The Bear Cave #281
New Activist Report, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “More Problems at KinderCare (KLC)” and “Problems at 130 Long-Term Underperformers” and our next special investigation comes out Thursday, July 17.
New Activist Report
HitHawk Research published on Eutelsat Communications (Paris: ETL — EUR1.63 billion), a European satellite company. HitHawk alleged that “Eutelsat lags far behind competitors like Starlink and Kuiper in terms of technology, scale, and innovation” and raised concerns about the company’s 3 billion euros of net debt. HitHawk said the short case for Eutelsat is appealing today, given the stock’s recent rally “driven by France’s capital injection and new CEO expectations” and issued a price target implying ~70% downside.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Krispy Kreme (NASDAQ: DNUT — $567 million) resigned “to pursue another opportunity” after two and a half years. The company’s Chief Growth Officer also departed this week.
Chief Accounting Officer of Children's Place (NASDAQ: PLCE — $108 million) “has left the company” with immediate effect after just nine months. The company has had five CFOs in the last five years. Last year, the clothing retailer switched auditors from Ernst & Young to BDO USA.
Mr. Alexious Kuen Long Lee, former CFO and board member of Lotus Technology (NASDAQ: LOT — $1.53 billion), departed the board with immediate effect after nearly four years. In April, another board member resigned after just three months and in December 2024 a board member resigned after nearly two years “for personal reasons.” The Chinese luxury electric vehicle company is down ~90% since its February 2024 SPAC merger. The company received several pointed comment letters from the SEC including an October 2023 comment letter concerning “specific disclosures relating to [how] rules and regulations in China can change quickly with little advance notice,” a December 2023 comment letter to “remove any implication that investors should not rely on the information presented,” and a May 2024 comment letter to “address areas that appear to need updating or that present inconsistencies.”
Data for this section is provided by VerityData from VerityPlatform.com
News of the Week
AI in Advertising
The Wall Street Journal published two articles highlighting how AI is disrupting the advertising industry: “Ad Agencies’ Low Growth Will Drag On as They Adjust to Era of AI, Barclays Says” and “How the Owner of Hidden Valley Ranch Learned to Love AI.” In short, ad agencies like Interpublic Group (NYSE: IPG — $9.38 billion), Omnicom Group (NYSE: OMC — $14.6 billion), and WPP plc (NYSE: WPP — $7.72 billion) may suffer as more companies use Generative AI for their advertising campaigns.
ChatGPT insight: “Generative-AI platforms from big tech vendors can crank out copy, imagery, video and even media-plans in seconds, undermining agencies’ traditional ‘hours-billed’ creative revenue. Large, federated holding companies are reorganizing but still carry heavy legacy structures, making it harder to redeploy talent and capital toward AI tools quickly.” (Read full ChatGPT response here)
“Is Chinese President Xi Jinping on his way out?” (New York Post)
“There are increasing signs that Chinese President Xi Jinping is being edged out of the leadership position he has held since 2013, according to reports.”
Tweets of the Week
ChatGPT insight: “Angi (NASDAQ: ANGI — $803 million) faces the risk of AI-empowered alternatives that bypass its marketplace, undercutting Angi’s role if users find contractors through smarter search or assistants. LegalZoom (NASDAQ: LZ — $1.65 billion) could be hollowed out by generative AI that lets people generate legal documents or advice for free, eroding demand for its paid services unless it adds more value. Gartner (NYSE: IT — $30.8 billion), similarly, stands to lose if AI democratizes research insights, allowing companies to get credible tech recommendations without the hefty Gartner price tag. In essence, AI can hurt these businesses by commoditizing the information and matching services they sell – turning what used to be proprietary or labor-intensive processes into something more automated and widely accessible.” (Read full ChatGPT research response)
Until next week,
The Bear Cave