🐻The Bear Cave #30🐻
New Activist Reports, GSX in Hot Water, 30 Best Twitter Accounts to Follow, and Tweets of the Week
Welcome to The Bear Cave — your weekly source of short-seller news. Feedback and sharing are always appreciated. If you are new, you can join our email list here.
New Activist Reports
Courage & Conviction Investing posted an interesting Seeking Alpha article on Carparts.com (NASDAQ: PRTS — $497 million). The report highlights insider selling, a secondary offering, and the company’s recent name change from U.S. Auto Parts Network to Carparts.com. PRTS stock is up almost 600% in the last twelve months.
Muddy Waters Research tweeted it was short Inovio Pharmaceuticals (NASDAQ: INO — $1.60 billion), citing recent litigation. Citron Research previously called the company “The COVID-19 Version of Theranos” over its questionable claims around coronavirus vaccine development.
GSX in Hot Water?
GSX Techedu (NYSE: GSX — $19.1 billion), a Chinese online education company, recently disclosed an SEC investigation. In a press release for its Q2 earnings the company said, “the SEC’s Division of Enforcement contacted the Company, requesting it to produce certain financial and operating records dating from January 1, 2017.”
The company also said,
“Prior to the SEC contact, the Audit Committee of the Board of Directors of the Company engaged third party professional advisers to conduct an internal independent review into these reports’ key allegations. As work remains ongoing, we cannot predict the timing, outcome, or consequence of that review.”
In addition, in June 2020, the SEC Division of Corporation Finance sent GSX Techedu a comment letter requesting additional disclosure around the company’s revenue growth.
The lawyer listed as GSX’s U.S. counsel in its comment letter response is Julie Gao of Skadden, Arps, Slate, Meagher & Flom LLP. Ms. Gao also did work for iQIYI (NASDAQ: IQ — $16.15 billion), a Chinese streaming company that recently disclosed an SEC investigation.
In addition, Ms. Gao did work for Bilibili (NASDAQ: BILI — $16.3 billion), a Chinese video game developer. The CFO of Bilibili, Xin Fan, is also chairman of the audit committee for GSX.
GSX’s auditor is Deloitte. According to the PCAOB Auditor Search database, the Engagement Partner from Deloitte responsible for GSX is Li Li Shan. According to PCAOB records, Ms. Shan has served as the engagement partner for two other public Chinese education companies. The first, RYB Education (NYSE: RYB — $60 million) is down 90% since its 2017 IPO. The second, Puxin Ltd (NYSE: NEW — $890 million) is down 50% since its 2018 IPO.
GSX has been accused of inflating revenue and profits by numerous short-sellers. You can find their public reports at gsxstockfraud.com
30 Best Anonymous Financial Twitter Accounts to Follow
In honor of our thirtieth issue, below are the 30 best anonymous financial Twitter accounts to follow. I prioritized accounts with small followings and those that share actionable ideas.
@WallStCynic — A random guy from Wisconsin tweeting about stocks
@CrowdedTradeCap — Generalized and company-specific research
@DonutShorts — Highlights the next stocks going to zero
@Keubiko — Insightful tweets long and short
@EnergyCredit1 — Smart tweets on energy stocks
@unemon1 — Stock rumors and trade ideas
@HiddenPivots — Best account for chart analysis
@BarbarianCap — Smart, anonymous analyst
@NeckarValue — Shares old interviews and articles on great investors
@10kdiver — Twitter threads on 10-Ks
@borrowed_ideas — Equity analyst with deep-dive threads
@WillauerProsky — Tweets on everything related to activist shorts
@greatquarter — Shares interesting, off the beaten path ideas
@TESLAcharts — Exposing Tesla one chart at a time
@JerryCap — Company press releases and news
@MoatsLikeKodak — General market tweets and some microcap ideas
@NeckarValue — Tweets old finance books/articles/stories
@OpenOutcrier — Breaking market news
@schaudenfraud — A cartoon character tweeting about stocks
@marginalidea — Smart short-seller
@CapitolistPig — Smart, company-specific gossip
@LSValue — Long-short investor with interesting ideas
@LibertyRPF — Smart generalist
@QuisitiveInvest — Investment research, economics, and finance
@valueterminal — Investing and business-related stuff
@TSOH_Investing — Interesting takes on companies
@FatTailCapital — Investor and jokester
@mr_skilling — A parody Jeff Skilling account
@NickatFP — Funny account, landlord jokes
@BagholderQuotes — For the days you need a self-esteem boost
You can also follow me on Twitter @StockJabber
What to Read
“Wirecard and me: Dan McCrum on exposing a criminal enterprise” (FT)
“Intimidation, surveillance and conspiracy theories: inside the FT’s five-year investigation of a billion-dollar fraud”
“Netflix’s Reed Hastings Deems Remote Work ‘a Pure Negative’” (WSJ)
“If I had to guess, the five-day workweek will become four days in the office while one day is virtual from home. I’d bet that’s where a lot of companies end up.”
“Auditors Struggle to Access Data, Count Inventory During Remote Work” (WSJ)
“Typically auditors meet with personnel of public and private companies in their offices, visit factories and warehouses, and rely on personal interactions and observations to make assessments. During the coronavirus pandemic, they are left with phone and video calls.”
Tweets of the Week
Until next week,
The Bear Cave