š»The Bear Cave (Issue #2)š»
CAN, SDGR, NYMX, AVXL, NEXCF, PTON, STMP, MDXG & More
āCEOs who played with a companyās numbers were more often prompted by ego than by a desire for financial gain.ā
āWarren Buffett in Berkshireās 2019 Shareholder Letter
Welcome to the secondĀ issueĀ of TheĀ BearĀ Cave! Your weekly source of whatās going on in the short world. Feedback is welcome and if you like this newsletter please share with friends and encourage them toĀ sign up.
New Activist Reports
Marcus Aurelius Research released a new report on China-based Canaan (NASDAQ: CAN ā $926 million):
āOur investigation of this bitcoin mining machine maker reveals undisclosed related party transactions, irregularities involving many customers and distributors, as well as a business model that we view as broken.ā
Citron Research went long software/life-sciences company Schrƶdinger (NASDAQ: SDGR ā $2.5 billion)
Night Market Research published a brief report alleging misleading statements from Nymox Pharmaceutical (NASDAQ: NYMX ā $225 million)
Utopia Capital highlighted red-flags at Anavex Life Sciences Corp (NASDAQ: AVXL ā $225 million)
Hindenburg Research published on augmented reality company NexTech AR (OTC: NEXCF ā $82 million). The CEO posted an interesting 51-minute YouTube response.
What to Watch
Pelotonās Lock-Up Expires Early (NASDAQ: PTON ā $7.15 billion)
āCome Monday, some 90% of Pelotonās shares outstanding will be freed up, opening the first window for insiders and early investors to sell since the companyās September initial public offering. This particular lock-up expires short of the traditional 180-day lock-up period that most companies follow.ā
Stamps.com (NASDAQ: STMP ā $2.98 billion) is up 400% over the last ten months. Over the last four years, the controversial shipping and postage company has gone from $56/share up to $281 then down to $32 and now back to $175/share. Prescience Point, The Friendly Bear, and Rota Fortunae have all published on Stamps.com.
Marc Cohodes released a new update on MiMedx (OTC: MDXG ā $835 million). After falling nearly 90% in 2018, the company has risen about 400% over the last 14 months. The company is the subject of much controversy.
Tom Price, the former head of Health and Human Services, joined the board of Sanuwave (OTCQB: SNWV ā $86 million), a medical device company that helps treat foot ulcers.
SEC News
The SEC Falsely Accused Me of Fraud
Gregory Law, the former CFO of Osiris Therapeutics, wrote about his experience being investigated by the SEC (his case was ultimately dismissed):
āIf youāre a public company CFO, you should be aware that there are circumstances in which the enforcement division of the Securities and Exchange Commission may assume thereās a good chance you are not ethical. Even if you are.ā
Hedge Fund Alleges SEC Bias in Short-Selling Case
āIn late 2018, the SEC filed civil fraud charges against Gregory Lemelson, an ordained Greek Orthodox priest who also runs a tiny hedge fund in Massachusetts. The agency alleges that he falsely disparaged Ligand Pharmaceuticals to profit from his short position in the stockā¦ā
You can read the SECās original complaint here. This case might be precedent-setting for activist short-sellers.
SEC Investigates Altriaās Investment in Juul
āThe Securities and Exchange Commission is investigating whether Altria adequately disclosed to shareholders the risks when it spent $12.8 billion in 2018 to take a 35% stake in Juul.ā
Until next week,
TheĀ BearĀ Cave
(Feedback Welcome, Forwarding & Sharing Is Very Appreciated)
Contact:Ā edorsey@stanford.eduĀ / (718) 873-2362 /Ā @StockJabber