The Bear Cave #83
New Activist Reports, Recent Resignations, Tweets of the Week
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New Activist Reports
Scorpion Capital published a 158-slide presentation on Berkeley Lights (NASDAQ: BLI — $1.82 billion), a digital cell biology company that went public in July 2020 and sells a $2 million cell sorting and analysis machine. Scorpion Capital conducted 24 research interviews with former employees and scientists from the company’s largest customers and found they did not trust the machine’s data and that the company would likely need to cut prices 50-80%. Scorpion Capital said Berkeley Lights “stands out for the number of nonsensical phrases, newly-invented words, and drivel it uses to describe itself.”
The company trades at 27x revenue despite flat revenues over the last four quarters and is down 60% since its July 2020 IPO. The company’s response was, in part:
“The report from Scorpion, a self-proclaimed short seller, contains highly misleading statements, groundless claims and a clear lack of industry understanding. It’s important to note that Scorpion never reached out to us prior to the publication of their report. We believe the sole purpose of the report was to serve the short seller’s interests at the expense of Berkeley Lights shareholders.”
Citron Research published bullishly on The RealReal (NASDAQ: REAL — $1.27 billion), an online and brick-and-mortar luxury resale company for clothes and jewelry. Citron argued the company was disrupting the high-end resale industry and could become “the Carvana of luxury” or be acquired by eBay. Citron highlighted that the demand and supply for the luxury resale market have grown during the pandemic and RealReal has an edge over competitors because of its customer data and strong authentication procedures.
Muddy Waters Research published on Danimer Scientific Inc (NYSE: DNMR — $1.63 billion), a biotech company that is trying to make degradable plastics. Muddy Waters claimed that Danimer misled investors about partnerships with brands like Mars and PepsiCo and that those partnerships may not produce revenue for years, if at all. Muddy Waters also said the company was “amateurish on production” and wrote, “DNMR claims its TAM is approximately $1 trillion, which probably qualifies DNMR for the TAM Exaggeration Hall of Fame.”
ShadowFall, a subscription-based activist short firm, published on Civitas Social Housing PLC (LON: CSH – GBP622 million), a British REIT. ShadowFall highlighted five related-party deals where the company did not properly disclose the conflicts of interest.
Nigh Market Research published an update on Cielo Waste Solutions, (TSX: CMC — CAD$477 million), a trash-based renewable energy company. Night Market Research alleged the company is 80% below its production level guidance and has 90% downside.
IP Hawk has started to highlight paid stock promotions in his free newsletter and recently highlighted one concerning Biotricity (NASDAQ: BTCY — $150 million). Check it out here.
Notable executive departures disclosed in the past week include:
CFO of Scientific Games (NASDAQ: SGMS — $7.37 billion) resigned after one and a half years on the job. The company has had five different CEOs and four different CFOs in the last ten years.
CFO of International Flavors & Fragrances (NYSE: IFF — $34.4 billion) resigned after a little under two years.
CFO of Huazhu Group (NASDAQ: HTHT — $15.19 billion) resigned “for personal reasons” after a little under two years.
COO of Dexcom (NASDAQ: DXCM — $54.5 billion) resigned after six months “in order to pursue another employment opportunity.”
COO, CTO, and CMO of Casper Sleep (NYSE: CSPR — $204 million) were all laid off amid a business restructuring. They were hired in 2019 and 2020.
Data for this section is provided by InsiderScore.com
What to Read
“Wall Street Influencers Are Making $500,000, Topping Even Bankers” (Bloomberg)
“Hankwitz charges anywhere from $4,500 to $8,000 per post on his TikTok page. He said Fundrise, a real estate investment platform, pays him every month to post two videos on his TikTok, and also offers him a monthly bonus of as much as $2,000 based on how many people he pushes to the platform.”
“'Concerned Citizen' At Theranos CEO Elizabeth Holmes' Trial Turns Out To Be Family” (NPR)
“While the courtroom drama then centered on which 12 Californians would form the jury that decides Holmes' fate, journalists in the courtroom had other burning questions: Who was this man? Why was he talking so much to all the reporters? Did he have a connection to Holmes he wasn't disclosing?”
“SEC Charges App Annie and its Founder with Securities Fraud” (SEC Enforcement)
“The order further finds that App Annie and Schmitt misrepresented to their trading firm customers that App Annie generated the estimates in a way that was consistent with the consents it obtained from companies that shared their confidential data, and that App Annie had effective internal controls to prevent the misuse of confidential data and to ensure that it was in compliance with the federal securities laws.”
Tweets of the Week
Long Short Value @LSValueAnyone have any confirming or otherwise first person / customer research that verifies / disputes the claims @ScorpionFund has made about $BLI product not working. Please DM me, I’d love to hear.
Until next week,
The Bear Cave