Callouts & quotes from 3,339+ activist slides

"They're not using the treadmill right now because it's a clothes hanger and it's dusty. Nobody likes running on a treadmill at home because it's boring... We can bring our insanely motivating fantastic instructors into your home, onto your 60-inch television screen... And with that subscription, they get yoga included. They get out to running included. They get cycling. They can go to their gym... We believe it's five years from now, two years from now, when your treadmill breaks, you're going to go to a Peloton store near you and you're going to see one of our two treadmills and you say honey, I don't want the dopey old treadmill from the dopey old fitness equipment company of yesteryear. I want it Peloton tread."

"it takes work on my office's part to get this drug approved...it's not like I write a prescription...here you go...see you later...and that's it, I'm done...we have to do a prior authorization...we're going to have to submit stuff...there's going to be administrative work - a fair bit...it's not going to be an insignificant amount...and it's a very small number of patients...it's a very niche group...that's the job, we're cool to do it...but am I going to go to the mat and do an appeal and do all this extra stuff and work super hard for a drug that I don't believe is all that powerful or effective to begin with?...no, it's just not a strong enough medicine to put in that much additional effort...."

"It is important to note that, to our knowledge, this data is known to very few market participants: it is designed for and provided primarily to the health care industry. Our understanding is that it is known to few, if any, sell-side brokerage firms. It is also priced to a corporate end market and, as such, is likely too expensive for all but the largest of buy-side firms. We believe that the market is generally blind to this data, and that prices of Penumbra shares must adjust to reflect this powerful, credible, and compelling information."

"Even if the market simply applies its existing 15.4x EV/EBITDA multiple to our more realistic view of Adj. EBITDA and adopts our calculation of net debt, the stock could have 30% downside. However, with Verint not growing organically, we value VRNT on the basis of a forward-year EV/EBITDA multiple, but on trailing Adj. EBITDA. With faster-growing and higher-quality industry peers trading at 10-11x forward-year EBITDA multiple, we believe that VRNT should trade at 8-10x forward EBITDA, implying a share price of $17-25 for 60-70% downside."

"BR lists its number #1 driver of Non-GAAP operating income margin is from “Scale and Natural OpEx leverage from a SaaS business.” However, Spruce Point does not believe that BR is a high-quality SaaS business, if one at all, given it admits it drives no pricing power and does not report metrics consistent with other SaaS companies such as Net revenue dollar retention or remaining performance obligation, and has just $414m of deferred revenue in relation to $3.7 billion of recurring fee revenue."

"Purely illustrative, as we do not believe book value correctly reflects the significant value of TICO’s operating business and book value is overly punitive on the tax leakage on publicly listed stakes that would be realized, as it includes a deferred tax deduction broadly at the 31% Japanese statutory tax rate, and not at the much more beneficial deemed dividend tax structure under an issuer buyback unwind of cross-shareholdings. TICO deserves a much higher valuation than 1x PBR."

"Spruce Point believes that ELF’s valuation is supported by its above market revenue growth. This revenue is highly dependent on its retail channels through Target, Walmart, and Ulta Beauty along with continued appeal with mostly female Gen Z consumers. To the extent that ELF receives pushback from these customers related to its association with Movers+Shakers and its perceived messaging and association with the NXIVM cult, there could be material downside to the share price."

"Aegon lists three distribution channels for its Individual Solutions business: a wholesale channel, a brokerage channel, and an affiliated retail agency consisting of Aegon's distribution subsidiaries, Transamerica Agency Network, Transamerica Financial Advisors, and World Financial Group. While WFG claims to empower communities through financial education, we will show in subsequent slides how we believe WFG uses questionable tactics in its recruiting and sales programming."

"The current average sell-side price target implies 13% upside, which we believe is hardly exciting in a world where you can earn 5% sitting in cash while avoiding the risks that, 1) Xylem mis-executes (like it has in previous M&A) with integrating Evoqua, 2) That the DOJ brings parallel charges against Evoqua similar to (or worse than) what the SEC charged, and 3) Financial restatement risk as suggested by Xylem’s recent disclosure of two sets of financial statements."

