The Bear Cave #291
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Gogo (GOGO)” and “Problems in Chinatown (Part 3)” and our next special investigation comes out this Thursday, September 18.
New Activist Reports
Wolfpack Research published on Faraday Future (NASDAQ: FFAI — $253 million), an early-stage electric car company. Wolfpack alleged the company “based its latest pump on fake orders, a rebadged Chinese minivan, and a tsunami of lies meant to induce retail to buy right before a massive flood of new shares are authorized.” Wolfpack highlighted the company’s “track record of abysmal failure ($4.4b spent with 17 cars delivered)” and alleged its claims of 10,000+ preorders for its minivan lack economic substance. For example, Wolfpack highlighted that Faraday disclosed 1,000 preorders from a microcap company that has “less than $10,000 in cash” and that other orders are from “paid co-creation partners.”
In response to Wolfpack’s report, Faraday Future said it “will promptly initiate the necessary internal procedures to file a lawsuit against Wolfpack Research and make a formal submission to the U.S. Securities and Exchange Commission (SEC).” The company also referenced its “Anti-Illegal Short-Selling Counterattack” and wrote, in part,
“The company has recently observed unusual volatility in its stock price and the company intends to investigate whether malicious actors are engaged in improper manipulation of the stock including through naked short selling or other stock manipulation schemes.”
NINGI Research published on Grindr (NYSE: GRND — $3.09 billion), a dating app catering to gay communities. NINGI alleged that users called the app “an ad-saturated, and glitch-ridden toxic wasteland” and alleged the company’s Average Paying Users metric is inflated because “the company quietly changed its definition to count daily purchases, not unique users.”
Pelican Way Research published on SuperX AI Technology (NASDAQ: SUPX — $1.59 billion), a Hong Kong-based interior design company that pivoted to become an AI compute system and GPU company. Pelican Way called the company “a classic China Hustle” and said its recent deals are “undisclosed related-party transactions designed to siphon money out of the company.” Last week, J Capital Research also published on the company and said “there is no evidence that SUPX actually is building AI infrastructure or has the expertise or assets to do so.”
Snow Cap Research published an update on FTAI Aviation (NASDAQ: FTAI — $17.6 billion), an aerospace products company. Snow Cap alleged that much of the company’s recent cash inflows come from one-time gains such as selling engines or a one-off insurance payment.
Fugazi Research published on Sound Group (NASDAQ: SOGP — $103 million), a social audio production company. Fugazi said the company “ticks every box in China’s ADR deception blueprint” and highlighted that the company claimed it lost a roughly $13 million cash deposit at a bank, a sign that the cash may have been faked on the company’s financial statements. The company’s auditor later “resigned in December 2024 after disputes on cash confirmations.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of PACS Group (NYSE: PACS — $1.51 billion) “entered into a separation agreement” after a little over one and a half years. The resignation follows an investigation in which the board “became aware of allegations that [he] had accepted a series of high-value items from individuals associated with a group of related entities with which the company does business.” The company had also been investigating allegations of billing misconduct first raised in a November 2024 Hindenburg Research report. The company’s President also resigned last month and the company has delayed filing its 10-Qs and 10-K this year. The company is down ~60% since its April 2024 IPO.
CFO of Dell Technologies (NYSE: DELL — $84.1 billion) resigned after two years. Last month, the company’s Chief Accounting Officer stepped down “for personal reasons” after five years. In January, Dell was on the B7A FOIA exemption list, indicating a potential undisclosed SEC investigation. In June, Disclosure Insight wrote about potential accounting deficiencies around Dell’s accounting for credits from suppliers and highlighted that in 2010 Dell paid $100 million to settle allegations it “used fraudulent accounting to make it falsely appear that the company was consistently meeting Wall Street earnings targets and reducing its operating expenses.”
CFO of CorVel (NASDAQ: CRVL — $4.39 billion) “will be transitioning out of his role and pursuing new opportunities” after seven years. In November 2024, the Chairman and founder of CorVel, V. Gordon Clemons, retired “effective immediately” after nearly 34 years. The Irvine, CA-based healthcare company is up ~25,000% since its 1991 IPO and is audited by Haskell & White LLP.
Data for this section is provided by VerityData from VerityPlatform.com
Paid Stock Promotions
Notable recent paid stock promotion campaigns include:
On September 9, DiaMedica Therapeutics (NASDAQ: DMAC — $366 million) “paid up to eleven thousand dollars for placement and promotion” of sponsored content on the Barchart website.
In September, US Gold Corp (NASDAQ: USAU — $222 million) paid a “total sum of $1,805,000” to Huge Alerts for a paid stock promotion campaign.
In September, Atlas Lithium (NASDAQ: ATLX — $90 million) also paid a “total sum of $1,835,000” to Huge Alerts for a paid stock promotion campaign.
In August, Solowin Holdings (NASDAQ: SWIN — $487 million) paid a “total sum of $300,000” to Huge Alerts for a paid stock promotion campaign.
Paid stock promotion campaign tracking is powered by StockPromotionTracker.com
News of the Week
U.S.-Listed China Microcaps Soar On Potential Manipulation
Several small U.S.-listed Chinese companies soared this week in potential short squeezes and extreme manipulation campaigns. For example, Mint Incorporation Limited (NASDAQ: MIMI) rose 42% this week on no news, Uni-Fuels Holdings (NASDAQ: UFG) rose 62% on no news, and Epsium Enterprise Limited (NASDAQ: EPSM) rose roughly 400% intraday on Tuesday on no news. Epsium company later said the rise “is not related to any changes in its underlying business fundamentals, financial performance, or any undisclosed material developments.”
The most severe move was in QMMM Holdings (NASDAQ: QMMM), which The Bear Cave previously said “is being manipulated by overseas stock manipulation groups and is at risk of a near-term, severe stock collapse.” Instead, the stock rose ~870% this week, driven in part by its announcement of a “crypto treasury strategy.” The Bear Cave apologizes for misjudging the situation and will take time to slow down, reflect, and understand what went so wrong.
“Co-CEO of Chinese publicly traded technology company and financial advisor indicted for over $100M securities fraud scheme” (DOJ)
“‘The defendants targeted American retail investors through a predatory pump and dump scheme to take advantage of the artificial inflation of the price of OST shares,’ said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. Today’s charges show the Criminal Division’s focus on aggressively protecting Americans from foreign actors seeking to exploit U.S. markets. Through the hard work of our prosecutors and law enforcement partners, we will continue to act quickly to seize the proceeds of these crimes and mitigate losses for victims.”
“Scandals. Accounting Fraud. It’s All Showing Up on the Corporate Hotline.” (WSJ)
“Complaints to tiplines have felled other executives, too. Alleged mistreatment of women helped topple a Credit Suisse executive board member in 2021 after an anonymous hotline tip. And Teflon-maker Chemours last year launched an accounting probe after an anonymous tip on its ethics hotline. The company later determined that top executives had shifted cash flows at year-end to hit targets that determined their annual stock and bonus awards. Its CEO and chief financial officer subsequently resigned.”
Tweets of the Week
Until Thursday,
The Bear Cave
Just wanted to call out your excellent work on RICK last year. You were literally on the scene (from across the street…to be clear) when the authorities raided RICKs NYC for their tax records. Now we learned why. Seems like a tough road ahead for management after this fraud and bribery indictment. The stock took a real header today even after eroding for over a year on bad fundamentals. Well done.