Callouts & quotes from 3,339+ activist slides

"The ex-employee indicated internal disappointment among Soleno staff as trial data rolled in – “they want to believe it works...that was not my immediate reaction to what I saw...the person [who ran] clinical development also felt the same way...we were disappointed to not see what we were expecting...no matter how you slide and dice it, the data is there the way it is.”"

"In light of the prevailing restrictions on non-emergency dental activity and expert predictions which indicate that the coronavirus may linger for months into the future, Spruce Point believes that it is not outlandish to believe that, not only could US volumes collapse to near-zero in Q2, but that volumes may remain heavily depressed through the remainder of the year."

"Spruce Point believes that IoT is an old technology that has suffered from adoption headwinds and poor profitability. Recall that even C3.ai was C3.IoT before its business model pivot. We find a common theme among technology stock promoters: they typically rely heavily on targeting retail investors to sell their story of large profits and riches from buying the stock."

"We believe it's time for Stryker's failing business strategy to end. The Company needs to take a hard stance that management's blunders are no longer acceptable and that it's time to reposition Stryker from a growth by terrible acquisition story, to one committed to internal investment, fixing cost bloat, improving manufacturing inefficiencies, and returning capital."

"We believe QuickBooks churns a high number of customers simply because micro-businesses have a high failure rate. Moreover, on the other end of the spectrum, companies that have matured and grown, arguably QuickBooks' best customers, churn as well because at some point they simply outgrow QuickBooks and need a more sophisticated or broader solution such as NetSuite."

"After adjusting for improper add-backs, contingent consideration write-downs, and capitalized commissions (on a tax-adjusted basis for Non-GAAP Net Income), Spruce Point believes that FY19 Adj. EBITDA should be at least ~25% lower than Company-reported Adj. EBITDA, and FY19 Non-GAAP Net Income should be at least ~65% lower than Company-reported Non-GAAP Net Income."

"Avery talks up its stock ownership policy that requires Directors and management to own minimum amounts of stock. However, what it doesn't say is that AVY insiders own just 1.1% of the total shares, and their overall ownership has declined materially in the past few years as we believe the business has become less competitive and under greater financial pressures."

"ABML has already changed how it characterizes its relationship with BASF. Not surprisingly, the regulatory requirements of SEC filings have resulted in the most conservative characterization. We believe this is clear evidence that management is prone to exaggeration of its commercial status and prospects and that investors should find such changes very troubling."

"Considering that Zillow's Adj. EBITDA is virtually all stock-based compensation, Spruce Point believes free cash flow is a much better figure to value the Company. Zillow trades at a much higher multiple of free cash flow then nearly all its peers. At over 6x sales and ~37x+ FCF, we believe that Zillow is one of the most richly valued stocks among its peer group."

"TASK made a lengthy enhancement to its definition of “Win Rate” that we believe added significantly more complexity. It then showed its Win Rate increase over a three year period. Management did not explain the impact of the revision on its subsequent improved Win Rate reporting though it claimed it “Simplified” its Win Rate to align with its NRR calculation."

"He indicated that some centers were happy to jam Medicare for a $90,000 consumable, even when the device was unnecessary, just to use the NOP organ recovery service – a practice our research is prevalent among smaller centers lacking staff and who we believe to be paying for the device as a kickback in exchange for organs steered their way by the NOP program."

"We believe that BP also needs to have a "more honest debate" - particularly as "the facts change" - with the objective being to "put the long-term interests" of stakeholders ahead of "the short-term" interest of BP's leadership to please the "others who argue with an ideological zeal": BP's decision to cut its oil and gas production by around 15% by 2030 vs."

"Sell-side promoters are divided on Zebra, and there is even one analyst with an underweight opinion and market perform rating and a $290 per share price target. We believe that even that is overly optimistic because analysts fail to conduct a rigorous forensic review of Zebra's recent acquisitions and financial reporting which suggests more issues lie ahead."

"We believe that Vivion’s January 2019 purchase of three relatively rundown Potsdamer Straße properties from Aroundtown generated significant profits for Aroundtown. The purchase appears to have been at an undue premium, and could have been consistent with our view that Vivion deliberately inflates its asset values in order to increase its borrowing capacity."