"On face value, Aerojet's revenue and earnings growth are comparable with industry peers. This forms the basis that its valuation is also in-line or at a discount with peers. However, Spruce Point believes that Aerojet's enterprise value does not accurately reflect numerous liabilities, its financial results are inflated with aggressive accounting, and its projected financial results will materially disappoint the Street “consensus” view formed by just a few analysts."

"Spruce Point believes that consensus estimates for future aspiration catheter revenues are not analytically robust. Yet, as with most companies, the market interprets these estimates as a good indicator of future sales, and as perhaps the most educated, rigorous, and analytically complete assessment of future performance. Accordingly, we believe that Penumbra shares are currently valued according to estimates which likely feature a high degree of error."

"While impressive on the surface, Samsara’s historical revenue ramp has been the result of opportunistic targeting of a one-time government mandate, an accounting sleight of hand, the beneficial impact to revenue recognition of customer financing, and the aggressive practice of buying out existing customer contracts (an extremely expensive technique for buying business that we believe is not appropriately captured in the Company’s financial disclosures)."

"IDEXX has dominant 55-60% market share in diagnostic equipment, the best selling disposable fecal test (SNAP), and operates one of the leading reference labs in the world. IDEXX also has more fecal-related patents than Heska has total patents. We imagine they understand the market's demand for such testing and the technology required to do it better than Heska. We believe their entry into the point of care market would be a material negative for Heska."

"We believe the evidence is clear: tech spending by school districts will be pressured during the 2023-24 school year. The effect is magnified in districts that have seen declining student enrollment. However, we believe this is just the beginning as ESSER funds won't run out until September 2024. Spruce Point believes this pressure will only continue to intensify in 2025, which will be the first full year without emergency federal funding since 2019."

"The other key observations from our derivation of estimated Live metrics are that (1) Consumer segment revenue grew faster before the launch of Live (FY 2016-2018) than it has over the past three years (FY 2022-2024), suggesting Live's massive revenue growth may just be fueled by cannibalization of non-Live revenue, and (2) Consumer segment revenue growth ex-Live is very modest, we believe calling into question the sustainability of the franchise."

"The ex-Nevro district manager’s comments reveal the severity of what we believe the company has covered up: that “sort of every KOL was saying the device isn’t working”; that sales reps across the country came to the same conclusion; the company refused to acknowledge the situation and blamed the reps instead; and that he personally couldn’t look customers “in the eye and ask them for visits anymore, because I didn’t believe in the therapy.”"

"We have conducted on the ground due diligence in China and believe that Ballard’s Chinese growth ambitions are likely to fail from weak partnerships with Broad Ocean and Synergy, and a market that is not developed enough to support fuel cell vehicle growth; Déjà vu, Ballard’s last China deal with Azure resulted in a contract breach and revising guidance lower in early 2015; investors should brace for similar disappoints this time around too"

"Spruce Point believes Mako’s robotic surgical platform is one of the few growth drivers in Stryker's overall lackluster product portfolio and could be over $1 billion of annual revenues. However, we believe that sell-side analysts and investors are not attuned to the fact that Stryker recently cut prices on Mako’s product suite by -17% to -30% in response to companies like Zimmer, which have been giving their system away at no upfront cost."

"Over the course of his nearly two decades as an institutional investor, Mr. Loeb has developed a sophisticated understanding of how to create and unlock long-term value for shareholders. As Chief Executive Officer of the Company's largest shareholder, Mr. Loeb would advocate vocally for stockholders' interests if elected to the Board. For these reasons, we believe Mr. Loeb is exceptionally qualified to serve as a director of the Company."

"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. Mercury does not even have a CISO at present, and only recently replaced its departed CIO."

"The purpose of this letter is to specifically outline the following two important opportunities that we believe the Board and management team should pursue in order to unlock value: (1) An exploration of all strategic alternatives for the underperforming Family Dollar business, including an outright sale; (2) An evaluation and initiation of a wide-scale market test of a multi-price point strategy at Dollar Tree bannered stores."

