The Bear Cave #215
New Activist Report, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at an ARK Invest Favorite” and “More Problems at Hershey (HSY)” and our next premium investigation comes out this Thursday, April 4.
New Activist Report
Kerrisdale Capital published on MicroStrategy (NASDAQ: MSTR — $28.9 billion), a business software company better known for its large Bitcoin holdings. Kerrisdale suggested a pair trade of short MicroStrategy and long Bitcoin because MicroStrategy now trades at a 100%+ premium to its Bitcoin holdings. Kerrisdale argued,
“Bitcoin is now easily obtainable through brokerages, crypto exchanges, and more recently low fee ETPs and ETFs. None of the reasons commonly provided for MicroStrategy’s relative attractiveness justify paying well over double for the same coin. MicroStrategy’s trading history and basic common sense suggests the current inflated premium will contract, much as it has on prior occasions, providing a compelling opportunity for a pair trade.”
Kerrisdale suggested the pair trade could offer a ~50% return if MicroStrategy reverts to its historical average Bitcoin premium.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of Open Lending Corp (NASDAQ: LPRO — $744 million) “terminated employment with the company and resigned from the Board” after one and a half years. The company is down ~40% since its June 2020 SPAC merger.
CEO of Dyne Therapeutics (NASDAQ: DYN — $2.33 billion) “entered into a separation agreement” after four and a half years and is also leaving the board.
CEO of Boeing (NYSE: BA — $118 billion) “decided to step down at the end of 2024” after a little over five years. In addition, the board’s Chair, Lawrence Kellner, “decided not to stand for re-election,” and will be replaced by Steve Mollenkopf, the former CEO of Qualcomm. In addition, the CEO of the Boeing Commercial Airplanes division is departing this week.
Chief Human Resources Officer of EverCommerce (NASDAQ: EVCM — $1.76 billion) departed after a little less than two years. The company is down ~45% since its July 2021 IPO.
Chief Revenue Officer of nCino Inc (NASDAQ: NCNO — $4.23 billion) “is leaving the company effective April 12, 2024 to pursue an opportunity outside of the financial services industry” after two and a half years. In January, the company’s CFO was “terminated without cause” after a little over three years.
Data for this section is provided by VerityData from VerityPlatform.com
Opportunity
AWH Capital, a Dallas-based long/short equity fund, is looking to hire a financial analyst who will focus on off-the-beaten-path longs and terminal shorts. If you have a keen intellect, a passion for investing, and 1-3 years of investment experience, please send your information to kschutz@awhcapital.com.
What to Read
“SEC Charges Former Arista Networks Chairman Andy Bechtolsheim with Insider Trading” (SEC)
“The SEC alleges that Bechtolsheim, who was Arista Networks’s chair at the time, learned of Acacia’s impending acquisition on July 8, 2019, through his and Arista Networks’s longstanding relationship with another multinational technology company that was also considering acquiring Acacia and consulted with Bechtolsheim concerning the potential acquisition. Immediately after learning this information, Bechtolsheim allegedly traded Acacia options in the accounts of a close relative and an associate. The next day, July 9, 2019, before the market opened, Acacia and Cisco announced that Cisco had agreed to acquire Acacia for $70 per share. That day, Acacia’s stock price increased by 35.1 percent. According to the SEC’s complaint, Bechtolsheim’s trading generated combined illegal profits of $415,726 in the accounts of his relative and associate.”
“NYCB and Meridian Rode the Property Boom Together. Now They’re Struggling.” (WSJ)
“The bank got many of its loans from a broker now blacklisted by Fannie Mae and Freddie Mac…”
“The unstoppable rise of Fortnox: Swedish software group attracts short sellers” (FT)
“Eklund has turned a niche supplier of accounting software that only operates in Sweden into a stock market sensation whose share price has risen fivefold on his watch…
The discrepancy has attracted the attention of skeptical hedge funds and analysts, who wonder how Fortnox increased customer numbers and revenues with metronomic regularity, immune to trends in economic growth and a marked rise in bankruptcies; the firm added 10,000 customers in the third quarters of 2020, 2021, 2022 and 2023.”
Tweets of the Week
Until Thursday,
The Bear Cave