The Bear Cave #237
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at TaskUs (TASK)” and “The Five Biggest AI Losers” and our next special investigation comes out this Thursday, September 5.
New Activist Reports
Hindenburg Research published on Super Micro Computer (NASDAQ: SMCI — $25.6 billion), a server company. Hindenburg conducted a three-month investigation which found “glaring accounting red flags [and] evidence of undisclosed related party transactions.” In particular, Hindenburg highlighted that in 2020 Super Micro paid $17 million to settle accounting violations with the SEC, purportedly dismissed the responsible executives, but then later rehired them in other roles. Hindenburg also noted that two Super Micro suppliers owned by Super Micro’s CEO and his brother “have been paid $983 million in the last 3 years” and they allegedly “serve as fertile ground for dubious accounting.”
Following the Hindenburg report, Super Micro announced it would delay its 10-K and “complete its assessment of the design and operating effectiveness of its internal controls over financial reporting.”
Hindenburg Research also published on iLearningEngines Inc (NASDAQ: AILE — $196 million), an AI-powered education and automation company that went public through a SPAC in April 2024. Hindenburg alleged that “the company’s revenue and expenses are largely fake” and noted that ~96% of the company’s revenue came from a UAE-based entity with undisclosed ties to the company’s CEO.
Kerrisdale Capital published on Lumen Technologies (NYSE: LUMN — $5.34 billion), an American telecommunications company. Kerrisdale claimed the company’s recent ~400% stock rise is tied to AI-driven “marketing spin for a massive construction project that only nets LUMN ~$800 million in cash over ~3 years and does little to solve its fundamental lack of growth and $19 billion in debt.” Kerrisdale wrote that the company’s core is “a dying, overlevered legacy telecom” and concluded, “As deal hype fades, Lumen's legacy telco reality will return to the forefront, reminding investors LUMN is doomed.”
Kerrisdale’s report disclaimer also referenced the recent SEC complaint against Andrew Left and said, in part,
“Prior to this complaint, Kerrisdale’s understanding of securities law was that by not releasing false or misleading information in one’s communications and by disclosing to the public that one is long or short a given security, and therefore biased, that there needed to be no restrictions on one’s trading of the covered security… But, in light of this complaint, and following its logic, perhaps it would help investors to just assume the following: assume we have shorted lots and lots of the stock of the Covered Issuer immediately prior to publication, and assume we will buy lots and lots of the stock of the Covered Issuer to cover our short position immediately subsequent to publication…”
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of BJ's Restaurants (NASDAQ: BJRI — $709 million) was “terminated without cause” after three years and also departed the board.
CFO of OGE Energy (NYSE: OGE — $7.95 billion) “resigned and accepted a position with another company” after three and a half years.
Roberta Neri, board member of Ryanair Holdings (NASDAQ: RYAAY — $19.8 billion), “plans to step down” after seven months “to avoid any appearance of a conflict of interest” because the investment fund she works for “recently announced plans to make an equity investment in a number of Italian airports.”
Chief Accounting Officer of Banc of California (NYSE: BANC — $2.26 billion) resigned after just ten months. The bank has had five different CFOs in the last five years.
Co-CEO of Teleperformance (Paris: TEP — 5.92 billion euros) “left his position in order to pursue new professional opportunities” after one and a half years. The company also “reaffirmed its full support” of Daniel Julien, the company’s 71-year-old founder, Chairman, and CEO, who currently works from Miami Beach, Florida. The Bear Cave previously published on Teleperformance here and here, raised concerns advances in AI would hurt the call center company, and concluded “Teleperformance is on a collision course with irrelevance.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“FTC Takes Action Against Care.com for Deceiving Caregivers About Wages and Availability of Jobs on its Site, Impeding Cancellation Process” (FTC)
“‘Care.com used inflated job numbers and baseless earnings claims to lure caregivers onto its platform, and used deceptive design practices to trap consumers in subscriptions,’ said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.”
“Care.com: Multiple Deaths and Child Abuses, Fraudulent Billing, and a Harvey Weinstein Babysitter” (Edwin Dorsey)
I have launched an investigation into Care.com and what I found is troubling:
Care.com approved babysitters are linked to the deaths of at least five children (two of these babysitters had prior criminal histories, another was operating an unlicensed daycare)
Care.com’s caregiver screening appears to be nonexistent. For example, I was able to sign up and apply to babysitting jobs as Harvey Weinstein.
Care.com bills users for unused services and repeatedly bills customers after they cancel their accounts
I believe Care.com may be creating fake accounts to entice users to pay money so they can upgrade and apply to nonexistent jobs
“I take on fraudsters and scammers for a living. Take it from me: Tim Sheehy is one of them.” (Marc Cohodes Op-Ed)
“His name is Tim Sheehy, and he’s running for the United States Senate… Under Sheehy’s watch, his company falsely certified itself as a ‘socially and economically disadvantaged company’ to try and win contracts. A spokesperson for the company claims this was an error that went undiscovered for years. I find that hard to believe.”
Tweets of the Week
Until Thursday,
The Bear Cave