The Bear Cave #203
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Flywire (FLYW)” and “Problems at Chegg (CHGG)” and our next premium investigation comes out Thursday, January 18.
New Activist Reports
Viceroy Research published an update on litigation with Medical Properties Trust (NYSE: MPW — $2.13 billion), a Birmingham-based REIT that owns hospitals typically in long-term sale-leaseback transactions.
In March 2023, Medical Properties Trust sued Viceroy Research for “a litany of malicious falsehoods grounded in a distorted picture of our business.” In its update, Viceroy highlighted that Medical Properties Trust recently disclosed it would take roughly $350 million in write-downs after difficulty collecting rent from its largest tenant, distressed health system Steward Health Care. In its updated discovery filing, Viceroy requested “all documents and communications related to Steward’s delay or failure to make timely rent or other payment obligations to MPT.”
In addition, The Bear Cave published on Medical Properties Trust twice. In June 2021, The Bear Cave wrote,
“Medical Properties Trust’s assets are concentrated with a few operators, usually private equity firms. Unknown to many investors, Medical Properties Trust’s largest tenants are in financial distress or propped up by related-party deals.”
And in our October 2022 investigation, The Bear Cave “[uncovered] a haphazard assortment of issues including distressed tenants, dubious representations, excessive spending, potential auditor independence issues, and a perplexing undisclosed entity for property management.”
HedgeyeREITs and anonymous Twitter account @BigRiverCapita1 have also repeatedly highlighted problems at Medical Properties Trust over the last few years.
Medical Properties Trust fell ~30% on Friday, has fallen ~70% over the last twelve months, and is down ~80% since The Bear Cave’s first June 2021 investigation.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of MultiPlan (NYSE: MPLN — $831 million) is “transitioning to Executive Chair of the Board” after about two years. Muddy Waters previously alleged the company’s “financial statements were engineered to obscure deterioration” in November 2020 and the company is down ~85% since its October 2020 SPAC merger.
CEO of OneSpan (NASDAQ: OSPN — $380 million) “was terminated without cause” after a little over two years. The company has had four different CEOs and five different CFOs in the last five years.
CFO of Agilon Health (NYSE: AGL — $3.50 billion) disclosed his intent to retire after nearly four years. In August, the company’s Chief Accounting Officer resigned “to pursue another professional opportunity” after eleven months. In addition, in May 2022 the company’s prior Chief Accounting Officer resigned after three and a half years “to pursue another career opportunity” and in February 2022 the company’s Chief Innovation Officer and Chief Business Officer both resigned after a little over one year “to pursue another career opportunity.” In December 2022, Citron Research published on Agilon Health and highlighted headwinds from a Supreme Court decision on Medicare overpayments. The company is down ~70% since its April 2021 IPO.
CFO of Cognex Corporation (NASDAQ: CGNX — $6.52 billion) “mutually agreed” to depart after four years. The company is down ~30% in the last twelve months and is audited by Grant Thornton LLP.
CFO of Foghorn Therapeutics (NASDAQ: FHTX — $238 million) resigned after four and a half years “to pursue other opportunities.” In September, the company’s Chief Medical Officer resigned after four years and the company is down ~70% since its October 2020 IPO.
Mr. Zhenyu Li, board member of Ecarx Holdings (NASDAQ: ECX — $901 million), resigned “due to personal reasons” after four years. In July, the company’s CFO departed after about one year. The Chinese automotive tech company is down ~75% since its December 2022 SPAC merger.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Nation’s Biggest Hospital Landlord Suffers New Losses” (WSJ)
“Medical Properties Trust, the country’s largest hospital landlord, said it would record about $350 million of write-downs related to its largest tenant, which had fallen behind on its rent, and hired a well-known restructuring adviser…
MPT said Steward was $50 million behind on its rent at year-end. MPT said it had agreed to fund a new $60 million loan to Steward and to defer portions of rent owed for 2024.”
“Founder And Former CEO Of Tingo Companies Charged With Securities Fraud” (Department of Justice)
“Dozy Mmobuosi allegedly orchestrated a massive scheme to inflate Tingo Group’s financial statements and make it appear as though the cellular and agriculture companies he founded were profitable and cash rich companies when, in fact, they were not. With this Indictment, Mmobuosi’s alleged deceitful scheme comes to an end.”
“US grounds some Boeing 737 Max planes after window blows out mid-air” (FT)
“US federal regulators have temporarily grounded some Boeing 737 Max planes in American airspace after a section of an Alaska Airlines jet blew out in mid-air… The move is a blow to Boeing, which has struggled with manufacturing defects on the 737. It continues to experience the fallout from a 20-month worldwide grounding imposed by regulators after a pair of deadly crashes five months apart.”
Tweets of the Week
Until next week,
The Bear Cave
On the many hospital organizations in financial distress, is this related to having to provide care to those unable or unwilling to pay? Or is it mismanagement on a grant scale throughout the industry?
Edwin,
I'm really surprised you're not tagging the tickers in your article for Substack's system.
Tagging the tickers will improve Substack’s ability to find the article for people who are searching for that ticker.
For instance: “Apple (AAPL) $AAPL needs to…”
The Substack app, last I knew, didn’t recognize these $ ticker links yet. However, they work on web and e-mail.
I’m encouraging all stock analysis authors to begin using this system more. If we use it as authors, it creates a bigger incentive for Substack to develop it. The more Substack develops their stock searching features, the better it will be for all stock analysis publications on Substack.