🐻The Bear Cave #56🐻

New Activist Reports, What to Read, and Tweets fo the Week

Mar 08, 2021

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New Activist Reports

Muddy Waters Research published on XL Fleet (NYSE: XL — $1.47 billion), a vehicle electrification company that went public through a SPAC in November. Muddy Waters alleged the company is “duping investors into throwing money at this company through a collection of exaggerations, half-truths, and mistruths.” Specifically, XL Fleet would allegedly inflate its sales pipeline and promise customers unrealistic savings from electrification. Citron Research previously tweeted bullishly about the company.

Hindenburg Research published on Ormat Technologies (NYSE: ORA — $4.49 billion), a geothermal power plant company that is allegedly engaged in “widespread and systematic acts of international corruption.” Hindenburg alleged that the company bribed its way into contacts in developing countries and highlighted that “Ormat’s General Counsel & Chief Compliance Officer, along with an Ormat director, are under pre-indictment in Israel.”

Mariner Research published on Exro Technologies (TSXV: EXRO — CAD$502 million), a promotional Canadian company with questionable management. Mariner Research alleged that “partnerships” highlighted in Exro press releases are with companies based out of PO Boxes and with sub-$1 million revenue. Exro, which started in the windmill business, has recently pivoted to electric batteries.

White Diamond published on GreenPower Motor (NASDAQ: GP — $464 million), a Canadian electric bus company. White Diamond highlighted that the company is losing government subsidies and financing the purchases of its largest customer. Mariner Research previously published on GreenPower as well.

Night Market Research published a Seeking Alpha article on Veritone (NASDAQ: VERI — $1.04 billion), an advertising agency masquerading as an AI company. Night Market Research wrote,

“Veritone generates the majority of its revenue in advertising, a mature, low-growth business, yet is valued as if it were a pure-play developer of artificial intelligence technology.”

The PETITION newsletter published on Jo-Ann Stores a U.S. retailer of do-it-yourself arts and crafts that is going through the IPO process. PETITION highlighted that the pandemic has given the company a one-time benefit as people fill their free time with arts and crafts, but as the pandemic subsides the company may have difficulty meeting its debt load:

“A deeper dive through the filing gets our alarm bells ringing. JoAnn is a highly levered speciality retailer with $929.7mm of debt on balance sheet. For the 39 weeks ended 10/31/21, the company reports COVID-Adjusted EBITDA of $220mm. Leverage is ~4.2x, a significant improvement from the prior 39 weeks period of ~12.0x leverage. However, on a more normalized FY 2020 Adj. EBITDA of $159.6mm, JoAnn’s leverage is ~5.8x. If JoAnn can’t sustain its COVID-inflated financial outperformance once its customers put down their sewing kits and head outdoors, the company’s run-rate leverage will be much higher than what’s being marketed in the S-1.”

What to Read

“Comment Letter King #3 (SPACs, ELY, WPP, UFPI, and More)” (Comment Letter King)

“UFP Industries (NASDAQ: UFPI — $3.82 billion), a U.S. lumber company, received an SEC comment letter that questioned its method for calculating gross sales and its non-GAAP adjustments “beyond those which are typical.” The letter read…”

“Problems at Vuzix (VUZI)” (The Bear Cave)

“Vuzix (NASDAQ: VUZI), an augmented reality glasses company, is up around 1,200% over the last twelve months on retail investor enthusiasm and a recent investment from ARK Invest. Vuzix’s history includes consistent unprofitability, serial dilution, a short-seller lawsuit, a 75-for-1 reverse split, 591 press releases, an OTC to NASDAQ uplisting, and more bark than bite…”

“Potential Liquidity Issues at ARK Invest” (The Bear Cave)