"Warning: Oatly regularly touts its good corporate citizenship to the environment. In its 2019 Sustainability Report, it hinted that its growth was placing strains on its short-term ability to improve its environmental footprint, but pledged to “make things right again” with various improvements. However, Spruce Point believes that it has back-tracked on this pledge. We find that it has unremedied EPA violations for over a year."

"It is important to note that, to our knowledge, this data is known to very few market participants: it is designed for and provided primarily to the health care industry. Our understanding is that it is known to few, if any, sell-side brokerage firms. We believe that the market is generally blind to this data, and that prices of Penumbra shares must adjust to reflect this powerful, credible, and compelling information."

"Starboard believes that Mr. Lacey’s experience in the senior management of public companies, including service as chairman, president, chief executive officer and corporate vice president, his experience on the boards of directors of public companies, his financial expertise and his direct knowledge of the component manufacturing and camera module business, will enable him to provide invaluable oversight to the Board."

"We value REZI as if it were two separate business using the valuation multiple implied by the trading comps on the previous slide. We believe that the businesses should trade at a discount to peers given lingering legacy operational and financial reporting issues, along with growing complexity from recent M&A. We see 25% - 50% downside risk and expect REZI to underperform the technology and home services sectors."

"Practically speaking, we believe it is a stretch to call the new fecal analyzers a new piece of diagnostic equipment. In reality, the veterinary staff are still required to undergo a sample preparation process that must be done correctly to ensure accurate test results, and the equipment is actually just an automated microscope that uses algorithms to scan the slide for pre-determined image evidence of parasites."

"After observing problematic restructuring accounting adjustments and financial presentation methods that we believe artificially boost Adjusted EPS and Free Cash Flow (two of the three key components of management Annual Incentive Plan), we observe that Avery Amended and Restated the Annual Incentive Plan on Jan 1, 2020 to greatly expand language around the clawback provision for fraud or intentional misconduct."

"We are conducting this election contest now during the pendency of the OfficeMax Merger because we strongly believe it is in all shareholders’ best interests to reconstitute the Board with new, highly qualified directors that have the requisite skill-sets and experience to dramatically improve the operations of the business and transform the Company for the future, whether as a stand-alone or merged company."

"Spruce Point believes there is significant downside to TASK's share price as the Company is overvalued on both its revenue and EBITDA multiple and should trade at best in-line with peer valuations, and at worse a material discount to reflect the numerous concerns we've documented in our report including substandard disclosures, and evidence of increased financial pressures with its largest customer Facebook."

"Most importantly for the near-term future, we believe that Dexcom faces a particularly steep revenue growth cliff of at least ~18 months as the rate of incremental U.S. T1 CGM penetration decelerates, as the Libre 2 competes directly with the G6 at an ~80% discount, and as the Company fails to make traction in the T2 market without a down-market CGM offering until late 2020 / early 2021 at the earliest."

"Ironically, AOS is covered by small regional U.S. stock brokers, many which do not have a physical presence in China. Thus, we believe their ability to have on the ground and up-to-date intelligence on the key aspect of AOS’s China business may be limited. It does not appear that analysts have come to grips with the broken nature of the China business, and many hold out hope for 20% upside in the stock."

"Bunge’s historical EV / Revenue multiple averaged 0.35x before the Viterra deal was rumored in May 2023. We believe that the combined Company’s fundamentals have weakened since food consumption trends have changed and Bunge has reported lost market share in certain regions and segments. As a result, we believe Bunge’s new multiple should be structurally lower than its historical trading multiple range."

"Rather than engaging in a multi-year public battle – a process that will inevitably end with representatives chosen by common stock shareholders being elected to the Board at the Company’s contested 2028 annual meeting – we believe it would be far more constructive to work together now, add a shareholder representative immediately, and focus on maximizing the value of the Croatti family's life's work."

"With one of the major bottlenecks preventing more widespread in-house 3D printing demand now gone with the expiration of key Align patents and the development of new software, Spruce Point believes that the cost savings and workflow efficiency offered by in-house printing will trigger a new wave of demand for 3D printers among orthodontists, posing a significant threat to Align's case volumes."

