Callouts & quotes from 553+ activist slides

"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."

"While these inconsistencies suggest that there may be discrepancies in the sell side's view of the base of the market, we are intrigued most by the fact that, regardless of how analysts identify and measure the market, they appear to significantly underestimate the pace of competitive market share gains: again, the sell side appears to assume that Penumbra will lose 2-3% market share per year, while Medtronic claims to have gained 15% in under a year and to be on pace to capture another 10% this year."

"On May 4, 2020, we completed the divestiture of the Security & Detection Systems and MacDonald Humfrey Automation solutions business ("airport security and automation business") to Leidos, Inc. for $ 1 billion (net cash proceeds of $ 950 million after selling costs and estimated purchase price adjustments), subject to final customary purchase price adjustments as set forth in the definitive sale agreement, and recognized a pre-tax loss of $26 million during the quarter ended July 3, 2020."

"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."

"Using the Wayback Machine, we see that Chronogolf has gone through three iterations of its pricing plan. Initially, customers could get any of its plans for free. In exchange for using its tools, it would ask for a set of golf games which it would promote and sell online on its marketplace. Its most popular promoted “Eagle” plan was $299.99 per month. At the time of acquisition by LSPD, we see that its comparable plan was offered at $250 per month in 2019."

"Article 2: Defines “pyramid selling” as an “an act by which an organizer or operator seeks for unlawful interests, disturbs the economic order and affects the social stability by recruiting persons, calculating and paying remunerations to recruiters on the basis of the number of persons a recruiter has directly or indirectly recruited or the sales performance, or asking the recruiters to pay a certain fee for obtaining the qualification for participation.”"

"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."

"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."

"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."

"Spruce Point finds it highly suspicious that AMR claimed all year in 2021 that it had 100% of its “All other” segment coal from NAPP priced. By late October that changed to 90%. By year end, it reported selling just 1.27m of the 1.50m tons. Yet, for the year, AMR reported realized pricing of $61.76 per ton vs. its last reported sales commitment of $58.33 per ton – a 6% premium for a business that appears under stress."

"Generac's recent investor presentation promotes 11 regional partnerships, two of which it promoted by issuing a corporate press release. Boston Solar issued a press release promoting a partnership. Based on our field research, we find only six (6) still sell Generac's products. Even worse, at two of the distributors marked in red below, we find serious concerns being raised about the business ethics of the partner."

"CEO Cole has put none of his own money into this venture and was willing to sell stock at $0.10.(1) In addition, his employment agreement gives him a special bonus for raising capital without a broker and M&A deals.(2) Aren't these traditional responsibilities of a CEO? More importantly, there are no timeline stipulations upon which he should be held accountable for delivering results to investors."

"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."

"Article 24: Prescribes penalties, including confiscation of ill-gotten gains and fines up to 2 million RMB, for “an individual” who “commits any act as prescribed in Article 7 of this Regulation” and (a) “organizes and plans any pyramid selling,” (b) “introduces, induces or coerces any other person to participate in pyramid selling,” or (c) “participates in pyramid selling.”"

"Amcor's CEO touted "flow forward" instead of "flow back" from a cross border deal. Flow back occurs when investors sell an acquiror's shares in a cross border deal, usually from technical considerations. Our analysis calls into question his statement, and shows that actual fundamental owners of Bemis have been selling, while index/ETF owners have only moderately added."

"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."

"Spruce Point observes that insider stock sales began around the time the CFO and CRO departed. CEO Movchan also started selling stock at year end 2023 with two large blocks of 100K and 150K at $10.00 per share. In addition, the new 10-K reveals that CEO Movchan enacted a 10b5-1 program on March 14, 2024 to enable the sale of up to 400,000 shares through Dec 31, 2024."

"Why does Stryker claim tuck-ins are easy? Why did it take almost a year to close the small “tuck-in” acquisition of SafeAir, a pencil that sells in boxes of ten? Why hasn’t Stryker said much of anything about SafeAir after completing the acquisition? Did Stryker not want to inform investors that it issued a recall with the FDA shortly after closing the acquisition?"

"Spruce Point has identified many red flags as it relates to Aerojet’s meteoric share price appreciation since 2017. Its significant EBITDAP growth without corresponding cash flow growth should be evaluated relative to recent executive and director departures, along with heavy insider selling, a civil DOJ inquiry, and disclosure of federal and state tax audits."

