The 26-Year Old Exposing $10B Public Companies | Edwin Dorsey, The Bear Cave
The Peel with Turner Novak
Turner Novak
4.6 • 11 Ratings
🗓️ 18 July 2024
⏱️ 113 minutes
🧾️ Download transcript
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Edwin Dorsey is the author of The Bear Cave, a weekly newsletter exposing publicly traded companies that are misleading investors and harming customers.
I’ve enjoyed Edwin’s writing since he launched his newsletter the Bear Cave in 2020, and he shares his best kept secret for doing customer research: FOIA requests. We also get into short selling more broadly, common corporate red flags, the economics of his media business, almost getting kicked out of Stanford for raising issues at Care.com his sophomore year, Planet Fitness’s illegal billing operation, Hershey’s Mr. Beast problem, and the creator economy more broadly.
(00:00) Intro (05:11) How shorting works (07:20) How short sellers exposed Enron (10:51) Edwin’s process for finding bad companies (15:52) Root Insurance and aggressive pricing (20:14) FOIA: the best kept secret for company research (24:30) Biggest corporate red flags (28:17) Most common industries for bad actors (29:32) Why scammers target minorities and low income consumers (31:46) Edwin’s $1B to $10B market cap sweet spot (34:03) The challenges of mainstream media (38:15) Exposing Care.com as a student at Stanford (45:25) Why immediate board resignations are a red flag (49:45) Launching The Bear Cave in Feb 2020 (49:37) Using podcast appearances to grow (56:06) The newsletter's business model (1:00:00) Experimenting with side-newsletters, job boards, and consumer surveys (1:10:04) Planet Fitness: gym or illegal billing operation? (1:18:45) Herbalife the pyramid scheme (1:21:05) Hershey’s MrBeast problem (1:28:15) Marketing and social signaling in CPG products (1:30:47) AgEagle Aerial Systems: $4B market cap, zero revenue (1:34:50) The most ridiculous SPACs (1:41:06) How Edwin differentiates his research (1:47:07) Favorite short sellers (1:47:59) Companies that will lose to AI (01:49:29) Why creator-led business will steal share from incumbents
Referenced The Bear Cave: https://thebearcave.substack.com/ FOIA Request Template (#13 here): https://www.readideabrunch.com/p/our-2023-hedge-fund-analyst-christmas SEC Full Text Search: https://www.sec.gov/edgar/search/ WSJ’s Care.com Story: https://www.wsj.com/articles/care-com-puts-onus-on-families-to-check-caregivers-backgroundswith-sometimes-tragic-outcomes-11552088138 Planet Fitness CEO resignation letter: https://x.com/StockJabber/status/1762220603715596460 Aurelius Value: https://x.com/AureliusValue Big River Capital: https://x.com/BigRiverCapita1 Marc Cahodes: https://x.com/AlderLaneEggs David Orr: https://x.com/orrdavid Citron Research: https://x.com/CitronResearch
Where to find Edwin: Twitter: https://twitter.com/StockJabber LinkedIn: https://www.linkedin.com/in/edwin-dorsey-a9195273/
Where to find Turner: Twitter: https://twitter.com/TurnerNovak LinkedIn: https://www.linkedin.com/in/turnernovak/ Newsletter: https://www.thespl.it/
Transcript
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| 0:00.0 | So I think the Freedom of Information Act is one of the best kept secrets. |
| 0:03.5 | My bread and butter is really looking at a company's relationship with their customers. |
| 0:08.0 | You could take two public companies with the same exact financial metrics, |
| 0:12.0 | but the one that's loved by their customers that could probably increase prices, |
| 0:16.0 | that has a lot of brand loyalty, is worth so much more than the one that's hated by its customers and it's |
| 0:21.4 | going to face a lot of churn and it's going to have a lot of problems with growth growing |
| 0:24.8 | forward. Even if the financials look identical, the customer sentiment really impacts value. |
| 0:30.0 | I got in a big fight with this publicly traded company called Care.com. It's a platform where |
| 0:35.4 | parents can go to find babysitters. There have been a few cases where a baby had died under the care. Care. It's a platform where parents can go to find babysitters. There have been a few cases where |
| 0:38.7 | a baby had died under the care of a care.com babysitter. I see a little bit of early stage litigation, |
| 0:45.0 | parents who claim they paid for background checks, but then got babysitters with criminal histories. |
| 0:49.4 | So I try to sign up to test their process as Harvey Weinstein. |
| 0:55.1 | And I thought there's no way I get approved. |
| 0:57.5 | They're obviously going to catch me. |
| 0:59.4 | And to my amazement, hello Harvey, you've been approved. |
| 1:03.1 | I go on there and I get extra verified. |
| 1:06.0 | They're not checking anything. |
| 1:07.6 | I document it all. |
| 1:08.6 | I write a little article. |
| 1:10.3 | The stock falls a little, a board member |
| 1:12.3 | resign the next day, gets some media attention, but it doesn't go superbiolist. And that would |
| 1:17.3 | have likely been the end of it. Except the company decides to fight back. |
... |
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