The Bear Cave 2020 Annual Review
Highlights of 2020, Bear Cave Lists, Popular Twitter Threads, And Our Best Paid Reports
This annual review summarizes The Bear Cave’s best content from 2020. I started this newsletter during the pandemic as Stanford was shutting down classes and since then it has grown into a full-time job. I am humbled by your support and am incredibly excited for the future.
Highlights of 2020
New Articles Published: 52
Emails Sent: ~250,000
Email List Growth: 0 to 8,022
Most Popular Interview: Marc Cohodes Interview
Most Popular Article: “The Bear Cave #36 + Problems at Vista Equity Partners”
Best Bear Cave Lists
The Bear Cave newsletter loves making lists. Here are some of my favorites:
10 Companies to Watch
(1) NV5 Global (NASDAQ: NVEE — $810 million) is an engineering services roll-up and has received three comment letters from the SEC since July 1st of this year (1, 2, 3). The letters focus on revenue recognition and accounting issues. The SEC noted,
“It appears undue prominence is given to your non-GAAP financial measures.”
The company changed auditors in 2016 and changed CFOs in 2019. You can read a thoughtful 2018 Value Investors Club write-up on NV5 Global here.
(2) Celsius Holdings (NASDAQ: CELH — $1.70 billion), a maker of healthy energy drinks, uses an auditor not used by any other NYSE or NASDAQ listed company and has told the SEC it does “not expect that our disclosure controls or internal controls will prevent all error and all fraud.” The company has legacy ties to bankers involved in 1MDB and loosened its revenue recognition policy in 2018. (Read more here.)
(3) PDF Solutions (NASDAQ: PDFS — $753 million), a software and engineering company, has had three different CFOs over the last five years. In September 2018 the company replaced PwC as its auditor with BPM LLP. Two months later the company responded to an SEC comment letter concerning its revenue recognition. Since switching auditors the company has not posted a GAAP profit, yet the stock is up over 100% in the last five years.
(4) Zuora (NYSE: ZUO — $1.23 billion), an enterprise software company, received two comment letters from the SEC concerning its revenue recognition and other issues in 2019. In response, Zuora said,
“The Company revised its method of calculating subscription revenue from new customers…”
Zuora replaced its CFO earlier this year, trades around 4x revenue, has posted GAAP losses every quarter since IPO, and has revenue growing around 15% annually.
(5) OneSmart International Group (NYSE: ONE — $666 million), a Chinese online education and daycare company, has received some scrutiny from the SEC. In an April comment letter the SEC noted,
“It appears your officer certifications … do not include the language referring to internal control over financial reporting that should appear.”
The SEC had also raised questions about the company before its NYSE listing. In a March 2018 letter, the company responded to an SEC question trying to reconcile revenue and enrollment growth. OneSmart wrote,
“The Company respectfully advises the Staff that there was an error in the average monthly enrollment figures in fiscal years 2016 and 2017…”
In 2019 OneSmart’s CFO resigned and in 2020 its audit committee chairwomen resigned. According to the company both resigned “due to personal reasons.” (Read more here).
(6) LivePerson Inc (NASDAQ: LPSN — $3.99 billion), an AI chatbot company, has had three CFOs in the last three years and uses BDO as its auditor. The company’s current CFO is 38.
(7, 8, 9) Ping Identity Holdings (NYSE: PING — $1.87 billion), JAMF Holdings (NASDAQ: JAMF — $4.28 billion), and Datto Holdings (NYSE: MSP — $4.89 billion) are all recent IPOs of Vista Equity Partners, a software-focused private equity the firm. Vista’s co-founder recently reached a $139 million non-prosecution agreement over his personal tax fraud. Vista’s other co-founder left the board of Datto Holdings in October and plans to leave the firm. Above all, Vista has been accused of questionable conduct with portfolio companies. PING stock fell 18% last week after the company missed earnings.
(10) K12 Inc (NYSE: LRN — $1.04 billion), an operator of online public schools, has been pitched as a play on the coronavirus pandemic, and the company is known for its ties to the Trump administration. In reality, K12 is a failing education provider and may be one of the biggest losers of a Biden administration.
As California’s attorney general Kamala Harris prosecuted the company and a large school district recently started a corruption investigation into potential bribery by K12. The company has not disclosed the issue to investors.
