Callouts & quotes from 3,339+ activist slides

"Amazon, the most dominant retailer in the world, lists Califia Farms Oat Milk as its “Best Seller”. We believe Oatly has a poor product placement on the website and is being pushed farther down on search results according to our recent tracking. We observe that Oatly’s price per fluid ounce is $0.30 cents, or 3x Pacific Oat milk."

"We have selected candidates who have directly relevant experience and skill sets in areas that we believe would be of substantial value to the Board, including expertise in dollar store and broader retail operations, integration and restructuring, mergers and acquisitions, strategic transformation, and public company governance."

"Now, as pandemic-era spending dries up and district staffing costs have ballooned to their highest levels ever, Spruce Point believes that school districts across the country will face a major fiscal cliff, effectively ending the gravy train of federal funding that ed-tech companies have been milking for the past several years."

"We believe Stryker's 2018 acquisitions were abysmal. It spent $2,451 million on acquisitions (and recorded an additional $108 million for acquisition and integration related charges), which contributed $236 million of revenue. However, according to the proxy statement, the operating income contribution was negative -$3 million."

"Given the recent deterioration of the Exchange's financial performance and historical precedent, we believe it is increasingly likely that ERIE's management fee will decline for the first time in decades which could reset earnings expectations by approximately 20% and slow premium growth at the Exchange over the coming years."

"We believe Stryker's 2019 acquisitions were abysmal. It spent $802 million on acquisitions (and recorded an additional $208 million for acquisition and integration related charges), which contributed $354 million of revenue. However, according to the proxy statement, the operating income contribution was negative -$7 million."

"We believe the issues at SnapAV are just a microcosm of ADI’s overall problem. For example, one of the growing issues can be seen with Samsung, which ADI lists as a “Featured Brand”. Samsung also offers products direct and is actively promoting its “Business Account” program that offers volume discounts and financing options."

"We believe Prestige is overvalued on both a revenue and EBITDA basis. Given Prestige's poor organic growth prospects, lack of competitive advantage, eroding market share, declining financial transparency, low quality management and governance practices, it is well justified for the Company to trade at a discount to its peers."

"We never cease to be surprised by what Wilson says. At the Stifel Conference in June 2021, Wilson claimed regarding the Element AIM, "we're not changing veterinarian behavior." We find this surprising, since we believe doing more point of care fecal testing AND buying from Heska would both be material changes in vet behavior."

"We believe that while the vast majority of distributors earn little to no income, those who do are rewarded primarily for recruiting new distributors. Based on public data and the assumptions detailed in our presentation, we believe that recruiting-related rewards constitute over 90% of the earnings of Herbalife distributors."

"In its 2019 IPO prospectus, PGNY references its treatment outcomes (most often referred to as "superior" or "optimal") a whopping 57 times, and the Company frequently references its superior outcomes data relative to non-members, both in-network and outside the PGNY network of clinics. We believe these claims are disputable."

"Heska's gross margins generally fall between those of high value-added diagnostic equipment companies and pure animal health distributors. Heska's EBITDA margins fall below those of nearly all possible comparable companies. We believe this is indicative of Heska's lack of proprietary technology and poor competitive position."

"We believe Skechers' stock price has been largely driven by outsized China growth. Absent the China story, we believe Skechers is “just” a moderate growth, “fast follower” shoe company that will likely never be able to compete with the performance athletic shoe companies that have vastly larger markets and stronger brands."

"Spruce Point believes there is little margin for error in food manufacturing, since the slightest mistake can cause contamination, illness, and even death. The repercussions could be long-lasting and tarnish the manufacturer's brand. We've noticed a recent uptick in product recall notices by Saputo, particularly in Canada."

"In the Company’s August 2021 investor presentation, PGNY uses the fictional treatment scenarios of “Sarah” to highlight the scary downsides of conventional treatment paths and the superior outcomes achieved through its more intensive treatment protocol. However, we believe PGNY’s pitch contains numerous misrepresentations."