"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."

"If cross-selling has been such a major component of management's growth plan, then why is the Company failing to capture a greater share of customer wallet? PowerSchool contracts we were able to obtain show that in most cases, PowerSchool's share of school district budgets stays flat and even declines as a percentage of a school district's operating budget."

"Note that Nevro can only sell a permanent implant if the patient achieved 50% pain relief during the temporary trial period that lasts a few days, creating a powerful incentive for sales reps to bulldoze the patient into uttering the magic phrase, and creating a patient base in whom the device never worked and will eventually need to be explanted."

"Bristol Meyers employee #1 (cont’d): Slammed BLI system as not that new or innovative; has no value proposition for big pharma like Bristol; hasn’t enabled anything meaningful for them as a customer; no one at Bristol seems to care much about the technology; hard sell to scientists internally; already have similar capabilities “much more cheaply.”"

"Ex-employees elaborated on the lack of further opportunity in cell line development: already ran out of customers; already killed off the segment despite what they promote to investors; was always "a hard sell" as couldn't show their tool is any better than current methods; no incentive or ROI for customers to use BLI for cell line development."

"Free cash flow growth should be a strong driver of equity valuation and sell-side analyst price targets. What we find is that Stryker's 2022E Free Cash Flow estimates have been contracting. Yet, not a single analyst has downgraded the stock, and in fact some brazen analysts claim shrinking Free Cash Flow merits a price increase and a "Buy"."

"The CEO has been selling stock more aggressively since shares were relisted in 2020. However, even more concerning is that just in the recent eight-month period from Feb 28th – Nov 11th CEO Liang has sold the most shares in recent history. His stock sales are mirrored by the CFO’s sales, who reduced his holdings for the first time by 70%."

"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."

"Porch essentially barters its software for leads, which it then sells, yet doesn't record the transaction in cost of revenues. Given the subjectivity and managerial discretion on placing values for exchanged services in barter transactions, they have often been heavily scrutinized by the SEC and are susceptible to accounting fraud."

"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."

"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."

"The article stated that “the Chinese authorities suspended the registration and approval of direct selling amid a nationwide crackdown on wrongdoing in the health products market”, and this means Morinda and other direct-selling companies in China are not expected to increase their presence in cities/provinces any time soon."

"With its own broadband service priced at a premium of as much as $10-$20 above broadband services provided by the MSOs and RBOCs, it became increasingly clear that any strategy predicated on reselling access services over another company's infrastructure in competition with the infrastructure owner would be challenging."

"It’s not just the deep-pocketed private equity firms, or the top 5 largest and publicly owned pest control companies, that are looking for acquisition targets. They also compete with mid-tier players that position themselves as a better fit for sellers as smaller, family-owned businesses where culture and people matter."

"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."

"KOL’s and ex-employees were remarkably consistent, across several dozen interviews, in explaining why Nevro’s sales growth collapsed – yet we failed to see one instance of device failures, lack of efficacy, and explants being asked about or mentioned in ~5 years of earnings calls or effusive sell-side reports."

"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."

"Sell-side analysts are not exceedingly bullish on the stock: several analysts do, in fact, voice concerns regarding the sustainability of Hill-Rom’s sales growth, in addition to frustration with management’s frequent re-basing of core sales growth ("core fatigue," as it’s amusingly called on earnings calls)."

"[Dauman] took a short-term financial gain beginning in 2011 by selling kids TV hits including SpongeBob to Netflix. That now appears to have backfired by encouraging young viewers to abandon Nickelodeon and other ad-supported channels and go online where they can watch shows whenever they want, without ads."

"In the following presentation Citron will show how Inogen along with its distribution network through legal and illegal tactics are committing elder abuse to sell portable oxygen concentrators for the highest price without proper disclosure of benefits to seniors at the most vulnerable time of their life."

"This anomaly raises a number of questions, not least as to what is the true value of the assets? Why would MTN sell AMT 51% of the assets for just 42% of the value, it does not appear that they were desperate to do so as there would have been other bidders? Could this mean that the assets are overstated?"

"For many years, management has been diverting capital to share repurchases, up until recently when it levered itself to acquire Itiviti. Throughout its public history, insiders have been consistently selling stock. Total insider ownership has declined every year since 2016, down to just 1.6% from 3.5%."

