The Bear Cave #240
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Five9 (FIVN)” and “Problems at Verint Systems (VRNT)” and our next special investigation comes out on Thursday, October 3.
New Activist Reports
Culper Research published on Kaspi (NASDAQ: KSPI — $19.0 billion), a large fintech company based in Kazakhstan. Culper alleged the company misled investors by claiming it “has zero exposure to Russia” and wrote,
“We believe that not only do Kaspi’s relationships with Russian partners permeate every segment of its business, but that in the wake of Russia’s February 2022 invasion of Ukraine and into 2024, Russia has contributed materially to Kaspi’s reported growth. Our research further unmasks Kaspi’s history of shadowy dealmaking, which raises not only related party and self-dealing concerns, but also exposes the company’s vast, longstanding ties to bad actors including sanctioned oligarchs and Russian mobsters.”
Culper highlighted positive online reviews purportedly from Russian clients using Kaspi and noted that Kaspi disclosed non-resident deposits are up ~300% since January 2022. Culper also found that an online marketplace operated by Kaspi continues to allow Russian sellers on the platform and, despite these issues, Kaspi trades at a much higher valuation than peer companies.
Following the report, Kaspi stock fell ~20% and the company published a brief statement saying, in part:
“Being the first company from Kazakhstan to successfully list on Nasdaq has obviously raised our profile amongst short sellers. For those investors who have known us over the years, our reputation speaks for itself.”
Timothy Liu of Meditation Capital, a Kaspi shareholder, also pushed back on Culper’s claims. Mr. Liu published a Twitter thread calling the Culper report “ridiculous” and claimed that Kaspi as well as many other banks in Kazakhstan were taking deposits from Russian emigrants and noted that some of Culper’s media sources identified other banks with less stringent compliance than Kaspi. In addition, Mr. Liu noted that Kaspi did not appear to violate any sanctions and alleged Culper made a host of other errors from mistranslating names to selective disclosure.
Iceberg Research published on New Found Gold (NYSE: NFGC — $517 million), a Canadian gold exploration company. Iceberg alleged the company was inflating the quality of its gold deposits and called the company’s CEO “a career stock promoter with a disastrous track record.”
Spruce Point Capital published on Intuit (NASDAQ: INTU — $181 billion), a large financial software company. Spruce Point alleged Intuit engaged in “consumer-unfriendly behavior,” overpaid for its acquisitions of Mailchimp and Credit Karma, and supposedly embellished profitability with “ever-changing segment reporting practices.” Spruce Point concluded Intuit has “40% [to] 80% potential long-term downside.”
Wolfpack Research published on Swvl Holdings (NASDAQ: SWVL — $21.1 million), a Middle Eastern transportation company. Wolfpack noted that the company’s website is non-functional, said its primary operations are “grinding to a halt,” and claimed the company is “on the verge of bankruptcy” with just $3 million in cash against lifetime losses of over $300 million. Shares fell ~40% this week and are down ~98% since the company’s March 2022 SPAC merger.
J Capital Research published on Innodata (NASDAQ: INOD — $404 million), a data management company. J Capital alleged that “[the company’s] U.S. financials don’t match Asian subsidiary filings” and claimed the company was inflating both revenues and costs. J Capital also highlighted that the company has had six different CFOs since 2017 and is audited by BDO India LLP.
In February, Wolfpack Research also published on Innodata and called the company “consistently unprofitable due to the declining relevance of its legacy business of manual data annotation via offshore labor.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Navitas Semiconductor (NASDAQ: NVTS — $409 million) resigned after seven months “for personal reasons.” The company has had three different CFOs in the last three years and is audited by Moss Adams LLP. The company is down ~80% since its October 2021 SPAC merger.
CFO of American International Group (NYSE: AIG — $47.5 billion) departed after one and a half years. The company has had six different CFOs and three different CEOs over the last ten years.
CFO of John Wiley & Sons (NYSE: WLY — $2.53 billion) is departing “without cause” after nearly three years. In October 2023, the company’s CEO was also terminated “without cause” after nearly six years.
CEO of BlackRock TCP Capital Corp (NASDAQ: TCPC — $712 million) “entered into an agreement regarding the terms and timing of his separation from BlackRock” after three years and also departed the board “to pursue other business opportunities outside of BlackRock.” In May 2024, the firm’s Chief Operating Officer “verbally informed BlackRock TCP Capital Corp of his intention to resign” after just six weeks. In April, the company’s Chief Compliance Officer also stepped down after 17 years “due to his expanding roles in different parts of the BlackRock organization.”
CEO of Nike (NYSE: NKE — $130 billion) “retired” after six years and is also departing the board. Shares rose ~7% following the announcement.
CFO of Healthcare Realty Trust (NYSE: HR — $6.51 billion) was “terminated other than for cause” after eight and a half years. The medical outpatient REIT is audited by BDO USA.
Jay Varma, Chief Medical Officer and board member of SIGA Technologies (NASDAQ: SIGA — $601 million), “began an indefinite leave of absence” after two years. Mr. Varma was formerly New York City’s “COVID Czar” and was caught on hidden camera admitting to partying in secret gatherings during the pandemic.
Seven of the eight board members of 23andMe (NASDAQ: ME — $173 million) resigned “effective immediately.” Their resignation letter raised concerns that the company’s CEO and only remaining board member, Anne Wojcicki, hadn’t shown progress in her attempt to take 23andMe private. In August, Ms. Wojcicki offered to buy 23andMe at forty cents a share, 96% lower than its June 2021 SPAC merger.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Russia’s Richest Woman Says Husband Sparked Deadly Clash” (Bloomberg)
“Russia’s richest woman, Tatyana Bakalchuk, accused her estranged husband of attempting to seize the Moscow headquarters of the country’s biggest e-commerce platform, which she owns.”
“SEC Charges Former Chairman and CEO of Tech Co. Kubient With Fraud and Lying to Auditors” (SEC)
“Shortly before Kubient’s initial public offering, Roberts fabricated reports that Kubient had successfully tested a software program that detects real-time fraud during digital advertising auctions, allowing Kubient to recognize $1.3 million in revenue, which was nearly all of its revenue leading up to the offering…
‘As alleged, this was a deliberate scheme by a public company CEO to concoct phony revenue, perpetuated by the failure of the company’s CFO and independent audit committee chair to act appropriately when they learned of concerns about that revenue,’ said Jason J. Burt, Director of the SEC’s Denver Regional Office.”
Tweets of the Week
Until next week,
The Bear Cave