The Bear Cave #246

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

Nov 03, 2024

Welcome to The Bear Cave! Our last premium articles were “Problems at Roblox (RBLX) #4” and “Problems at Roblox (RBLX) #5” and our next special investigation will come out one day early on Wednesday, November 6.

On our website, The Bear Cave is now sharing a live list of Roblox abuse cases here, a list of all our media and podcast appearances here, and a list of our investigations on “AI Losers” here.

New Activist Reports

Blue Orca Capital published on Baldwin Insurance Group (NASDAQ: BWIN — $5.33 billion), an independent insurance distribution company. Blue Orca called Baldwin “a chronically unprofitable insurance distributor rollup” and alleged the company “engages in questionable financial engineering to hide costs from its income statement and inflate adj. EBITDA and Operating Cash Flow.” Specifically, Blue Orca claimed Baldwin “utilizes acquisitions to erase operating expenses by shifting what would have been commissions to insurance agents from the income statement into earnout liabilities on the balance sheet.” Blue Orca also highlighted that insiders have sold about $77 million in stock since 2022.

Bonitas Research published on Byrna Technologies (NASDAQ: BYRN — $334 million), a company that makes non-lethal guns like air pistols. Bonitas alleged the company inflated its “authorized dealer” count and found that many of its listed resellers have “no online presence nor independent retail storefronts, including a car wash, a tea shop, a uniform embroidery shop, and a barbershop.” In addition, Bonitas said the company faces new competition at lower price points and provided evidence that the company’s online sales growth is flattening.

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of Grocery Outlet Holding Corp (NASDAQ: GO — $1.47 billion) “agreed to step down as CEO and resign as a member of the Board effective immediately” after two years. The company’s predecessor CEO, Eric J. Lindberg Jr., is returning after a prior 17-year stint leading the company. The company is down ~50% since its June 2019 IPO.
CFO of Green Plains Inc (NASDAQ: GPRE — $772 million) “retired” after two years. The ethanol fuel producer has had five different CFOs in the last ten years and the company’s Chief Accounting Officer also departed after four years in June.
CEO of Stepan Co (NYSE: SCL — $1.64 billion) “is departing the company to pursue other opportunities” after two and a half years and is also leaving the board.
CFO of NerdWallet (NASDAQ: NRDS — $1.07 billion) “notified the company of her decision to resign, effective March 7, 2025, to pursue other opportunities” after four years. Since NerdWallet’s November 2021 IPO, the company’s Chief Marketing Officer, Chief Product Officer, and Chief Business Officer have all also departed.
CEO of Evolv Technologies (NASDAQ: EVLV — $373 million) was “terminated without cause, effective immediately” after nearly five years. Last week, a committee of independent directors “commenced an investigation of the company’s sales practices, including whether certain sales of products and subscriptions to channel partners and end users were subject to extra-contractual terms and conditions that impacted revenue recognition and other metrics, and if so, when senior company personnel became aware of these issues.” The company is down ~75% since its July 2021 SPAC merger.
CFO of Shutterstock (NYSE: SSTK — $1.14 billion) “will be departing to pursue another opportunity” after five years. The company’s Chief Product Officer also departed in August after less than two years and the company has had three different CEOs and five different CFOs in the last ten years.
CFO of Valley National Bancorp (NASDAQ: VLY — $4.80 billion) “will separate” from the company after five and a half years. In June, Valley’s Chief Risk Officer resigned after two years “due to his pursuit of another professional opportunity outside the banking industry.”
Jill Sutton, board member of Pitney Bowes (NYSE: PBI — $1.29 billion), resigned “effective immediately” after nine months on the board “because of disagreements related to the company’s operations, policies and practices in respect of the Board’s corporate governance on critical matters.” Ms. Sutton’s resignation letter noted “extensive Board turmoil and governance concerns” and read, in part,
“Following today, a total of seven independent directors have resigned or retired in just six months, including the other independent director who joined the Board with me.”
“I was recently removed as Board Chair in a 3-to-2 vote and subsequently removed from the Governance Committee, where I was also serving as Chair. My replacement, Milena Alberti, is the third Board Chair in the last six months.”
Ms. Sutton continues to serve on the boards of Potbelly and Miller Industries and was previously Chief Compliance Officer of United Natural Foods.
Chief Product and Technology Officer of Marqeta (NASDAQ: MQ — $2.97 billion) departed “effective immediately” after three and a half years. In April, The Bear Cave published on problems at Marqeta (MQ) and noted the company and its close partner Block (SQ) have seen a large exodus of executives and board members amid recent whistleblower allegations.

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

What to Read

“To Zero and Beyond | Building Muddy Waters Capital with Carson Block” (Podcast Interview)

“In this interview with Max Wiethe, Block explains why starting a fund became necessary to pursue activist short selling in a serious capacity, the pitfalls of capital raising and the different types of investors who are interested in specialized strategies like theirs, and how he is expanding his business with new strategies beyond activist short selling.”

“Latham socked with sanctions in bitter fight involving short seller Muddy Waters” (Reuters)

“U.S. District Judge Dolly Gee of Santa Ana ruled that Latham improperly disclosed to its client, California businessman Steven Sugarman, an expert witness report that incorporated highly confidential information from Muddy Waters. The judge also ruled that Sugarman improperly shared the expert witness report with an employee in an attempt to gin up negative news stories about Muddy Waters.”