🐻The Bear Cave #62🐻
New Activist Reports, What to Read, and Tweets of the Week
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New Activist Reports
Scorpion Capital published on QuantumScape (NYSE: QS — $13.3 billion), an innovative lithium battery company. Scorpion called the company “A Pump and Dump SPAC Scam by Silicon Valley Celebrities, That Makes Theranos Look Like Amateurs.” The 188-slide report included conversations with 9 former QuantumScape employees, including one who said:
“I've worked for many CEO’s, and I'm more in the camp of being honest with your investors. That's not the QuantumScape way.”
QuantumScape issued a Twitter thread response:
New activist Joker Research published on NETGEAR (NASDAQ: NTGR — $1.19 billion), a home WiFi hardware company. Joker Research scraped data from BestBuy and Amazon to show deteriorating sales and wrote that NETGEAR’s “vanishing competitive position is no laughing matter.” Joker Research also highlighted large insider selling and unreasonably high analyst expectations. For updates follow @JokerResearch on Twitter.
Iceberg Research published on Diginex Ltd (NASDAQ: EQOS — $284 million), a Hong Kong-based crypto exchange that went public via SPAC in September. Iceberg Research highlighted insider selling, dubious transactions, and past litigation related to asset transfers. The company generated about $23,100 in revenue for the first half of 2021.
Koneko Research published a report titled “Long SOHU Short SOGO” Koneko argued,
“The current market price of SOGO implies a high likelihood that its $9/ADS acquisition by Tencent will be successful while the current market price of SOHU implies a very significant likelihood of failure. A hedged position has a high probability, but not a guarantee, of an attractive return regardless of the deal outcome.”
Citron Research Tweeted bullishly about Grayscale Bitcoin Trust (OTC: GBTC — $32.7 billion) and skeptically about Riot Blockchain (NASDAQ: RIOT — $3.35 billion):
White Diamond Research published on Intrusion (NASDAQ: INTZ — $278 million), a cybersecurity company that is up around 400% over the last twelve months. White Diamond highlighted that holds no patents, a recent CFO resignation, and high insider selling.
Twitter user @Keubiko just launched a free Substack newsletter to share general investment research. His ideas and writing are top-notch and he is worth reading. Join his newsletter here.
Learning About the Steel and Iron Ore Industry
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What to Read
“2020 Letter to Shareholders” (Amazon)
“To all of you: be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings. It remains Day 1.”
“Playing Different Games. Or why Tiger is eating your lunch (& your deals)” (Substack)
“Tiger’s investment strategy can be roughly summed up as: Be (very) aggressive in pre-empting good tech businesses. Move (very) quickly through diligence & term sheet issuance. Pay (very) high prices relative to historical norms and/or competitors. Take a (very) lightweight approach to company involvement post-investment…”
Greenlight Capital Q1 Letter (ValueWalk)
“Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey. The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing.”
Tweets of the Week
Until next week,
The Bear Cave