đ»The Bear Cave #26đ»
New Activist Reports, GSX under Scrutiny, Concerns about ACEL, Recent Executive Departures, and Tweets of the Week
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New Activist Reports
White Diamond Research published on MicroVision (NASDAQ: MVIS â $244 million) and said the company âHas Risen Over 1000% On Delusional Retail Investor Dreams.â The company was previously criticized by Wolfpack Research.
Hindenburg Research published a Twitter thread on Park National Corporation (NYSE: PRK â $1.38 billion) after the stock popped from being added to the S&P SmallCap 600 index.
Koneko Research published a long thesis on two Chinese companies: Phoenix New Media (NYSE: FENG â $109 million) and Sohu.com (NASDAQ: SOHU â $930 million).
Short Activists Speak Out Against GSX Techedu
Citron Research publicized the website gsxstockfraud.com, which aggregates allegations of fraud against Chinese online education company GSX Techedu (NYSE: GSX â $25.5 billion). The website contains reports from Grizzly Research, Muddy Waters Research, JL Warren Capital, and anonymous whistleblowers.
GSX stock remains up over 900% since its 2019 IPO.
Concerns About Accel Entertainment
Last week I highlighted Accel Entertainment (NYSE: ACEL â $798 million), an indebted rollup of video gaming machines, as a stock to watch going into Q2 earnings. The company reported a $21 million loss on a 99% decline in revenue, yet the stock rose about 25% for the week.
The rise in Accel is very perplexing to me. Revenue was hit particularly hard because of a statewide Illinois ban on video gaming terminals during Q2. This ban was lifted on July 1, the start of Q3, and the company claimed, âJuly gaming revenue [is] near our pre-COVID-19 budget.â
Count me a skeptic. Why should a recession, rising unemployment, restaurant closures, and a contagious airborne virus barely affect indoor cash-only gambling machines? Moreover, if gaming revenue is really returning to normal, the company may want to rethink its recent change in depreciation timetables:
âDuring the first quarter of 2020, we conducted a review of our estimates of depreciable lives for our video gaming terminals and equipment. As a result of this review, we extended the useful lives of our video gaming terminals and equipment from 7 to 10 as the equipment is lasting longer than originally estimated.â
Since going public via a SPAC in 2019, Accel has not reported a GAAP-profitable quarter, Accel disclosed three material weaknesses in its first 10-K, ProPublica alleged improper ties between Accel and the Illinois Gaming Board, and the coronavirus pandemic crushed Accelâs business.
After last weekâs rise, the stock is flat since its SPAC merger.
Resignations and Departures
Notable executive departures disclosed last week include:
CIO of Assured Guaranty (NYSE: AGO â $2.01 billion) after under one year on the job.
CFO of Upwork (NASDAQ: UPWK â $1.71 billion) after three years.
CFO of Inseego (NASDAQ: INSG â $1.17 billion) after three years.
CFO of Calumet Specialty Products (NASDAQ: CLMT â $204 million) after eight months.
CEO of Monro Inc (NASDAQ: MNRO â $1.78 billion) after three years.
Data for this section is provided by InsiderScore.com
Endorsement
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What to Read
âHow Tim Cook Made Apple His Ownâ (WSJ)
âI knew what I needed to do was not to mimic him⊠I would fail miserably at that, and I think this is largely the case for many people who take a baton from someone larger than life. You have to chart your own course. You have to be the best version of yourself.â
âKodak Loan Disclosure and Stock Surge Under SEC Investigationâ (WSJ)
âThe price spike briefly produced a potential windfall for company executives who owned stock-option grants, some of which were granted on July 27, the day before the loan was officially announced.â
âDoris Buffett, Her Familyâs âRetail Philanthropist,â Dies at 92â (NYT)
âMs. Buffett shunned what she called âthe S.O.B.âsâ â symphonies, operas and ballets â as recipients of largesse and instead concentrated on the underprivileged.â
Tweets of the Week
Until next week,
The Bear Cave