"We believe PGNY's intimation that “Sarah” suffered a miscarriage due to the lack of PGT is marketing fluff. We believe PGNY is capitalizing on patients' (often reasonable) assumption that the increasing use of new technologies must improve health outcomes. Once again, the actual science does not fully support their claim."

"We believe the market wildly overvalues the entirety of BR by not considering that 40% of its business is tied to low/no margin distribution revenue and services such as credit statement printing. Its gross margins and capex spending (due to aggressive capitalization of costs) are vastly below financial technology peers."

"We identify at least four factors that are temporarily inflating OCF by an estimated 67%-78%. We also point out numerous errors and inconsistencies with management's figures. We believe at best, these are just sloppy errors, and at worst case these are intentional acts by management to obscure its strains from investors."

"We are short CTO Realty Growth (CTO) because we believe this management team, like our old friends at B. Riley (RILY), are lying to investors about the sustainability of their dividend while enriching themselves and are willing to engage in accounting shenanigans like using a sham loan to cover up a top tenant’s failure."

"At the end of the day, we believe LODE has failed to deliver on its corporate promises, has a subpar CEO, and illiquid assets of little productive value. We believe the LiNiCo transaction won't succeed and that investors should value LODE at a multiple of its cash. Our price target is approximately $0.35 - $0.70 /share."

"Two of the incumbent nominees oversaw the substantial value destruction that we believe occurred at BOTH Red Lobster and Smokey Bones, and three were on the Compensation Committee that, as described later, put into place an incentive structure we believe that encouraged excessive spending as the answer to every problem"

"Shareholders asked the Company to pause and reconsider what we believe to be a value destructive plan to separate Red Lobster with a substantial majority of shareholders formally requesting that Darden hold a special meeting to discuss this very topic, and the Board blatantly ignored shareholders’ clearly stated wishes"

"Two of the incumbent nominees oversaw the substantial value destruction that we believe occurred at BOTH Red Lobster and Smokey Bones, and three were on the Compensation Committee that, as described later, put into place an incentive structure we believe that encouraged excessive spending as the answer to every problem"

"Shareholders asked the Company to pause and reconsider what we believe to be a value destructive plan to separate Red Lobster with a substantial majority of shareholders formally requesting that Darden hold a special meeting to discuss this very topic, and the Board blatantly ignored shareholders’ clearly stated wishes"

"Valuing FSCT shares at a more conservative multiple – below that of its purported peer group – and taking into account (A) management’s unreleased guidance and (B) the potential impact of the pandemic on sales, Spruce Point believes that FSCT shares are worth 50%-60% less than the $33 price set by the merger agreement."

"While the difference between separating all or parts of beverages is ~$8 per share in value, we believe the intangible benefits of separating the entire business are considerable: 1) creates two pure-plays; 2) preserves global brands; 3) maximizes probability of value-add strategic moves for each business in the future"

"Remitly's valuation premium is better illustrated graphically. We understand the case of Remitly's valuation being above the legacy players that have larger physical footprints and more hardware exposure (e.g. Euronet (ATMs) & Western Union (stores)), we do not believe its large premium to Wise or PayPal is justified."

"Warning: If in fact Oatly is right and that it will never be able to supply enough oat milk, then we believe its future will be doomed. We expect competitors will continue to fill the void and take market share. In the long run, we see a real possibility that Oatly is squeezed out of the market and towards insolvency."

"We believe an ownership threshold of 20% to call a special meeting strikes a reasonable balance between enhancing shareholder rights and protecting against the risk that a small minority of shareholders could trigger a special meeting resulting in unnecessary financial expense and disruption to State Street's business"

"We believe the Company’s stock price underperformance versus both peers and the broader market indices is due to consistently poor financial performance, a lack of credibility from repeatedly failing to deliver on commitments to shareholders, and a history of problematic governance that fails to demand accountability."