(This list is from The Bear Cave #39)
30 Best Anonymous Financial Twitter Accounts to Follow
1. @WallStCynic — A random guy from Wisconsin tweeting about stocks
2. @CrowdedTradeCap — Generalized and company-specific research
3. @DonutShorts — Highlights the next stocks going to zero
4. @Keubiko — Insightful tweets long and short
5. @EnergyCredit1 — Smart tweets on energy stocks
6. @unemon1 — Stock rumors and trade ideas
7. @HiddenPivots — Best account for chart analysis
8. @BarbarianCap — Smart, anonymous analyst
9. @NeckarValue — Shares old interviews and articles on great investors
10. @10kdiver — Twitter threads on 10-Ks
11. @borrowed_ideas — Equity analyst with deep-dive threads
12. @WillauerProsky — Tweets on everything related to activist shorts
13. @greatquarter — Shares interesting, off the beaten path ideas
14. @TESLAcharts — Exposing Tesla one chart at a time
15. @JerryCap — Company press releases and news
16. @MoatsLikeKodak — General market tweets and some microcap ideas
17. @NeckarValue — Tweets old finance books/articles/stories
18. @OpenOutcrier — Breaking market news
19. @schaudenfraud — A cartoon character tweeting about stocks
20. @marginalidea — Smart short-seller
21. @CapitolistPig — Smart, company-specific gossip
22. @LSValue — Long-short investor with interesting ideas
23. @LibertyRPF — Smart generalist
24. @QuisitiveInvest — Investment research, economics, and finance
25. @valueterminal — Investing and business-related stuff
26. @TSOH_Investing — Interesting takes on companies
27. @FatTailCapital — Investor and jokester
28. @mr_skilling — A parody Jeff Skilling account
29. @NickatFP — Funny account, landlord jokes
30. @BagholderQuotes — For the days you need a self-esteem boost
(This list is from The Bear Cave #30)
Notable Resignations and Departures
Notable executive departures disclosed in the last 30 days include:
1. CFO of Molina Healthcare (NYSE: MOH — $12.3 billion) after less than three years on the job. Molina has had three different CFOs in the last five years and in 2019 the SEC questioned the company about a potential financial restatement.
2. CFO of Cavco Industries (NASDAQ: CVCO — $1.84 billion) after one and a half years. Cavco has had four CFOs in the last five years.
3. CFO of Sally Beauty Holdings (NYSE: SBH — $1.30 billion) after less than three years.
4. CEO of B&G Foods (NYSE: BGS — $1.69 billion) after about one and a half years.
5. CFO of Marathon Petroleum (NYSE: MPC — $26.4 billion) after about one and a half years.
6. CFO of Avita Therapeutics (NASDAQ: RCEL — $478 million) after less than a year.
7. CFO of Veoneer (NYSE: VNE — $2.21 billion) after two years.
8. CFO of PetroPump (NYSE: PUMP — $611 million) after about six months.
9. CFO of Colgate-Palmolive (NYSE: CL — $72.5 billion) after about two and a half years.
In addition, the CFO of Asure Software (NASDAQ: ASUR — $120 million) resigned after 87 days “for family health reasons.” The company has had five CFOs in the last five years.
(This list is from The Bear Cave #41)
Popular Twitter Threads
The Bear Cave often publishes deep dive Twitter threads (usually under my personal handle @StockJabber). Here are the best ones:
The Bear Cave Interviews
The Bear Cave published interviews with Marc Cohodes, Carson Block, Sahm Adrangi, Gabriel Grego, and Roddy Boyd. View them all here.
Most Viewed Paid Reports
Every month The Bear Cave sends two deep-dive company investigations to paid email subscribers ($34/month). The Bear Cave is temporarily removing the paywall from our most popular paid reports for the next 48 hours. If you want content like below twice every month please consider becoming a paid subscriber.
On January 1, 2021, prices for The Bear Cave premium are increasing from $34/month to $44/month. However, if you sign up now you will be grandfathered in at the current rate of $34/month.
Problems at Celsius Holdings (CELH)
Celsius Holdings (NASDAQ: CELH — $1.63 billion) is a company like no other. The company allegedly makes healthy energy drinks and its stock is up nearly 900% in the last five years. Its investors include indicted bankers involved in 1MDB, hip-hop producer Russell Simmons, and a shark from Shark Tank. The company uses an auditor not used by any other NYSE or NASDAQ listed company and has told the SEC it does “not expect that our disclosure controls or internal controls will prevent all error and all fraud.”
Problems at Triterras (TRIT)
Singapore-based Triterras (NASDAQ: TRIT — $1.10 billion) describes itself as a “custom-built, blockchain-enabled, end-to-end global trade and trade finance platform.” The company went public through a SPAC earlier this year and, in my opinion, the company’s executives may have ties to numerous bankruptcies and stock promotions. In addition, I believe the company may derive a large portion of its revenue directly or indirectly from related-party entities.
Problems at Root Insurance (ROOT)
Root Insurance (NASDAQ: ROOT — $3.94 billion) is a car insurance company that is misleading investors and consumers. The company went public in October and claims to use its phone app to distinguish good drivers from bad ones by tracking driving speed, braking, travel times, phone usage, and other factors. Root recently reported improved underwriting results, which it credits to algorithmic enhancements. I believe Root’s results are driven by undisclosed price increases and a one-time pandemic benefit.
Problems at EverQuote (EVER)
EverQuote (NASDAQ: EVER — $1.09 billion) claims to be a marketplace that helps consumers compare car insurance quotes, primarily on its website everquote.com. In reality, EverQuote is a combination of over 100 questionable auto insurance lead generation websites. In addition, EverQuote rarely gives consumers actual quotes and instead refers them to other websites. EverQuote makes money from these referrals as well as selling consumer info to insurance agents.
Goals for 2021
The Bear Cave in 2021 will be similar to 2020, except I will be focusing more time on specific company investigations and do more public short-seller interviews. If you have been enjoying The Bear Cave please consider sharing it with a friend or colleague.
Follow The Bear Cave newsletter on Twitter @BearCaveEmail and join the newsletter with link below. Contact the author, Edwin Dorsey, by email at edwin@585research.com or on Twitter @StockJabber