The Bear Cave #233
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Teleperformance (TEP)” and “Problems at TaskUs (TASK)” and our next premium investigation comes out Thursday, August 15.
New Activist Reports
Viceroy Research published an update on Globe Life (NYSE: GL — $8.37 billion), a supplemental life insurance company that operates through a network of independent salespeople. Viceroy alleged that Globe Life agents “regularly misrepresent themselves as government employees to generate leads” and raised concerns about the limited scope of the company’s “independent investigation” into allegations of unethical sales practices.
Viceroy Research also published an update on Medical Properties Trust (NYSE: MPW — $2.94 billion), a Birmingham-based REIT that owns hospitals typically in long-term sale-leaseback transactions. Viceroy highlighted recent bankruptcy filings from Medical Properties Trust’s largest tenant, non-profit hospital chain Steward Health, that suggest Medical Properties Trust’s leases are uneconomic and will be renegotiated lower in the future. Viceroy concluded,
“It’s clear that [Medical Properties Trust’s] entire book must be impairment tested and is grossly overvalued. We believe the only reason the company appears to be refusing to offer rent concessions or discounts is that it would trigger a disastrous revaluation. As you can imagine we have very little faith in [Medical Properties Trust’s] auditors PwC who have presided over this mess since 2008. We hope this serves as an extremely late wake-up call. Investors should ask themselves how many other skeletons are hiding in the closets in Birmingham.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Standard Biotools (NASDAQ: LAB — $525 million) resigned after a little over one year “to accept an opportunity at another public company.”
CFO of iRhythm Technologies (NASDAQ: IRTC — $2.62 billion) “will step down for personal reasons” after a little over two years. The company has had four different CEOs and three different CFOs in the last five years.
CFO of Remitly Global (NASDAQ: RELY — $2.68 billion) “is leaving for family reasons” after a little over two years. The company is down ~70% since its September 2021 IPO.
CFO of BlackBerry (NYSE: BB — $1.37 billion) “has decided to pursue other opportunities outside of the company” after nearly five years. In February, Canadian investor Prem Watsa resigned from the board after ten years “in connection with the company’s repayment of its convertible debentures held by Fairfax Financial Holdings, of which Mr. Watsa is Chairman and CEO.” In November 2023, the company’s longtime CEO and Chairman, John Chen, resigned as well.
CFO of Inari Medical (NASDAQ: NARI — $2.68 billion), 65, retired after five and a half years. The company is audited by BDO USA and is up ~10% since its May 2020 IPO.
CFO of Roblox (NYSE: RBLX — $26.7 billion) resigned after six and a half years “to pursue personal interests.” The resignation comes just two weeks after a Bloomberg investigation found that the company “reported 13,316 instances of child exploitation to the National Center for Missing & Exploited Children [in 2023]” and that since 2018 “police in the US have arrested at least two dozen people accused of abducting or abusing victims they’d met or groomed using Roblox.” The Bear Cave has published extensively on child abuse problems on Roblox and in our August 2023 investigation wrote that “The Bear Cave believes Roblox has facilitated more child abuse than any public company in history.”
Tan Su, board member of ECARX Holdings (NASDAQ: ECX — $546 million), resigned after seven months “due to personal reasons.” In January, another board member also resigned and in July 2023 the company’s CFO departed. The Chinese automotive tech company is down ~85% since its December 2022 SPAC merger.
Chief Accounting Officer of Dentsply Sirona (NASDAQ: XRAY — $5.42 billion) resigned “effective August 16, 2024, to pursue another opportunity” after two years. Last year, the company’s Chief Legal Officer and Chief Human Resources Officer both departed according to their LinkedIn profiles. In 2022, the company’s CEO was “terminated” and the company’s CFO departed amid “an internal investigation into certain financial reporting matters” which ultimately led to a restatement of the company’s 10-K for 2021.
Tony West, Chief Legal Officer of Uber Technologies (NYSE: UBER — $130 billion), “plans to take a temporary unpaid leave of absence commencing August 17, 2024, to volunteer on a political campaign in his personal capacity.” Mr. West is the brother-in-law of Vice President Kamala Harris.
Data for this section is provided by VerityData from VerityPlatform.com
Looking for AI Losers
This year The Bear Cave has published on several companies we believe will be major losers due to artificial intelligence such as homework help company Chegg (CHGG), call center company Teleperformance (TEP), and basic business process outsourcer TaskUs (TASK). If you know of a company that will be an AI loser, please hit reply and let us know.
All tips are appreciated — the more obscure the better!
What to Read
“In Defense of Andrew Left” (The Bear Cave)
“Let’s get this straight: according to the DOJ, Harry Markopolos getting paid by an anonymous hedge fund to falsely call GE ‘A Bigger Fraud Than Enron’ and ‘on the verge of insolvency’ is totally fine.
However, Andrew Left tweeting criticism about the GE allegations under his own name is ‘a media campaign to discredit another activist short seller’s short report on GE and artificially inflate the price of GE stock.’”
“Andrew Left should have taken his own advice” (Sherwood News)
“If you had purchased or shorted $100,000 of each of Left’s 16 recommendations described in the indictment the day he published his report and never closed your position, you would have turned $1,600,000 into $6,688,617.44 (excluding borrow fees) for a 318% return since making the first trade in August 2018.
If you had invested that same $1,600,000 in the S&P 500 in August 2018, you would be up ~86% right now. The ‘long Left’ portfolio would have outperformed the S&P 500 by 3.7x since August 2018.”
“The Activist Pushing Companies to Ditch Their Diversity Policies” (WSJ)
“Robby Starbuck has fueled social-media attacks on Tractor Supply, Deere and Harley-Davidson, and his list of targets is getting longer.”
Tweets of the Week
Until next week,
The Bear Cave