"Notably, with much of Hill-Rom's c-suite fairly new to the business, we believe that – with much of its long-term equity incentives locked up for several years at least – management has incentive to re-set expectations to manageable targets now, rather than leave investors expecting Hill-Rom to hit unattainable goals."

"Notably, with much of Hill-Rom's c-suite fairly new to the business, we believe that – with much of its long-term equity incentives locked up for several years at least – management has incentive to re-set expectations to manageable targets now, rather than leave investors expecting Hill-Rom to hit unattainable goals."

"Oasis's proposals are additive only and are not calling for shareholders to oppose any incumbent directors; we believe there is benefit in having a larger board, like sector peers, allowing for the addition of specialized expertise while retaining existing directors to ensure continuity and stability for shareholders."

"As we discussed in our investor presentation, we believe this poor capital allocation was the direct result of poor corporate governance at the Board level, including shareholder-unfriendly compensation practices that incentivized management to pursue growth at the expense of returns on capital and shareholder value."

"HIMS' prices for its core products are significantly higher than widely available alternatives. In fact, we would argue that the massive annual savings available from other sources more than offsets the cost, inconvenience, or potential stigma from doctor visits. We believe such pricing disparities are unsustainable."

"Spruce Point believes that MSCI's "average" ESG rating is woefully inaccurate and fails to acknowledge that Rollins settled charges with the SEC, has a large vehicle fleet with no plans to adopt EVs, uses pesticides that harm insects vital to the ecosystem, and has been cited in the past for cruelty towards animals."

"Spruce Point does not believe the Evoqua deal was an effective roll-up strategy worthy of the commanding valuation paid by Xylem. After deploying $490m for acquisitions, cash flow struggled ever since COVID-19, and its final acquisition of Mar Cor appears to have been a bust with the return of unpaid earnout money."

"Entering a negative feedback loop: We believe that O Realty is highly dependent on keeping its stock premium inflated to lower its cost of capital to pursue growth. However, we will illustrate that its growth is declining, which will leads to a lower stock price, higher cost of capital and lower investment spreads."

"LSPD has cobbled together a motley collection of assets at increasingly expensive valuations. LSPD does not disclose target EBITDA margins, and generally hasn't disclosed historical growth rates. We believe a majority of the assets lose money and had already peaked in their growth cycle prior to LSPD's acquisition."

"We believe that the FY25 revenue guidance increase earlier this month of $10 million is substantially explained by the expected contributions from the Ambry Genetics acquisition and the new Pathos/AstraZeneca deal, two factors that we estimate should have added nearly $46 million to projected revenue for the year."

"Spruce Point believes that the circumstances facing Premier are very similar: while the sell side believes that Premier’s above-market shareback rates can last indefinitely into the future, Spruce Point finds evidence that near-term catalysts could force Company economics back in-line with the rest of the market."

"Our metric of fully loaded customer acquisition costs as a percent of online revenue has barely declined from its Q4 2021 peak and remains materially above 2020 levels. In addition, we believe that calculating CAC based on net subscribers provides a useful reference point for a business like HIMS with high churn."

"To summarise, TFS’s mark-to-model approach to biological asset valuations and revenue recognition policies allow it to leverage real capital. Accordingly, we believe that the only factor that would prevent this business from being a Ponzi scheme is whether or not the underlying products are a feasible investment."

"Optically, PGNY would like investors to believe that it is achieving significant operating leverage. In reality, the largest contributor to its operating leverage story has been its aggressive use of stock-based compensation (SBC). Netting out the benefit of SBC uncovers that PGNY’s EBITDA margins are in decline."

"Spruce Point believes that Dollarama is significantly overvalued based on its undifferentiated and increasingly uncompetitive business model, inflated and unsustainable margins which are posed to decline, and its limited growth prospects which will restrain its ability to hit its long-term earnings expectations."