"Spruce Point is concerned that management is sacrificing liquidity for faster top-line growth – growth which is not reflective of improving fundamentals, but which we believe is simply attributable to (1) a shift in how management accounts for operating leasebacks and (2) a rapid re-adoption of operating-type sale/leaseback agreements which are now being recognized as revenue in full up front."

"[T]he outsiders (who often had complicated balance sheets, active acquisition programs, and high debt levels) believed the key to long-term value creation was to optimize free cash flow, and this emphasis on cash informed all aspects of how they ran their companies – from the way they paid for acquisitions and managed their balance sheets to their accounting policies and compensation systems."

"Based on our review of LinkedIn and other sources, we believe a large volume of CCTs in the US are located in remote locations. Not only does this suggest the opportunity for questionable reimbursement practices on the part of iRhythm, but we believe it also calls into question iRhythm management’s numerous claims related to the build-out of its CCT “Center of Excellence” in San Francisco."

"The Street believes that VRNT shares trade at a ~35% discount to SaaS peers. However, we estimate that VRNT trades just above the industry median, despite its chronically low organic growth, destructive acquisitions, and inability to generate cash flow growth despite frequent M&A – a stark contrast to the many fast-growing and highly-profitable true cloud businesses which occupy the space."

"Limbach trades at over 18x our estimate for its FY26E Adj. EBITDA, a large premium when compared to peers. We believe this premium is unwarranted considering the Company's decelerating organic revenue growth, non-existent free cash flow growth, and its aggressive accounting methods which we believe may overstate earnings quality and obscure the true underlying volatility of the business."

"Petitioner believes that given the recent i) fatality, ii) hospitalization and near-fatality, iii) 13 fatalities in the pitolisant development program, and iv) the inherent and unavoidable toxicity of H3 receptor antagonists/inverse agonists as a drug class, as indicated supra, it would be a grave mistake to repeat the incremental approach that marked the eventual withdrawal of Seldane."

"Spruce Point believes it's likely that MPWR routes its cash through Singapore, which is owned by MPS International Ltd. (Bermuda). Singapore engaged in related-party transactions with Bermuda for "Services Rendered". Yet, its Singapore subsidiary Monolithic Power Systems (Singapore) PTE. LTD currently has a going concern warning, and is audited by a three person firm called Plus LLP."

"Spruce Point believes it’s likely that MPWR routes its cash through Singapore, which is owned by MPS International Ltd. (Bermuda). Singapore engaged in related-party transactions with Bermuda for “Services Rendered”. Yet, its Singapore subsidiary Monolithic Power Systems (Singapore) PTE. LTD currently has a going concern warning, and is audited by a three person firm called Plus LLP."

"BR recently expanded its TAM without any logical explanation. Its recent increase from $46 to $52 billion can be explained by the Itiviti acquisition, which it claimed added $5 billion (see this slide on why we think this is aggressive). Now BR is having investors believe its TAM has grown by $8 billion (or 15.4%) in a challenging economic backdrop where it isn't immune to recession."

"Spruce Point believes that Stryker doesn't cleanly provide investors with Mako sales figures. However, based on our research, we believe the market fails to appreciate both the size of the business, and the pressures it is under from disruptive pricing and sales from Zimmer Biomet, the #2 player in the industry. Mako revenues could exceed $1.0 billion, with prices dropping up to 30%"

"The impending release of the Libre 2 is no secret to the Street. Nor are its new technological features. However, as we discuss, we believe that the evened playing field between the Libre 2 and G-Series will bring downward pricing pressure on the increasingly-commoditized CGM market – and that this could have disastrous consequences for Dexcom to an extent ignored by the sell side."

"Spruce Point believes that the ongoing proliferation of third-party 3D printing labs in the clear aligner space will only incentivize further R&D directed at clear aligner development: whereas Align was, until recently, the only major player in the clear aligner space, materials producers now face a broad and rapidly-growing number of potential customers for clear aligner plastics."

"Spruce Point believes that Dropbox overstates free cash flow with a simplistic presentation that is analytically flawed and ignores two material costs such as: 1) Costs required to repurchase shares related to employee compensation programs, which are operating in nature, and 2) Costs associated to pay for infrastructure, which are effectively deferred capital expenditure payments."

