The Bear Cave #199
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Axos Financial (AX)” and “Problems at Flywire (FLYW)” and our next premium investigation comes out Thursday, December 21.
New Activist Reports
Muddy Waters Research published on Blackstone Mortgage Trust (NYSE: BXMT — $3.65 billion), a mortgage REIT focused on commercial real estate in North America, Europe, and Australia. Muddy Waters claimed that “interest rate swaps and manipulated risk ratings/loss provisions have obscured serious deterioration in BXMT’s loan book.” Muddy Waters also predicted that BXMT would need to cut its dividend in the second half of 2024 and that many borrowers would be unable to refinance their loans and ultimately default.
Viceroy Research published a case study concerning assets in Jacksonville owned by Arbor Realty Trust (NYSE: ABR — $2.53 billion), a mortgage REIT focused on bridge financing. Viceroy alleged that many Jacksonville properties in Arbor’s portfolio were acquired “at almost 100% premiums to their previous sales in 2018-2020” and now “are expected to fall below Arbor and other bridge lenders’ outstanding balances.” Viceroy also wrote,
“Whistleblowers have reached out to Viceroy en-masse to provide evidence and public citations of current, distressed Arbor deals and underlying assets.”
Last month, Viceroy raised more concerns about Arbor’s loan portfolio.
Bleecker Street Research published on NextNav (NASDAQ: NN — $432 million), a geolocation services company. Bleecker Street called NextNav “a sixteen-year-old company trying to build a better alternative to GPS with little meaningful traction” and said the company “aligned itself with real estate in the metaverse and flying cars.” Bleecker Street also predicted NextNav would be unable to compete against bigger rivals like Apple and Google. The company is down ~60% since merging with a B. Riley-affiliated SPAC in October 2021.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of Lanvin Group Holdings (NYSE: LANV — $392 million) “decided to step down from her roles to pursue new endeavors outside the group” after one and a half years and also departed the board. In January, the company’s CFO also resigned after one year and the company is down ~70% since its December 2022 SPAC merger.
CEO and CFO of Veradigm Inc (NASDAQ: MDRX — $1.10 billion) “resigned at the request of the Board effective immediately” after one and a half years as part of an “ongoing independent investigation by the Audit Committee of the Board that relates to the company's financial reporting, internal controls over financial reporting and disclosure controls.”
CFO of L3Harris Technologies (NYSE: LHX — $37.1 billion) departed after two years. The company has had six different CFOs in the last ten years.
CFO of Madison Square Garden Entertainment (NYSE: MSGE — $1.54 billion) resigned after two years “to accept a position at another company.” In October, the company’s General Counsel also resigned after two years and “accepted a position at another publicly traded corporation.”
Chief Marketing Officer of Peloton Interactive (NASDAQ: PTON — $2.15 billion) resigned after one year and “will not receive any severance payments.” Last month, the company’s Chief Product Officer departed and in 2022 the company’s Chief Accounting Officer, Chief Legal Officer, CFO, and CEO all departed as well.
Vice President of Financial Products at SunPower Corp (NASDAQ: SPWR — $834 million) resigned after two years. In October, the company’s principal accounting officer also resigned and, in the first half of the year, both the company’s Chief Marketing Officer and Vice President of Operations departed.
Mr. Kye-Sung Lee, board member of Korea Electric Power (NYSE: KEP — $9.42 billion), departed after two and a half years because his term expired. In May, the company’s CEO “resigned from all his positions” after two years. The company is overseen by a 16-person board with an average board member tenure of one year.
Chief Accounting Officer of Legacy Housing Corp (NASDAQ: LEGH — $556 million) resigned “effective immediately” after four and a half years. The company disclosed that the “resignation was personal in nature and was not the result of any disagreement related to the company's operations, policies, or practices.” The company’s CFO also “stepped down” in September after a little over one year. In October, the company’s auditor, CohnReznick LLP, “resigned without cause.” The company has had five different CFOs and four different auditors in the last five years.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Senators launch bipartisan probe of private equity's growing role in U.S. health care” (NBC)
“Two U.S. senators have launched a bipartisan investigation into secretive and powerful private-equity firms’ involvement in health care in the nation, demanding documents and information from executives associated with two hospital systems to assess how much profit they have generated through their complex financial arrangements and whether the deals harmed patients and clinicians…
Letters have also gone out to Prospect Medical, Leonard Green & Partners and Medical Properties Trust, a real estate investment trust that has been involved in multiple deals with private-equity firms allowing them to sell off hospital real estate holdings for cash.”
“Chinese Amusement Park Operator Falls 90% a Month After Hindenburg Short” (Bloomberg)
“‘Unfortunately, the NASDAQ exchange is littered with dozens of obvious China-based scams. These companies commonly lure in unsuspecting U.S. retail investors through Telegram, Discord, or WhatsApp chat groups then exit through the kind of rug pull decline we are seeing with Golden Heaven,’ Anderson, founder of Hindenburg Research, said in an email, adding that he has raised the issue with NASDAQ.”
“Tel Aviv bourse says no unusual trading ahead of Oct 7 Hamas attack” (Reuters)
“The Tel Aviv Stock Exchange said on Tuesday that a report by U.S. researchers suggesting there were investors in Israel who may have profited from prior knowledge of Hamas' Oct. 7 attack was inaccurate and its publication irresponsible.”
Tweets of the Week
Until next week,
The Bear Cave