The Bear Cave #73
New Activist Reports, Recent Resignations, What to Read, Tweets of the Week
Welcome to The Bear Cave — your weekly source of short-seller news. If you are new, you can join our email list here.
New Activist Reports
Mostly Borrowed Short Ideas, a new anonymous short activist (@borrowed_shorts) published a follow-up report on Greenbox POS (NASDAQ: GBOX — $473 million), a high-risk payments processor that is up roughly 4,000% over the last twelve months. The author wrote,
“Greenbox POS directly violates the terms of service of its card network partners by operating unverified adult content websites.”
The report also presents evidence that “entertainers” on a website maintained by GreenBox are using stock image photos, and the report questions the company’s anti-money laundering compliance. The Bear Cave previously highlighted problems at GreenBox and wrote,
“GreenBox’s audit chairman was the CEO of a company that had its registration revoked by the SEC, and GreenBox’s co-founder and chairman filed for bankruptcy and paid a multi-million-dollar arbitration settlement amidst allegations of fraud… One of the CEO’s brothers, Liron Nusinovich, took over as head of Know Your Customer compliance in February according to his LinkedIn. Prior to that, Rachel Etessami was GreenBox’s head of underwriting and KYC compliance. Her previous work experience was as the general manager at Palm Beach Tan according to her LinkedIn.”
Western Edge published a Seeking Alpha article on Ocugen (NASDAQ: OCGN — $1.44 billion), a controversial ophthalmology company involved in coronavirus vaccine production. Western Edge highlights that Ocugen’s vaccine partner is “in its own international bribery scandal” and that the company’s vaccine was denied by the FDA. Moreover, Ocugen’s CEO and family are connected to a failed COVID-19 antibody testing program. Ocugen is down 50% from its highs, but still up around 3,500% over the last twelve months on retail investor enthusiasm.
Bleecker Street Research published on Hall of Fame Resort & Entertainment Co (NASDAQ: HOFV — $343 million), a year-old SPAC merger that is building an indoor NFL-themed waterpark. Bleeker Street Research highlighted a number of red flags at the company. For example, HOFV’s largest shareholder is Stuart Lichter, who was also heavily involved with Elio Motors (OTC: ELIO), which later fell 98%. In addition, the company launched a partnership with Dolphin Entertainment, the PR firm used by the Fyre Festival. Bleeker Research raised doubts about whether the waterpark, based in Canton, Ohio, could generate economic traffic. Bleek Street wrote,
“To achieve its Waterpark guidance, every traveler that landed in the Akron-Canton Airport from 2017 to 2019 will have to attend the Waterpark. More realistically, we estimate, if built, the Waterpark will miss guidance by 85%.”
Bleeker Street Research is run by Chris Drose, a former analyst at short-biased hedge fund Kingsford Capital who is launching an activist short fund this summer. He was recently profiled in Institutional Investor here.
Alta Fox Capital published a 55-slide presentation on IDT Corp (NYSE: IDT — $1.17 billion), a technology conglomerate with a reputation for spinoffs. Alta Fox believes that two potential upcoming spinoffs could lead to ~100% upside. Following the report, IDT traded up 15%. Alta Fox previously ran an activist campaign at Collectors Universe (CLCT), which went up about 4x in one year before being acquired.
Koneko Research published bullishly on Newater Technology (NASDAQ: NEWA — $38 million), a Chinese wastewater treatment company that is in the process of being taken private by its management team.
Keith Dalrymple launched a newsletter to highlight problems at Brookfield Asset Management (NYSE: BAM — $80.9 billion), a large Canadian asset management firm.
Iceberg Research tweeted that it was short AMC:
Resignations and Departures
Notable executive departures disclosed in the last month include:
CFO of Asbury Automotive Group (NYSE: ABG — $3.52 billion) resigned after a little over one year. The company has had six different CFOs in the last five years.
CFO of Epizyme (NASDAQ: EPZM — $788 million) resigned after two years. The company has had five CFOs in the last five years.
CFO of Outset Medical (NASDAQ: OM — $2.02 billion) resigned after two years.
CFO of Calavo Growers (NASDAQ: CVGW — $1.09 billion) resigned after a little over one year.
CFO of Travelzoo (NASDAQ: TZOO — $153 million) resigned after 90 days “for personal reasons.”
CFO of Milestone Scientific (NYSE: MLSS — $135 million) “reached a mutual decision to part ways” after 39 days.
CFO of BBQ Holdings (NASDAQ: BBQ — $152 million) resigned after one and a half years on the job. The company has had six CFOs and eight CEOs in the last ten years.
Data for this section is provided by InsiderScore.com
What to Read
“He Convinced the Elite He Invested for Good. Then the Money Vanished.” (WSJ)
“Arif Naqvi attracted billionaires and governments to his funds by promising to make money from investments that would benefit society. Prosecutors allege he committed fraud, stealing from those he wooed…”
“Revealed: ExxonMobil’s lobbying war on climate change legislation” (Channel 4 News)
“A senior ExxonMobil lobbyist has been captured on camera revealing how the oil giant is using its power and influence to water down US climate legislation…”
“Persis Drell Should Resign as Stanford’s Provost” (Edwin Dorsey)
“During my time at Stanford, I personally experienced retaliation and corruption by Stanford’s Provost, Persis Drell. Here is a brief summary…”
Tweets of the Week
Until Thursday,
The Bear Cave
I've never traded the stock, but I did read through the prospectus on HOVF and it's one of the craziest business ideas I've seen in ages. I don't think this would have worked even in a great economy, and the idea of building a theme park in a random part of Ohio to appeal to football fans just seems bizarre.
I look forward to seeing what sorts of other non-sensical stuff ends up going public with all these SPACs desperate to find a deal partner.