"We estimate GLOB founders sold (or transferred) over $80m of stock in the IPO, each of the subsequent secondary offerings, and multiple open market sales. Additionally, we believe that the irrevocable trusts may not have to file its sales in the open market, making it difficult to track their current ownership"

"Axon’s $1.8 billion market cap valuation seems excessive relative to the market opportunity, which we do not believe has significant growth given: 1) stagnant law enforcement officer growth, and 2) deflationary forces that will compress Axon’s ability to charge for cameras while absorbing rising storage costs."

"Spruce Point believes Kornit Digital (“the Company” or KRNT) saw 2018 revenues, and particularly cash flow, driven entirely by Amazon’s expansion of its Merch program, which are likely to taper based on a slow-down of program growth, and would leave a gaping hole in Kornit’s aggressive revenue growth strategy."

"Thus, even though the Sponsor claims it is transferring equipment value to the Tax Equity, when one looks through the economics of the transaction, we believe it becomes clear that RUN is mainly selling assets that are not dependent on the homeowner's purchase of electricity once the FMV has been established."

"It appears CTC is more inclined to sell properties than it was in the past. In 2018 and during the first half of 2019, CTC drastically increased the value of sales. This is concerning given that CTC’s debt load has grown substantially over this time. We believe this is a sign the company is strapped for cash."

"Spruce Point believes that analysts are stretching for reasons to promote BOOT with a most recent example being Beyoncé’s new Cowboy Carter album. Unfortunately, we find that consumer interest is quickly fading, and such “one-time” sales benefits should not be a reason for BOOT’s valuation multiple to expand."

"We believe investors are ascribing an irrationally high valuation to Oatly. Per the Company’s own trusted data source of Euromonitor, the plant-based dairy market in its key regions is expected to be $21 billion by 2025. However, Oatly’s current valuation is almost $12 billion, or 62% of the projected market."

"Spruce Point does not believe that BR is justified in calling itself a SaaS company with margins that scale. In fact, its financials look nothing like a high quality SaaS company. When we benchmark BR's gross margins and deferred revenue relative to its recurring revenue, we find it to be wildly below peers."

"Elliott believes that there is an opportunity for stockholders to realize value SIGNIFICANTLY greater than BMC's current stock price through the addition of thoughtful and experienced technology executives who will encourage a full strategic and operational review with the aim of maximizing stockholder value"

"In short, we believe a standalone digital cytology provider such as Lacuna has no sustainable competitive advantage, as the technology is relatively simple (transmitting a test image or result) and the available pool of veterinary pathology expertise is large and fluid (Lacuna has lost two to IDEXX to date)."

"Based on our research and conversations, we believe recent acquisitions executed under Farrell and Dierker have been poorly planned and executed, and more aggressively structured (notably with earnouts) – insult to injury given the large multiples paid for these deals and rising debt load to fund the deals."

"Spruce Point believes Heska Corp (Nasdaq: HSKA or “the Company”), a $2.8 billion market cap animal health equipment distributor, has been struggling to grow organically and has been using low-quality acquisitions as a means to deflect market share loss and margin erosion and to generate investor enthusiasm."

"Stifel's $29 price target and "Buy" recommendation illustrates that analysts and investors are expecting expansion of the Amazon relationship. Barclays as well believes Amazon sales will be stable for the next few quarters, and acknowledges the big downside risk. We believe the market will be disappointed."

"Spruce Point believes that the overwhelming macroeconomic events which have transpired since the deal was announced could render the business even less appealing at the current juncture, encouraging the buyers to pressure Forescout into renegotiating the deal, or even compelling them to walk away outright."

"Spruce Point believes there is rampant misunderstanding of CLEAR’s capital structure. Even Bloomberg fails to identify over $115 million of operating leases. However, we think the biggest disconnect is the multiple share classes that are convertible to Class A shares and the Tax Receivable Agreement (TRA)."