"I believe that, as far as the numbers are concerned, discussion is possible. But you have an auditor, and you have others who are overseeing the audit. I also know that there are some in-house analysts who are also looking at the issue. A clear opinion has emerged, which we at the DSW share, that the numbers have not been manipulated, massaged or falsified."

"We believe that the rapid uptake of the Libre among T2 patients compared to their much more muted adoption of the G-Series demonstrates that the (current) technological advantages of the more expensive G-Series are superfluous for T2 diabetics, and that the rest of the T2 market is almost entirely open for the taking by the cheaper and easier-to-use Libre."

"Value Proposition: Trian believes Mr. Winkleblack's substantial executive experience, including almost 12 years of service as Executive Vice President and Chief Financial Officer of H.J. Heinz Company, provides him with knowledgeable perspectives on strategic planning, international operations, acquisitions and divestitures and cost and financial controls."

"Spruce Point believes that DY does not have a good handle on the trajectory of its Days Sales Outstanding (“DSO”), a measure of days to collect from customers. The CEO's recent comments indicate a false sense of optimism that DSO will improve when they have worsened. Following his last comment on DSO, both CEO Nielsen resigned and CAO Villaverde resigned."

"Considering the fact that IQ paid RMB 2.4 billion for this supposed “game development company,” we find this to be ridiculous at face value and believe it is indicative of utter incompetence by IQ’s management at best, or a completely fraudulent transaction designed to siphon cash out of the publicly-traded company and into management’s pockets, at worst."

"We believe Nuvei is a mixture of acquisitions which on average have been acquired at approximately 5.6x revenues. We estimate up to 40% of revenues are acquired and do not deserve to increase the value of the entire company given numerous issues we've identified with specific acquisitions such as Base Commerce, Smart2Pay, SafeCharge and Vantage Payments."

"We believe that if Quectel were added to the Covered List that it would not only be a headwind to government (and perhaps all sector) sales, but it would also necessitate a widespread replacement of existing hardware, which would be accompanied by a requisite write-off of capitalized connected device costs, thus further compressing Samsara gross margins."

"Spruce Point believes CLEAR can potentially solve its capacity issues by continuing to raise prices, which would weed out some members not wanting to pay. In the extreme, CLEAR becomes like a high-end concierge service for a small member base willing to pay a significant fee. The Company would likely be much smaller than it is today under this scenario."

"Spruce Point believes Broadridge should have ceased capitalization of additional costs with the UBS project last year given delays and cost overruns. As a result, had the latest capitalized conversion and start-up costs been expensed, Broadridge would have been in violation of its “Leverage Ratio” covenant, which limits it to 3.5x Total Debt to EBITDA."

"We believe owning Mercury at the current price is a terrible risk/reward proposition. The average analyst price target of ~$56/share implies just 9.5% upside, when not a single analyst is questioning the implications of replacing a key technology partner. We believe Mercury remains the most expensive stock in the A&D sector with 50%-60% downside risk."

"Cardiologists noted that PCPs are not qualified to interpret monitor results, an important point given the high rates of disagreement with final reports noted earlier. However, it is easy to see why iRhythm is pushing this treatment protocol, as many cardiologists believed it would result in over-testing, although with little to no impact on outcomes."

"We believe brand identify is a critical success factor in the food space. There’s already evidence prices are deflating, and the long run winner must be able to connect and market to the broadest audience possible. Califia Farms was founded in 2010 and has a nearly identically sized social media following to Oatly, which was founded over 27 years ago."

"With respect, one of the responsibilities of the Senior Independent Director at BP is to “be available to address shareholders’ concerns which have failed to be resolved by the chair, CEO or CFO or for which such contact is inappropriate”, which we believe perfectly describes the current state of the dialogue between Bluebell Capital Partners and BP."

"Spruce Point believes it odd that GFL did not discuss an amended agreement with Waste Management on their Q2 earnings call. At the same time, GFL is introducing greater regulatory uncertainty by acquiring the WCA business. A new "forward-looking" risk factor statement highlighted by GFL may offer clues that its deals are on shaky regulatory grounds."