"Spruce Point believes CLEAR trades at an unwarranted premium to other subscription businesses geared toward consumers. We believe it is facing formidable competition to solve the TSA and airline pain points which are the checkpoint and checked baggage areas. We also believe its valuation is materially higher once adjusted for the TRA liability, lease, and fully diluted share count."

"We believe it will be difficult for Zillow to grow as long as its Premier Agent business is in decline. Our estimates for 2024 assume continued weakness in Premier Agent offset by strong gains in its Rentals business paired with a comparable operating expense structure to 2023. Based on these estimates, we believe Zillow could produce $200 to $260 million of free cash flow in 2024."

"Spruce Point believes that investors need to pay careful attention to USCR's capital expenditure (capex) program. In 2017 for the first time, USCR gave hard capex guidance, which explicitly stated it included capital leases. USCR is becoming increasingly dependent on capital leases (>50% of total capex for the first time in 2017) and has missed its capex forecast every single time."

"We agree that the Libre’s lack of an alarm has been a major hurdle preventing wider Libre adoption among T1 diabetics, who were the earliest CGM adopters. However, with the impending inclusion of an alarm in the Libre 2, we believe that the playing field between Abbott and Dexcom will largely be leveled – and that the economic consequences of this could be devastating for Dexcom."

"Ginkgo is, we believe, a colossal fraud, a Frankenstein mash-up of the worst scams of the last 20 years: Enron’s abuse of related parties and special purpose entities; Intrexon, the father of synthetic biology scams, and its circular “revenue” charade; the vaporous grandiosity of WeWork and Theranos; and Ginkgo’s Siamese twin Zymergen, which fell 75% in a single day in August."

"Shareholders need to be satisfied that the peer group is appropriate and not cherry-picked for the purpose of justifying or inflating pay. In general, we believe a peer group should range from 0.5 to 2 times the market capitalization of the Company. In this case, Glass Lewis has identified 10 peers outside of this range, which represents approximately 62.5% of the peer group."

"CHD’s share price is inflated to an all-time high, and irrational valuation, as, we believe: 1) investors flock to the perceived safety of consumer staples amidst rising trade war tensions, 2) a belief that recent acquisitions will succeed in accelerating growth, and 3) recent price increases enacted to offset commodity inflation and tariffs can be reimplemented if necessary."

"In light of our findings that: 1) Generac's core and clean energy business dealership growth is slowing and it has lost partners, 2) Its PWRcell solar competitive advantage vis-à-vis Tesla's Powerwall has diminished, and 3) Some Generac dealers are engaging in allegedly misleading and deceptive marketing practices, we believe the CMO's departure should be a serious red flag."

"How can TurboTax disclosed Paying ARPR only increase 7% from 2020 to 2023 when (1) Online and Live average list prices rose 10% and 9%, (2) Intuit launched the highest ASP Full Service offering in 2021, and (3) we estimate that higher list ASP Live as a percent of total paying returns grew from 7% to 18% over the same period. We believe this suggests weak price realization."

"The other three members of Intuit's Audit Committee also raise eyebrows. While we don't question the accomplishments of Directors Burton, Dalzell, and Yuan in their respective fields (legal, technology, and engineering), we do believe Intuit's Audit Committee could be strengthened by the addition of executives with more extensive auditing and financial management expertise."

"We believe Disney should take more “shots on goals” and increase creative risks outside of its core franchises, similar to Netflix – explore allocating more budget dollars across lower-cost, easier to produce projects to further balance Disney’s higher-cost franchise content; prioritizing “retention” content spend should diversify away the risk of expensive streaming flops"

"Spruce Point believes that IAS is undervalued relative to DV and that the gap should narrow. We believe IAS offers greater exposure to faster growing and less saturated international markets. We also believe IAS has better patent coverage, financial reporting transparency and stronger equity sponsorship. We are long IAS as a relative value hedge for our DV short position."

"In an absolute best case scenario in which ABML successfully builds and ramps its facility, secures adequate battery supply to operate at full capacity, and finds customers willing to purchase material at ABML’s estimated prices, and assuming ABML should trade in-line with a mix of battery value chain and recycling players, we believe ABML is worth less than $1.00/share."