The Bear Cave #242
The Bear Cave #242
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Verint Systems (VRNT)” and “Problems at Roblox (RBLX) #4” and our next special investigation comes out Thursday, October 17.
New Activist Reports
Jehoshaphat Research published on Montrose Environmental Group (NYSE: MEG — $772 million), a roll-up of environmental testing, remediation, and services companies. Jehoshaphat alleged the company obscured its organic growth decline by changing its definition of organic growth in its SEC filings five times in the last four years. In addition, Jehoshaphat highlighted that the company’s recent acquisitions appear to be doing poorly, as evidenced by recent goodwill reductions, and noted the company has a heavy debt burden with “no underlying free cash flow to shareholders.” Jehoshaphat also highlighted that insiders “have recently initiated 10b5 plans to sell large amounts of their personal stock holdings in coming months.”
Hunterbrook Media published on CAVA Group (NYSE: CAVA — $14.47 billion), a fast-growing chain of Mediterranean restaurants. Hunterbrook raised food safety issues with CAVA noting that CAVA’s food safety ratings in New York City are well below comparable chains:
Hunterbrook also found that CAVA had the lowest average rating by restaurant chain employees on job site Indeed, with many reviews raising concerns about food safety practices.
Capybara Research published on Laser Photonics (NASDAQ: LASE — $97 million), an Orlando-based “industrial-grade laser solutions” company. Capybara called the company “the fourth iteration of a 25-year-long series of fraudulent ventures” and highlighted that the company recently restated financials and has “identified material weaknesses in internal controls.” Capybara predicted the stock, which is up ~500% this year, is worth nothing.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Jack in the Box (NASDAQ: JACK — $864 million) resigned after a little over one year “to pursue a new position with a company outside the restaurant industry.” The company has had four different CFOs in the last five years.
CEO of Ingevity Corp (NYSE: NGVT — $1.35 billion) departed effective immediately after four years and also left the board. In July, the company replaced both its General Counsel and Chief Human Resources Officer. In March, William J. Slocum resigned from the board after just one and a half years while also continuing to serve on the board of Strategic Education (STRA).
CEO of BrightSphere Investment Group (NYSE: BSIG — $878 million) “will step down” after nearly five years. The company has had five different CEOs and four different CFOs in the last five years. The company is overseen by a five-person board with investor John Paulson as Chairman.
CEO of LPL Financial Holdings (NASDAQ: LPLA — $18.2 billion), Dan Arnold, was “terminated for cause” after nearly eight years “in the course of an investigation conducted by outside counsel that determined that Mr. Arnold made statements to employees that violated the company's Code of Conduct.”
Principal Accounting Officer of Bank of Hawaii (NYSE: BOH — $2.53 billion) “resigned to pursue other opportunities” after two years.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
Andrew Left Motion to Dismiss (Document Link)
“At its core, the SEC alleges that Mr. Left did not honestly hold the opinions he published, and published them to profit from the stock price movements that would follow his publications. The irony of this case is that it is the SEC, not Mr. Left, who alleges misleading half-truths requiring omitted facts to make them not misleading…”
“Departing SEC Enforcement Chief Grewal to Join Milbank Law Firm” (Bloomberg)
“Gurbir Grewal, the US Securities and Exchange Commission’s top enforcement official, will join law firm Milbank after he leaves the regulator later this month, according to people familiar with the matter. Grewal will work out of Milbank’s New York office as a partner in the litigation and arbitration practice.”
“FanDuel and VIP Perks: The Unraveling of an NFL Team Worker’s Betting Scheme” (WSJ)
“Amit Patel, convicted of embezzling $22 million, filed a new suit against FanDuel, shedding light on lavish perks tied to fantasy-sports spending”
“Snap Failed to Warn Users About Sextortion Risks, State Lawsuit Alleges” (WSJ)
“New Mexico claims the social-media company’s product features and enforcement gaps make its platform a haven for child predation and blackmail”
“Financial newsletter accuses Roblox of enabling child abuse” (The Verge)
“A popular financial newsletter is accusing Roblox of allowing large-scale child exploitation and inappropriate content on its platform, drawing on years of media reports. The allegations are detailed in The Bear Cave.”
Tweets of the Week
Until next week,
The Bear Cave