"Spruce Point believes part of what has driven Weis' share price is the belief that its operating cash flow grew 550% YoY in Q1'18. However, by pro forma adjusting results for its aggressive accounting change to accelerate accounts receivables as cash, and a one-time incentive payment (cash flow drag) from Q1'17, we estimate the growth rate was 74%."

"Based on our analysis of over 30 years of financial data and public information, we question the public benefit of WTRG’s business model, and believe it is a vehicle for insider enrichment that operates akin to a Peter-to-Peter-to-Paul scheme whereby money from new and current investors is used to pay existing investors a highly promoted dividend."

"We believe the Street has failed to critically assess the quality and performance of Mettler’s China business, and takes management’s Adj. EPS as given, without stress testing its accounting choices that are geared towards high capitalization of development costs, endless restructuring, and long periods of amortization in excess of industry norms."

"We believe the Street has failed to critically assess the quality and performance of Mettler’s China business, and takes management’s Adj. EPS as given, without stress testing its accounting choices that are geared towards high capitalization of development costs, endless restructuring, and long periods of amortization in excess of industry norms."

"Notwithstanding that Vivendi nominees Anna Jones and Camilla Antonini declared their independence in the candidacy papers, it is our opinion that such independence is doubtful, since they both resigned from their former position in the board — together with other directors — to accomplish what Elliott believes to be a pro-Vivendi oriented outcome."

"We believe the Street is structurally misunderstanding the magnitude of the cybersecurity-related costs that Mercury will face going forward, as well as the delays in revenue contract award opportunities it will face in its high-growth “command, control, communications, computers, and intelligence” (C4I) segment – expected to be a $100m business."

"Spruce Point believes that Xylem's digital ambitions are failing, in part, due to its lack of commitment to growth capital spending. We observe that software spending growth is declining and not exceeding its amortization. We also observe that in the quarter before closing Evoqua, Xylem made its first software impairment in more than two years."

"Spruce Point has taken a balanced view when analyzing the animal health sector, having identified what we believe is both an over-hyped low-quality company as a short opportunity (PetIQ: PETQ) and a well-positioned beneficiary of a corporate restructuring transaction presenting a long opportunity (Henry Schein: HSIC spin-off of Covetrus: CVET)."

"Spruce Point believes PowerSchool’s current share price presents asymmetric downside risk due to growing regulatory risks, a domestic customer base that is struggling to fund necessities, a flawed international growth plan, and nascent personalized learning products that we believe are unlikely to become meaningful contributors to bottom line."

"Spruce Point believes AMR is an ESG nightmare. Environmentalists and the public should be outraged to think AMR believes shareholders deserve rewards at this point. Spruce Point finds hidden liabilities, debts due to mine reclamation costs, pensions costs and compensating workers for black lung disease amounting to approximately $740 million."

"Most light- and heavy-duty truck OEMs are increasingly integrating telematics, modems, and safety cameras and accompanying data services into their commercial vehicles. Rather than solely representing a new channel, we believe that OEMs in the best case will compress pricing and in the worst case will increasingly represent direct competition"

"HIMS has made celebrity endorsement campaigns a cornerstone of its marketing effort. While these efforts have increased awareness, and we welcome the Company’s attempts to destigmatize certain conditions, we believe such efforts do little to build medical credibility or appeal to a broader audience beyond the Company’s core young demographic."

"HIMS has made celebrity endorsement campaigns a cornerstone of its marketing effort. While these efforts have increased awareness, and we welcome the Company’s attempts to destigmatize certain conditions, we believe such efforts do little to build medical credibility or appeal to a broader audience beyond the Company’s core young demographic."

"This implies the real estate agent population could see a dramatic decline in the U.S. with minimal impacts to the consumer experience. We believe this would compound the issue of lower commissions for Zillow; not only would agents make less money, but there would be fewer of them to purchase Zillow’s services and/or to partner with on Flex."

"Spruce Point believes investors should be skeptical of the continued outperformance of PERI’s share price. PERI recently announced a CEO transition plan and then disclosed concerning revisions to accounting policies in its annual report. Insiders have been repeatedly liquidating shares and PERI reported its first cash flow decline in years."

"We believe the Board's actions and preference for the status quo make it clear that the Board needs direct representation for common stockholders and new independent directors who will bring fresh perspectives, true independence, and a renewed sense of accountability to the Company, while putting the interests of common stockholders first."

