departed after just one year.
CFO of StepStone Group (NASDAQ: STEP — $2.90 billion) “retired” after four years. The company is roughly flat since its September 2020 IPO.
Both co-CEOs of BRC Inc (NYSE: BRCC — $689 million) announced upcoming departures at the end of this year. The company’s CFO, Chief Operating Officer, Executive Chairman, and Chief Retail Officer have all departed this year as well. The company is down ~65% since its February 2022 SPAC merger and was previously mentioned in The Bear Cave as a notable advertiser on Rumble (NASDAQ: RUM).
CFO of eXp World Holdings (NASDAQ: EXPI — $1.88 billion) resigned after five years “to pursue other opportunities.” In April 2022, The Bear Cave raised concerns about the company’s “dubious accounting, regulatory snafus, an SEC subpoena, high insider selling, and a questionable recruiting pipeline promoted by a prominent Scientologist.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Inside James Comey’s Bizarre $7M Job as a Top Hedge Fund’s In-House Inquisitor” (Vanity Fair)
“The taping of meetings represented just the tip of the surveillance ecosystem at Bridgewater. A slew of ex-FBI agents staffed the security team. Not only did cameras cover seemingly every inch of the property, but they seemed to be watched in real time. Staffers who left their desks even briefly would return to sticky notes left on their computer monitors admonishing them for failing to put up a screen saver. New employees were often warned to be careful about their use of the company gym, which lent out clothes. One staffer, exhausted after a particularly tough workout, was chastised after absentmindedly walking out wearing a pair of Bridgewater loaner socks. The employee was let go.”
“Sphere CFO ‘calmly’ quit after MSG boss James Dolan’s ‘yelling and screaming’: source” (New York Post)
“According to a source with knowledge, Dolan was ‘yelling and screaming’ at Ranji, who in response ‘calmly’ left the room and gave his notice to the company’s general counsel. ‘Gautam is very calm and usually can take it and roll with it,’ said a source, who explained that the CFO had enough of Dolan’s hair-trigger temper. Dolan, meanwhile, ‘is the consummate hammer,’ the source added. ‘He treats everyone like a nail.’”
“How Warren Buffett Privately Traded in Stocks That Berkshire Hathaway Was Buying and Selling” (ProPublica)
“Buffett has long said such trading would be a conflict of interest, and Berkshire policies prohibit it. But confidential records show that, on at least three occasions, he sold millions of dollars of shares in stocks that Berkshire was trading.”
Tweets of the Week
Until Thursday,
The Bear Cave