🐻The Bear Cave #54🐻

New Activist Reports, Comment Letter King, Tweets of the Week, and More

Feb 22, 2021

Welcome to The Bear Cave — your weekly source of short-seller news. If you are new, you can join our email list here. The Bear Cave is also launching a new free newsletter about SEC comment letters. Check it out here: CommentLetterKing.substack.com

New Activist Reports

Wolfpack Research published on EHang Holdings (NASDAQ: EH — $3.01 billion), a Chinese flying car company. Wolfpack wrote,

“We believe EHang is an elaborate stock promotion, built on largely fabricated revenues based on sham sales contracts with a customer who appears to us to be more interested in helping inflate the value of its investment in EH.”

Lei Yang, the engagement partner at Ernst & Young responsible for EHang, was also the audit partner for Luckin Coffee and China Cache International according to PCAOB records. Both those companies have since been delisted.

Bonitas Research published on AgEagle Aerial Systems (NYSE: UAVS — $547 million) and called the drone company a “pump & dump scheme.” The Bear Cave also published a report on AgEagle that highlighted false rumors promoted by the company as well as the involvement of a predatory hedge funds previously charged by the SEC. UAVS stock is down 40% over the last week.

White Diamond Research published on Torchlight Energy Resources (NASDAQ: TRCH — $503 million), a reverse merger shell that is up 1,000% over the last six months.

Snow Cap Research published an update on Bingo Industries (ASX: BIN — AUD$2.04 billion), an Australian waste management company. Snow Cap Research alleged the company has aggressive revenue recognition policies and is breaching environmental guidelines.

Night Market Research published a Seeking Alpha article on FuelCell Energy (NASDAQ: FCEL — $6.05 billion), a biogas fuel cell company that is up over 700% this year.

Quintessential Capital Management published a bullish Seeking Alpha article on Acacia Research (NASDAQ: ACTG — $409 million), and described the company as “next generation genomic sequencing at a bargain price.”

The Comment Letter King Newsletter

The Bear Cave is launching a new free newsletter to highlight SEC comment letters. The SEC sends about 150 comment letters every week to companies about disclosure, accounting, and other issues. The Comment Letter King newsletter highlights the important ones that investors are missing.

For example, the SEC recently sent Palomar Holdings (NASDAQ: PLMR — $2.55 billion), an insurance company, a comment letter over improper non-GAAP presentations and improper loss adjustment disclosures.

Read the Comment Letter King

What to Read

“Problems at AgEagle Aerial Systems (UAVS)” (The Bear Cave Premium)

“AgEagle Aerial Systems (NYSE: UAVS — $826 million) describes itself as a “pioneer in advanced commercial drone technologies” and has promoted the rumor of an Amazon partnership. In reality, the company owns no patents, currently uses an external part-time Chief Technology Officer, and has spent approximately $40,000 on research and development in the last three years.” (Paywalled for premium subscribers)

“The Man Who Abandoned Value” (Institutional Investor)

“But now, with his firm standing atop a 274 percent year, the question is whether these institutional investors will finally embrace Worm Capital’s founder as a savvy investor worthy of their blessing…”

“The Texas Freeze: Why the Power Grid Failed” (WSJ)

“The core problem: Power providers can reap rewards by supplying electricity to Texas customers, but they aren’t required to do it and face no penalties for failing to deliver during a lengthy emergency. A severe storm paralyzed almost every energy source, from power plants to wind turbines, because their owners hadn’t made the investments needed to produce electricity in subfreezing temperatures.”