"By closely examining the composition of WD-40's inventory accounts, we observe that Finished Goods make up an increasing percentage of the overall balance, and more than prior to entering the last crisis. In our opinion, this suggests that inventory is building up and not selling-through to customers."

"Genius essentially barters its technology for league data, which it then sells to sportsbooks. Given the subjectivity and managerial discretion on placing values for exchanged services in barter transactions, they have often been heavily scrutinized by the SEC and are susceptible to accounting fraud."

"In 2008, while Guillermo was employed by World Group Securities (an entity that previously existed under the WFG umbrella), he was charged with violating antifraud provisions of US securities laws and was eventually banned by the SEC from associating with any firm that sells securities to the public."

"With shareholder's and sell-side analyst's constant focus on 1) real estate and 2) share price, we believe the Board's approval of executive package with no relationship to these two inputs demonstrates a complete breakdown of Director accountability to shareholders, the true owners of the Company"

"Off Grid's history dates to 2000, and it assumed its name in 2010. Its website hasn't been updated since 2019 despite being acquired by Generac in Sept 2021. Despite this long operating history, its largest customer appears to be a related-party located right next door that sells its products."

"Spruce Point believes that changes in Executive and Board leadership at Enfusion are highly troubling. Notably, at least two members have served at companies targeted recently by other short sellers while the CEO was Chief Risk Officer at a firm that settled with the SEC for illegal trading."

"Form EIA-861M is a mandatory report for most investor owned electric utilities, all energy service provider including Third Party Owners of solar PV (TPO) and other selected electric utilities and distribution companies that sell or distribute electric power to end users on a monthly basis."

"TASK is trying to sell investors on COVID-19 related expenses as adjustments to EBITDA and EPS. This might be perfectly acceptable if it were common practice for public company peers to do so. However, we don't believe that to be the case. As a result, we adjust TASK's EBITDA lower by ~$8m."

"The table below showing Casino's market share versus its "Real" EBITDA (i.e., excluding our estimate of gains on sale in 2014 and 2015) strongly casts doubt on the notion that there's any relationship between Casino's present market share and EBITDA generated by selling products in stores."

"We believe that the ability of the trust to sell stock in a short time frame after being contributed is a red flag, particularly in context of Aerojet’s audit chair resigning, its COO entering into a retention agreement, and IRS and California tax audits being disclosed shortly thereafter."

"Our research indicates that Biotech Labs has not received the requisite USDA licenses to sell its products in the U.S. This is confirmed by the LinkedIn company description of one of its foreign distributors, Biotech Diagnostics, Maryland-domiciled entity that raises additional questions."

"RINO claims to be the leader in selling desulfurization (“FGD”) and other environmental equipment to Chinese steel mills. It reported 2009 revenue of $193 million. In reality its revenue is under $15 million, and its management has diverted tens of millions of dollars for its own use."

"Spruce Point believes current sell-side analyst price targets are wildly optimistic. The consensus estimate projects 74% upside to Generac’s share price. Almost 90% of its stock promoters have a “Buy” recommendation or equivalent. 11% are “Hold” and not a single analyst says “Sell”."

"Spruce Point questions the heavy insider selling in Q4 2021 around the time we find both: 1) Unusual international revenue declining and, 2) Underestimation of the Zentrick termination payout by 2x that would have drastically reduced the Company’s 29% earnings beat for the quarter."

"Competitors with radically cheaper machines have already taken share in each segment BLI has targeted; same capabilities “for a substantially lower capital expenditure”; Abcellera ($5B market cap) is biggest competitor, has a “full stack” solution vs. just selling a screening tool."

"It is unconscionable that the Darden Board would allow the Company to sell its Red Lobster business for what amounts to a 'fire sale' price after shareholders clearly indicated that they did not want the Company to enter into a transaction unless it was subject to their approval."

"He indicated that Twist's lack of quality control would be “a disaster for a pharma company,” suggesting its quality was inferior to even Chinese players – and that the product issues preventing it from selling into pharma were unique to Twist, as its competitors all sell there."

"The Seller hereby sells to the Purchaser and the Purchaser hereby purchases from the Seller 490 Quota in the Company with a total nominal value of ALL 490 representing 49% of the entire registered capital of the Company in consideration for the Purchase Price ("Target Quotas")."