The Bear Cave #219

New Activist Report, Recent Resignations, and Tweets of the Week

Apr 28, 2024

Welcome to The Bear Cave! Our last premium articles were “Problems at Marqeta (MQ)” and “Problems at Primerica (PRI)” and our next premium investigation comes out this Thursday, May 2.

New Activist Report

Hunterbrook Media, a new media outlet that shares its stories in advance with an affiliated hedge fund, published a follow-up article on UWM Holdings (NYSE: UWMC — $10.2 billion), a wholesale mortgage lender. Hunterbrook Media said it “learned that a UWM executive set up a shell company that in 2019 was used to purchase and establish UMortgage, a Philadelphia-based mortgage company that brands itself as independent.” Hunterbrook also highlighted videos posted by a former UMortgage originator who claimed that “UMortgage leadership regularly manipulates its rate sheets to make UWM’s loans appear cheaper than those from other lenders — without telling the UMortgage loan originators whose responsibility it is to shop for the best deal on behalf of clients.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Chemours (NYSE: CC — $4.07 billion) “entered into a separation and release agreement” after eleven months. In March, the company’s CEO, CFO, and Principal Accounting Officer were placed on administrative leave “pending the completion of an internal review being overseen by the Audit Committee of the Board of Directors with the assistance of independent outside counsel, which scope includes the processes for reviewing reports made to the Chemours Ethics Hotline.”
CFO of Archer-Daniels-Midland (NYSE: ADM — $30.2 billion) “entered into a transition agreement” after two and a half years. The company “faces an investigation by the Justice Department amid scrutiny over its accounting practices [and] disclosed that current and former employees have received subpoenas.” In January, the outgoing CFO was placed on administrative leave “pending an ongoing investigation being conducted by outside counsel for the company and the Board's Audit Committee regarding certain accounting practices and procedures.”
CEO of CNH Industrial (NYSE: CNHI — $14.2 billion) resigned after three and a half years and is also leaving the board “to pursue other interests.”
CEO of Critical Metals Corp (NASDAQ: CRML — $979 million) will transition to “President of European Operations” after five years. The company is up ~20% since its February 2024 SPAC merger.
Pierre Jacquet and Timothy Scannell, board members of Exact Sciences (NASDAQ: EXAS — $10.7 billion), “are not standing for re-election at the Annual Meeting” after five years and one year, respectively. A third board member, Freda Lewis-Hall, “whose term expires in 2026, intends to retire immediately following the Annual Meeting for personal reasons.”
Chief Human Resources Officer of United Parks & Resorts (NYSE: PRKS — $3.26 billion), formerly known as SeaWorld, departed after one and a half years. The company has had four different CEOs and four different CFOs in the last five years.
Geraldine Elliott, board member of Marqeta (NASDAQ: MQ — $2.78 billion), “will be departing from our board of directors following the Annual Meeting” after three years. Ms. Elliott continues to serve on the board of Whirlpool. Three weeks ago, The Bear Cave published on problems at Marqeta (MQ) and noted the company and its close partner Block (SQ) have seen a large exodus of executives and board members.
Two weeks ago the CFO of Customers Bancorp (NYSE: CUBI — $1.48 billion), Carla Leibold, “was notified of her termination from employment with the company for ‘cause’ under her employment agreement for violating company policy, effective immediately.” The bank also disclosed that the outgoing CFO, who had served for five and a half years, “has disputed the company’s characterization of her separation from the company.”
On Thursday, Customers Bancorp filed an amended 8-K and disclosed that “the company and Ms. Leibold have agreed that the termination of Ms. Leibold’s employment is a separation by mutual agreement.” The bank also agreed to “post-employment compensation to be paid to Ms. Leibold in an amount equal to $2,500,000” and said Ms. Leibold “has represented to the company that she is not aware of any facts that constitute or might constitute violations of the company’s legal or regulatory obligations.”

Data for this section is provided by VerityData from VerityPlatform.com

What to Read

“Billions in Dirty Money Flies Under the Radar at World’s Busiest Airports” (WSJ)

“The next morning, the women collected their luggage in Dubai without having too much to worry about: Any amount of cash is allowed to enter the United Arab Emirates, as long as it is declared. The women followed signs to customs and told authorities they had brought the equivalent of $2.8 million.
Most airports worldwide, including in the U.S., don’t scan passenger luggage for cash, a costly undertaking in equipment and personnel. Countries where all money is welcome have no obligation to report about suitcases full of cash arriving from abroad. The loopholes allow billions of dollars worth of cash to fly out of the U.K. and elsewhere to countries with fewer rules, law-enforcement officials said.”

“B. Riley Jumps as Auditor Signs Off, Cites Material Issues” (Bloomberg)

“‘Marcum decided to enclose new risk factors and call Kahn a related party, which is everything the skeptics have been saying,’ Marc Cohodes said by email. The firm still has ‘mismarked assets and related-party dealings that don’t pass the sniff test,’ he said.”

“Cathie Wood’s Popular ARK Funds Are Sinking Fast” (WSJ)

“By the end of last year, ARK funds had destroyed more wealth than any other asset manager over the previous decade, losing investors a collective $14.3 billion, according to Morningstar.”