The Bear Cave #234

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

Aug 11, 2024

Welcome to The Bear Cave! Our last premium articles were “Problems at Teleperformance (TEP)” and “Problems at TaskUs (TASK)” and we will be releasing our next special investigation on Thursday, August 29 instead of our normal publication date of Thursday, August 15.

New Activist Reports

Bleecker Street Research published on Gogo (NASDAQ: GOGO — $969 million), an aircraft internet company. Bleecker Street claimed the company would face continued 5G upgrade delays and noted that Elon Musk’s Starlink “is rapidly taking market share.”

Spruce Point Capital published on Zebra Technologies (NASDAQ: ZBRA — $16.5 billion), a barcode and RFID technology company. Spruce Point alleged that the company’s core products are under competitive pressure, the company’s recent acquisitions are struggling, the company’s board is insulated with half the members serving for over a decade, and the company’s stock has “65% – 80% long-term potential downside risk.”

Hunterbrook Media published on TeraWulf (NASDAQ: WULF — $1.27 billion), a Bitcoin miner that claims to be environmentally friendly. Hunterbrook accused the company of “apparent greenwashing” and wrote,

“TeraWulf claims over 93% of the energy it uses at its keystone New York facility is renewable — but the New York Power Authority, which supplies 45% of the facility's energy, told Hunterbrook Media: ‘None of the power that NYPA provides the firm can be claimed as renewable power.’”

Hunterbrook also alleged TeraWulf leases facilities and pays service fees to entities owned by TeraWulf’s CEO.

Scorpion Capital published an update on Twist Bioscience (NASDAQ: TWST — $2.58 billion), an early-stage synthetic DNA company. Scorpion alleged that the company’s recent revenue growth was driven by “undisclosed related-party revenue and potential round-tripping” and speculated that some of Twist’s revenue could be coming from “an opaque Cayman-domiciled Chinese entity affiliated with GF Securities, which was associated with one of the largest frauds in Chinese history.”

In November 2022, Scorpion published on Twist Bioscience and said the company “has no value proposition beyond price and is a bottom-tier vendor with a poor reputation.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of Blue Bird Corp (NASDAQ: BLBD — $1.59 billion) departed after one and a half years. The company has had four CEO transitions since its February 2015 SPAC merger and is audited by BDO USA.
CEO of Clarivate (NYSE: CLVT — $4.12 billion) “will depart from his position and step down as a member of the board of directors” after nearly two years.
CFO of Unity Software (NYSE: U — $6.07 billion) “agreed to enter into a mutual separation agreement” after a little over three years. The company’s CEO and Chair of nine years, John Riccitiello, previously departed in October 2023.
CEO of Alight Inc (NYSE: ALIT — $3.76 billion) “will step down as the company's Chief Executive Officer and as a director, effective after the Board names a successor” after four and a half years.
CFO of Ameresco Inc (NYSE: AMRC — $1.40 billion) resigned “to pursue other opportunities” after five years. The company is audited by RSM US LLP.
CEO of Zillow Group (NASDAQ: ZG — $11.9 billion), Richard Barton, departed “effective immediately” and will become Co-Executive Chairman of the Board.
CFO of ZoomInfo Technologies (NASDAQ: ZI — $3.29 billion) “will depart from his position as CFO” after six years and the company plans on “entering into a customary separation and release agreement, the terms of which will be disclosed if and when determined by the parties.” In its Q2 results this week the company disclosed it “made a change in estimates related to the collectability of receivables from customers and changed operational procedures to require upfront pre-payment for services from certain smaller customers.”
In May 2022, The Bear Cave published on ZoomInfo and “obtained hundreds of pages of consumer complaints from small businesses desperate to cancel ZoomInfo contracts.” The Bear Cave wrote that “ZoomInfo often renews contracts against the wishes of its customers, threatens litigation to enforce renewals, and has admitted to the Washington State Attorney General of sometimes doing renewals ‘in error.’ In addition, The Bear Cave has found that ZoomInfo’s data collection practices are much more aggressive, and potentially illegal, compared to its dozens of competitors.”
The company is down ~80% since The Bear Cave’s investigation.
CFO of 10X Genomics Inc (NASDAQ: TXG — $2.44 billion) “will resign from the company, effective August 30, to join a private company” after nearly six years. In February, the company’s Chief Commercial Officer also “entered into a Transition and Separation Agreement” after one and a half years.
CFO of EverCommerce (NASDAQ: EVCM — $1.82 billion) resigned “to pursue other opportunities” after nearly eight years. On or around March 28, the company’s Chief Human Resources Officer departed after less than two years and on March 31 the company disclosed a board member resigned with two days notice. In addition, the company’s Chief Accounting Officer resigned in April 2023 after two years and the company’s Chief Operating Officer resigned after just one year. The company is down ~40% since its July 2021 IPO.
Mr. Yang Zhao, board member of BitFuFu (NASDAQ: FUFU — $720 million), resigned effective immediately after just five months. The company is down ~55% since its February 2024 SPAC merger.
Chief Revenue Officer of GitLab (NASDAQ: GTLB — $6.62 billion) resigned after a little over one year.
Chief Compliance Officer of Barings BDC (NYSE: BBDC — $1.05 billion) resigned after one and a half years. In March, the company’s Chief Accounting Officer resigned “to pursue other business opportunities” after just four months and the company’s President resigned “effective immediately, to pursue other business opportunities” after five and a half years. In April 2023, the company’s CFO “stepped down” after seven months “to pursue other business opportunities” and in December 2022, both the firm’s CEO and prior Chief Compliance Officer resigned after just three months in their roles.

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

What to Read

“Turkey blocks Roblox access over abuse concerns, justice minister says” (Reuters)

“Turkey has blocked access to the popular video game platform Roblox over concerns about content that could lead to child abuse, the country's justice minister said.”

“Private Credit Fund Burned by Risky Bets Is Bleeding Cash” (Bloomberg)

“Prospect Capital, a little-known New York firm that helped pioneer the private credit boom, has come up with an unusual technique to keep dividends flowing out of an $8 billion fund it runs. For years now, it’s sold financial instruments to retail investors and handed over the proceeds to shareholders.”

“Alcohol, Arrests and Acrimony: The Troubled Legacy of America’s Chicken Dynasty” (WSJ)

“In the middle of 2022, Tyson Foods replaced many of its top executives and shut down offices in South Dakota and Chicago, leading to widespread employee departures from its operations in beef, pork and prepared foods. The company has more recently closed or sold several processing plants, improving profitability in its chicken business. The management overhaul included John Randal, then 32 years old, rising from chief sustainability officer to CFO—the youngest ever at a Fortune 500 company. He was arrested about a month later.”