The Bear Cave #253

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

Dec 22, 2024

Welcome to The Bear Cave! Our last premium articles were “Problems at POET Technologies (POET)” and “Our 2024 Hedge Fund Analyst Christmas List” and our next special investigation comes out Thursday, January 2.

New Activist Reports

Spruce Point Capital published on Aegon (NYSE: AEG — $9.88 billion), a Dutch life insurance company. Spruce Point said it “developed significant concerns over the company’s primary distribution arm, World Financial Group for its aggressive sales and recruitment tactics” and compared the operation to “an extremely aggressive multi-level-marketing business.”

Hindenburg Research published on Sezzle (NASDAQ: SEZL — $1.52 billion), a buy now, pay later company. Hindenburg wrote, “Sezzle is borrowing expensive capital to make extremely risky loans through a struggling platform that is rapidly losing customers and merchants” and also highlighted that the company’s CEO “has pledged $542 million in shares as collateral for a margin loan, representing ~30% of the company’s total shares.”

Hunterbrook Media published on JOYY (NASDAQ: YY — $2.20 billion), a Chinese video-based social media platform. Hunterbook highlighted that Google and Apple recently removed the company’s flagship app, Bigo Live, from their app stores following a New York Times investigation alleging child abuse through the platform. Hunterbook also found that the existing streams on Bigo Live, which accounts for ~89% of the JOYY’s revenue, were “largely deserted” with top streamers having just a few dozen concurrent viewers.

Wolfpack Research also published on JOYY and said the New York Times reporting “cements Bigo Live’s reputation as a haven for pedophiles.” Wolfpack added,

“With TikTok set to be banned January 19th of next year – we think that even a revival of Bigo Live by Google and Apple would be short-lived and at that, ill advised.”

In November 2020, Muddy Waters also published on JOYY and argued that the company is 60-90% fraudulent and that most of the revenue realized on the platforms come from company servers, bots, or users round-tripping transactions to themselves.

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of MGP Ingredients (NASDAQ: MGPI — $878 million) “entered into a Transition Agreement” after one year and also departed the board.
CEO of GEO Group (NYSE: GEO — $3.85 billion) “entered into a Separation Agreement and General Release” after he “gave notice of his retirement to pursue other opportunities” after one year. GEO has had three CEOs and three CFOs in the last five years and is audited by Grant Thornton LLP.
CFO of Enovix Corp (NASDAQ: ENVX — $1.83 billion) departed “effective immediately” after one and a half years.
CEO and Chairman of Outfront Media (NYSE: OUT — $3.02 billion) “mutually agreed” to retire and depart the board after about 11 years. The billboard advertising REIT is down ~40% since its March 2014 IPO.
President of Merit Medical Systems (NASDAQ: MMSI — $5.72 billion) “resigned and voluntarily terminated his employment” seven months after being promoted to his role. The December 16 8-K also disclosed: “Prior to [his] resignation, Merit had received notice of allegations regarding his conduct, which Merit's independent directors investigated with the assistance of independent counsel. The allegations were unrelated to Merit's operations or financial performance.” Two days later, the company “outlined the ongoing succession planning process for its Chief Executive Officer,” Fred Lampropoulos, the company’s 74-year-old founder.
Chief Accounting Officer of TaskUs (NASDAQ: TASK — $1.46 billion) resigned “effective February 26, 2025, to pursue other opportunities” after about four years. In August, The Bear Cave published on TaskUs and called the business process outsourcer “a massive AI loser.”

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

What to Read

“Rumble Announces $775 Million Strategic Investment from Tether” (Press release)

“The company will use $250 million of the proceeds to support growth initiatives and the remaining proceeds to fund a self-tender offer for up to 70 million shares of its common stock.”

“CoinDesk Dismisses Top Editors After Story Draws Crypto Executive’s Ire” (WSJ)

“The article showed Justin Sun, the founder of Tron blockchain who purchased a $6.2 million banana, eating the expensive fruit. Not long after the story was published on Nov. 29, Sun’s team complained about the tone of the piece to both CoinDesk’s editors and its owner, crypto exchange Bullish, and demanded it be taken down, employees said.”

“B. Riley Accuses Former Senior Banker of Trade Secrets Theft” (Bloomberg)

“B. Riley Financial accused a former top investment banker of scheming to steal clients and staff for his new employer, Texas Capital Bank. In a lawsuit filed in Dallas last week, B. Riley claimed David Merriman unexpectedly resigned from his position as a senior managing director just before Thanksgiving but had been plotting with Texas Capital even before then.”