Welcome to The Bear Cave! The last premium articles for paid readers were: “Problems at Tenable (TENB)” and “Problems at Guggenheim Strategic Opportunities Fund (GOF).” Our next special investigation is scheduled for Thursday, September 3.
New Activist Reports
Wolfpack Research published on Flotek Industries (NYSE: FTK — $894 million), revealing that the company had not told investors that its $400 million PREPA power contract in Puerto Rico had been cancelled. Days later, the company shared this news in an SEC filing. Wolfpack estimated that this would wipe out over 50% of the company’s backlog. According to Wolfpack, Flotek had been ripped off by a partner whose leader had a criminal record.
Fugazi Research published on Aeva Technologies (NYSE: AEVA — $1.3 billion), calling it “a bleeding startup masquerading as AI.” Fugazi argues Aeva survives on serial partnership announcements and constant dilution, and flags approximately $11.9 million of insider selling into the rally that followed its August AI-data-center announcement. Fugazi writes:
“Aeva has spent nearly a decade announcing lidar partnerships, hemorrhaging capital, and selling stock; the latest hyperscaler optics narrative does not change the math.”
Bristlemoon Research published on Macy’s (NYSE: M — $6 billion) earlier in August, arguing that department stores are “melting ice cubes” that have become “attractive shorts” as their valuations have gotten more expensive. Investors are “over-extrapolating” Macy’s recent comp improvement, Bristlemoon argues, writing that the company may face a new margin headwind driven by transportation inflation.
Notable Recent Resignations or Apparent Departures
Notable executive departures disclosed in the past week include:
Chief Executive Officer of L3Harris Technologies (NYSE: LHX — $49.7 billion) departed with immediate effect after the board discovered violations of the company’s Code of Conduct. He had previously been axed as CEO-elect of Lockheed Martin in 2012 over a relationship with a subordinate colleague. The Wall Street Journal wrote this week that women at the company had shared concerns about the CEO’s behavior for “years.”
Chief Financial Officer and Chief Accounting Officer of Ameresco (NYSE: AMRC — $1.3 billion) is stepping down in a month, and the General Counsel resigned “effective immediately.” The exits follow an undisclosed VP of Finance departure in May and a 2022 activist short report questioning the company’s accounting.
The Chief Operating Officer of Viking Therapeutics (NASDAQ: VKTX — $3.95 billion) disappeared from the company’s website with no further disclosure. The VP of Clinical Operations similarly vanished from the site in February.
Chief Financial Officer of Boston Beer (NYSE: SAM — $1.9 billion) informed the company on August 17 that he was stepping down and will leave September 30. The board launched a formal search for a permanent replacement while naming an interim CFO.
Chief Operating Officer of Merit Medical Systems (Nasdaq: MMSI — $5.4 billion) gave notice on August 18 of his resignation “for good reason,” effective March 2027, days after the company eliminated his position in a reorganization.
Unannounced departures courtesy of Canary Data.
News of the Week
The Entrepreneur Behind The Bear Cave Newsletter (Raging Capital Ventures)
Edwin Dorsey: In my opinion, DraftKings (NASDAQ: DKNG) is in a lot of long-term trouble because of prediction markets, which have several structural advantages. Many admit users at age 18, can reach customers beyond traditional sportsbook jurisdictions, and are distributed through third-party interfaces such as Robinhood. They also have a superior model often with better prices, no betting limits, and no desire to ban winning bettors.
In addition, prediction markets have billions in VC dollars to spend on acquiring new customers, and some operators, such as Novig, are targeting DraftKings’ core base of recreational bettors.
The competitive dynamic between prediction markets and DraftKings reminds me of Netflix versus Blockbuster in the mid-2000s.
…I imagine a future where an “expert” is someone who consistently outperforms the prediction markets, rather than someone with a certain educational pedigree who sounds smart on TV. I predict that millions of Americans will buy hurricane, flood, or wildfire insurance on prediction markets specialized to their Sub-ZIP codes with resolution based on hyperlocal weather data. I hope valuable data on future markets like “Which degree will be highest paying in 2035?” or “Which cities will have >4% GDP growth?” will help people make better decisions about what to study or where to live.
I’m an active and consistently profitable trader on Kalshi and see tremendous opportunity to build out a successful trading operation, a new prediction market focused newsletter, and prediction market research tools on my platform HighgroundResearch.com.”
Check out Edwin’s prediction market analytics site here.
Tweets of the Week
Until next week,
The Bear Cave