"The poor economics of this business, in our opinion, fuel SOFI's need to issue equity. While there could be strategic value to the Student Loan business, given its direct economic costs, we believe that SOFI's principal reason for originating at these levels is to meet targets for management bonuses through manipulating their Fair Values."

"Trian believes Mr. Winkleblack's substantial executive experience, including almost 12 years of service as Executive Vice President and Chief Financial Officer of H.J. Heinz Company, provides him with knowledgeable perspectives on strategic planning, international operations, acquisitions and divestitures and cost and financial controls."

"Trian believes Mr. Winkleblack’s substantial executive experience, including almost 12 years of service as Executive Vice President and Chief Financial Officer of H.J. Heinz Company, provides him with knowledgeable perspectives on strategic planning, international operations, acquisitions and divestitures and cost and financial controls."

"Trian believes Mr. Winkleblack’s substantial executive experience, including almost 12 years of service as Executive Vice President and Chief Financial Officer of H.J. Heinz Company, provides him with knowledgeable perspectives on strategic planning, international operations, acquisitions and divestitures and cost and financial controls."

"With the largest component of Hill-Rom’s PP&E facing a maximum ten-year useful life - the same period over which management appears to have delayed capital spending - we believe that the Company may be forced to ramp up capital spending substantially in the coming years simply to support maintenance capex, to say nothing of growth capex."

"With the largest component of Hill-Rom’s PP&E facing a maximum ten-year useful life – the same period over which management appears to have delayed capital spending – we believe that the Company may be forced to ramp up capital spending substantially in the coming years simply to support maintenance capex, to say nothing of growth capex."

"We believe Nuvei's talk about having to “accelerated investments” that are being pulled forward from 2022 into 2021 is a negative development that dovetails with our research findings that many of its technology processes are dated, and that its easiest high risk, higher margin business that benefited results recently won't be repeated."

"By following this plan, we believe Macy's has the opportunity to create significant value for shareholders and massively improve its share price to approximately $70 per share (before value creation from further improved operations and credit card earnings), while maintaining its cash flow and real estate flexibility and reducing risk."

"Given what we believe to be management and the Board's history of questionable decision making, how can shareholders trust the Company to rush this critical decision when management repeatedly refuses to share one of the most important assumption affecting the value that shareholders should expect to receive in a Red Lobster spin-off?"

"Despite Heska’s efforts to paint a picture of a transformed company, we believe the evidence (including SEC filings, supplier contracts, legal discovery, reported financials, R&D spend, capital investment, business practices, and actual product shipping in the market) indicates that Heska’s business has changed very little, if at all."

"FIGS points to its design innovation, such as bringing the 'jogger' pant style (which has existed for years in the realm of athletic wear), to the scrubs market. We do not believe such design introductions to provide a sustainable advantage. Searching for jogger pants on Uniform Advantage yields 113 options in a vast array of colors."

"What makes WTRG’s Board believe that the CEO of Lancaster Colony (a food company) is an “Audit Committee Financial Expert”? Examining his work experience dating back to 2002 shows that he held predominately food marketing roles and we find no evidence he has served on any other public company audit committee before this current role."

"We believe the competitive landscape for HIMS has become significantly more crowded over the past two years. The Company faces new threats from some of the largest online platforms in the world as well as focused upstarts targeting specific product areas. We believe HIMS' has a historical pattern of understating competitive threats."

"Aegon trades at a slight discount to its peer median. However, we believe the Company deserves a deeper discount due to the considerable operational risk that exists in its Americas segment; we do not believe the Company's sell-side analysts have given proper attention to the risk that WFG's MLM structure presents in their analysis."

"Some of these changes to the competitive landscape will be familiar to Align investors. Others will not. Spruce Point believes, however, that, taken as a whole, these developments will (and are beginning to) drive seismic shifts in the economics of the clear aligner space, which was until recently occupied by just one major player."

"We believe sell-side targets do not account for the structural risks that exist in the Company due to Aegon's significant reliance on WFG to drive financial results, nor does it properly account for potential continued weakness in the international business or the potential for earnings volatility in the asset management business."