The Bear Cave #91

New Activist Report, Recent Resignations, and Tweets of the Week

Nov 14, 2021

Welcome to The Bear Cave — your weekly source of short-seller news. If you are new, you can join here. Please hit the heart button if you like today’s newsletter and reply with any feedback.

New Activist Report

Culper Research published an update on Aemetis Inc (NASDAQ: AMTX — $659 million), a renewable energy and biochemicals company that is up ~850% over the last year. Culper Research alleged the company is misleading investors and regulators about the progress of various construction projects. Culper wrote,

“We find this repeated goalpost-shifting obliterates the credibility of Aemetis management. In Q3 2021, Aemetis produced negative gross margins, net losses of $17.6 million, and now holds just $6.4 million of cash. The Company’s [Sustainable Aviation Fuel] plans alone now call for capital expenditures of $367 million in 2022 and 2023, just to get off the ground. We don’t think they ever will.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of StarTek Inc (NYSE: SRT — $196 million) resigned after eleven months “to pursue a specific opportunity rather than on account of any differences with the Company.” The company has had three different CFOs over the last five years and is audited by BDO India LLP.
CFO of Hostess Brands (NASDAQ: TWNK — $2.56 billion) resigned after a little over a year.
CFO of Axcella Health (NASDAQ: AXLA — $116 million) resigned after two years “for personal reasons and to pursue other interests.” The company has fallen ~80% since its 2019 IPO.
CFO of Prelude Therapeutics (NASDAQ: PRLD — $763 million) resigned after two and a half years “to pursue other opportunities.”
CFO of View Inc (NASDAQ: VIEW — $1.18 billion) resigned after less than three years on the job following an internal investigation that determined he “negligently failed to properly record the liabilities for warranty-related obligations and cost of revenue” and “intentionally failed to disclose certain information to the Board of Directors and the Company's independent registered public accounting firm.” Jehoshaphat Research previously criticized the company’s accounting, and the stock is now down roughly 50% from its March 2021 SPAC merger.
Ashley C. Glover resigned “effective immediately” as an audit committee board member of EngageSmart Inc (NYSE: ESMT — $4.53 billion) after less than two months on the board. The company went public in October.
Chief Accounting Officer of Coursera (NYSE: COUR — $4.95 billion) resigned after less than three months “to pursue a Chief Financial Officer opportunity.”
President of Lordstown Motors (NASDAQ: RIDE — $1.01 billion) resigned after one year.
Meghna R. Desai resigned as an audit committee board member of Sculptor Capital Management Inc (NYSE: SCU — $1.27 billion) after less than five months “due to other professional obligations.” Sculptor has had four different CFOs over the last five years.
Chief Medical Officer of Rubius Therapeutics (NASDAQ: RUBY — $1.26 billion) resigned after less than two years “to pursue another opportunity.”
Chief Medical Officer of Finch Therapeutics (NASDAQ: FNCH — $722 million) resigned after a little over two years “in order to return to Canada to attend to a family health matter.”
CEO of Icahn Enterprises (NASDAQ: IEP — $15.9 billion) resigned after a little over six months “due to certain personal family issues that make it impossible for him to continue his permanent relocation in Florida.”

Data for this section is provided by InsiderScore.com

What to Read

“McKinsey partner accused of insider trading on Goldman Sachs deal” (FT)

“The complaint alleged that Dikshit purchased out-of-the-money GreenSky call options — a bet that the price of the underlying security will rise — that were set to expire days after the announcement, and then sold the options on the morning the deal was announced. Prosecutors alleged he made the trades in brokerage accounts under his own name and his wife’s.”

“McDonald’s CEO Apologizes for Text Exchange About Shooting Deaths” (WSJ)

“Your text message was ignorant, racist and unacceptable coming from anyone, let alone the CEO of McDonald’s.”

“Larry Culp Rewired GE. Then He Unwound It.” (WSJ)

“They discovered the blade—which had been piling up at some stations—traveled nearly 3 miles on its 85-day journey through the plant. The solution was clear: rip out the old machinery and rearrange the production line to shorten the green string. In the process, GE upgraded the machines to help stop the logjams. When finished in early 2020, the blade traveled just 165 feet and production time was cut by 42%.”