The Bear Cave #256
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Our 2024 Hedge Fund Analyst Christmas List” and “Problems at Sezzle (SEZL)” and our next special investigation comes out this Thursday, January 16.
New Activist Reports
Independent researcher Lauren Balik published on AppLovin (NASDAQ: APP — $107 billion), a mobile app monetization company. Ms. Balik called the company “a hellhole of related-party transactions on low-tier mobile games in a declining industry.” Ms. Balik found that AppLovin’s network is filled with low-quality apps overflowing with ads, often for other low-quality apps also overflowing with ads. The report highlighted that one of the game developers in AppLovin’s network is an alleged money laundering operation and alleged that AppLovin’s recent growth “is largely due to related party transactions and circular revenue run through a series of Cyprus-based Belarusian-owned games studios passing transactions back-and-forth, using AppLovin as the intermediary to facilitate the transactions.”
AppLovin stock is up ~2,800% over the last two years.
Scorpion Capital published a 342-slide presentation on TransMedics Group (NASDAQ: TMDX — $2.31 billion), an organ transplant company. Scorpion interviewed over 30 ex-employees, surgeons, and leading transplant centers and found that many in the organ transplant community have a disgust towards TransMedics. Scorpion highlighted how TransMedics allegedly denied a life-saving heart transplant over a billing dispute and engaged in unclear or excessive billing. For example, Scorpion alleged TransMedics frequently transports organs on private jets even though most organ donors and recipients live within 250 miles of each other. Scorpion also said the company is facing a customer exodus towards competing organ procurement and transportation companies and concluded,
“In 20 years of shorting, TransMedics is the most extreme and grotesque healthcare fraud we have encountered.”
In a rebuttal post, Ragnarok Research called Scorpion one of the best activists but noted that many TransMedics' flights appear to be for longer 500-mile+ trips. Last week, Unemon Research also published data showing an increase in TransMedics flights beginning in September, suggesting the company’s organ transport volume is increasing, not decreasing.
Jehoshaphat Research published on Premier Inc (NASDAQ: PINC — $2.01 billion), a healthcare group purchasing organization. Jehoshaphat alleged the company has low earnings quality and that removing “one-time or gimmicky elements” would deflate Adjusted EBITDA by about 40%. Jehoshaphat also predicted many of Premier’s customers would leave upon contract expiration and highlighted that the company’s CFO, COO, Chairman, SVP of Supply Chain, and Group VP of Strategic Sourcing have all departed in the last year.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of VEON Ltd (NASDAQ: VEON — $2.31 billion) departed with no notice after almost two years. The Dubai-based telecommunications company has had five board chairs and three CFOs in the last five years.
CFO of Sonoco Products (NYSE: SON — $4.51 billion) “separated” after two and a half years.
CEO of NeoGenomics (NASDAQ: NEO — $1.90 billion) retired after two and a half years and will also depart the board. The Florida-based genetic testing company has had four CEOs and five CFOs in the last five years.
CFO of Azek Company (NYSE: AZEK — $6.41 billion) “is resigning effective January 24 to pursue another opportunity with a private company outside of the building products industry” after three and a half years.
CFO of Arhaus (NASDAQ: ARHS — $1.53 billion) resigned after six years. Last month, the company’s Chief Operating Officer also “separated” after just seven months.
CEO and Chair of Hershey (NYSE: HSY — $32.0 billion) “has informed the Board of her intention to retire from the company” after over nine years once a successor is appointed. The board said it “will consider external and internal candidates, in partnership with a nationally recognized search firm.” In July 2023, The Bear Cave warned that Feastables, a chocolate brand started by YouTuber MrBeast, would take share from Hershey. In March 2024, The Bear Cave published on Hershey again and wrote,
“The Bear Cave is more confident than ever that Feastables is taking share from Hershey. In short, Hershey is a melting giant.”
Chief Product Officer of Bumble (NASDAQ: BMBL — $818 million) departed after eleven months. The company’s CEO, CFO, Chief Legal Officer, and Chief Marketing Officer all departed or disclosed resignations last year.
Data for this section is provided by VerityData from VerityPlatform.com
News of the Week
Unusual Whales Congress Trading Report (Full report)
Market watchdog Unusual Whales published its 2024 Congressional Stock Trading Report and found that the investment portfolios of elected Democrats were up an average of 31% compared to an average gain of 26% for Republicans, both outperforming the S&P 500 return of 24.9%. Unusual Whales wrote that “Dems generally won this year due to their big tech holdings, whereas Republicans held (for the most part) financials and commodities.” Access the full report here and the viral X thread here. Senator Josh Hawley retweeted the report and called for a ban on congressional stock trading.
Andrew Left Addresses Government Fraud Charges (CNBC)
Andrew Ross Sorkin interviewed Andrew Left about the civil and criminal charges he currently faces. The discussion covers the importance of free speech and free market commentary, the process of collaboration when producing short reports, risk management around short reports, and how many of his predictions were ultimately right. Watch the full 14-minute interview here and the non-paywalled six-minute clip here.
The Bear Cave previously wrote an article titled “In Defense of Andrew Left” that highlighted potential deficiencies in the case that the government and media are missing.
Marc Cohodes Sues Parker Petit (Full PDF)
Independent short-seller Marc Cohodes amended his lawsuit against former MiMedx CEO Parker Petit to include allegedly defamatory claims in Mr. Petit’s new book “The Entrepreneur's Dilemma: Should I take my company public?” The lawsuit reiterated allegations that Mr. Petit pressured a Senator to have the FBI investigate Mr. Cohodes and also stated, in part,
“Petit’s misconduct included directing an internal investigation dubbed ‘Project Snow White’ that was designed to uncover wrongdoing committed by employees who raised internal concerns about MiMedx’s business practices, rather than assess the merits of those concerns. ‘Project Snow White’ included installing a secret surveillance system that recorded over 2,750 hours of video of MiMedx employees, along with the nonconsensual recording of employee phone calls.”
WSJ published a good video profile of conservative activist Robby Starbuck who has pressured several large public companies into abandoning DEI policies. Watch it here.
Becker’s Hospital Review published its annual “Shkreli Awards” list for bad behavior in healthcare. Public companies on the list include UnitedHealthcare (UNH), Amgen (AMGN), and Zynex (ZYXI).
Martin Shkreli published an analysis of four potential quantum computing shorts: Rigetti (RGTI), IonQ (IONQ), D-Wave (QBTS), and Quantum Computing Inc (QUBT).
Senate Budget Committee published a report titled “The Harmful Effects of Private Equity On The U.S. Health Care System.” Medical Properties Trust (MPW) was mentioned 23 times in the report.
SEC settled charges against Vince McMahon, the former CEO of WWE, “for signing two settlement agreements on behalf of himself and WWE without disclosing the agreements to WWE’s Board of Directors.”
Tweets of the Week
Until Thursday,
The Bear Cave