🐻The Bear Cave #29🐻
New Activist Reports, Red Flags at STAA, Recent Resignations, and Tweets of the Week
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New Activist Reports
Grizzly Research published on LexinFintech Holdings Ltd. (NASDAQ: LX — $1.41 billion) and called the company, “a Leverage Time Bomb About to Explode.” Grizzly Research highlighted new regulation, undisclosed related-party transactions, and “unfathomably low delinquency rates” as potential problems at the financial services platform. Shares were down 13% last week.
White Diamond Research published on semiconductor company Atomera (NASDAQ: ATOM — $217 million).
Culper Research published a response to the CEO of Blink Charging (NASDAQ: BLNK — $231 million), who criticized Culper’s original short report on the company.
Citron Research went long Fluidigm (NASDAQ: FLDM — $603 million), which recently received an Emergency Authorization for a salvia based COVID test. Citron wrote,
“FLDM is not another fly by night COVID-19 stock with untested promotional management. Instead it has created a product that is most likely to become a standard in mass testing with a world class management team that has a history of execution.”
Red Flags at STAAR Surgical
STAAR Surgical (NASDAQ: STAA — $2.09 billion), a maker of implantable eye lenses, was criticized in a short report earlier this month by J Capital Research. The report alleged the company may be faking revenue and profits. I did some digging and found additional red flags.
STAAR’s largest customer is Shanghai Lansheng, a Chinese distributor that currently accounts for roughly 53% of STAAR’s revenue, up from 15% in 2015. Shanghai Lansheng has accounted for the majority of STAAR’s growth, yet the company is suspiciously quiet about its largest customer. In fact, for the last three years, STAAR has consistently misspelled the name of its largest customer as “Shanghai Langsheng” in SEC filings. For more info on oddities around Shanghai Lansheng read the excellent J Capital report.
STAAR has also received multiple comment letters from the SEC over the last few years. The SEC has sent letters concerning the company’s disclosure of a Warning Letter from the FDA, its disclosures on the company’s Swiss defined benefit plan, its lack of loss contingency accrual for litigation, and its sales to a distributor in Syria.
In addition, STAAR recently amended its revenue recognition. In its 10-K for fiscal 2017 STAAR disclosed,
“The Company recognizes revenue when realized or realizable and earned, which is when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the sale price is fixed or determinable; and collectability is reasonably assured.”
And in the 10-K for fiscal 2018 STAAR disclosed,
“The Company recognizes revenue when its contractual performance obligations with customers are satisfied.”
STAAR’s SEC correspondence and changes in revenue recognition have been managed by four different CFOs in the last five years.
Resignations and Departures
Notable executive departures disclosed this month include:
CEO of Sanmina (NASDAQ: SANM — $1.94 billion) after less than one year on the job.
Chairman of Affiliated Managers Group (NYSE: AMG — $3.29 billion) after three months.
CFO of Calumet Specialty Products (NASDAQ: CLMT — $204 million) after eight months.
CFO of MEDNAX (NYSE: MD — $1.65 billion) after less than two years.
CFO of General Motors (NYSE: GM — $43.0 billion) after two years.
CFO of Upwork (NASDAQ: UPWK — $1.81 billion) after three years.
CFO of Inseego (NASDAQ: INSG — $1.07 billion) after three years.
CEO of Monro Inc (NASDAQ: MNRO — $1.55 billion) after three years.
Data for this section is provided by InsiderScore.com
What to Read
“The Wildest Insurance Fraud Scheme Texas Has Ever Seen” (Texas Monthly)
“I thought that I would never be arrested, or that I could buy my way out of it. That’s how things work in the rest of the world.”
“Berkshire Hathaway Buys Stakes in Five Japanese Trading Companies” (WSJ)
““I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” said Mr. Buffett in a statement. He said the five companies “have many joint ventures throughout the world and are likely to have more of these partnerships.””
“Navy SEAL Trader at Jefferies Helped Expose Hedge Fund Scandal” (Bloomberg)
“The 43-year-old is the unidentified executive outlined in court filings last week, whose taped conversation led to the swift downfall of Dan Kamensky’s Marble Ridge Capital”
Tweets of the Week
Until next week,
The Bear Cave