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Welcome to edition 45 of C-Suite Transitions, a weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.
Sudden Departures
GameStop (GME) $25.70
On June 5, 2023, GameStop announced the immediate termination of Matthew Furlong as President and CEO, without cause. The company did not provide a reason for Mr. Furlong’s termination. He also resigned from his position as a director of GameStop.
According to his appointment filing announced on June 9, 2021, Matt Furlong had a 24-month contract with Gamestop.
In the past five years, Mr. Furlong’s departure marks the fifth CEO exit from the company following the departures of Michael K. Mauler, Dan DeMatteo, Shane Kim, and George Sherman.
Having previously held leadership positions at Amazon, Mr. Furlong joined GameStop in June 2021. During his time at Amazon, he led the operations of Amazon Australia’s business and also served as the head of Amazon’s North American consumer business.
Ryan Cohen
GameStop announced that the Board appointed Ryan Cohen as Executive Chairman of the company and Alain Attal as the Lead Independent Director of the Board. Mr. Cohen’s responsibilities include capital allocation and overseeing management.
Mr. Cohen has been involved in several “meme stocks” in recent years.
[A meme stock refers to a stock that undergoes significant price fluctuations and trading volume influenced by social media platforms and online communities, predominantly driven by retail investors. Meme stocks are often stocks of companies with high short interest.]
Chewy (CHWY): Ryan Cohen was the co-founder and former CEO of Chewy, a pet focused e-commerce company. Chewy was eventually sold to PetSmart in 2017 for $3.35 billion. Mr. Cohen continued to lead Chewy as CEO until March 2018. Chewy went public in June 2019 at a valuation of $8.7 billion.
Bed, Bath and Beyond (BBBY): In March 2022 Cohen disclosed his ownership of a 9.8% stake in the company, expressing his intention to engage with the board regarding strategic alternatives. He later reached an agreement with the company with three board seats in the deal.
In August 2022, Ryan Cohen sold his entire position at Bed Bath & Beyond. Mr. Cohen’s holdings included both stock and options, which collectively accounted for over 9.4 million shares.
CFO Gustavo Arnal made a significant sale of BBBY shares worth over a million dollars. He sold a substantial portion of shares at $29.95. This sale coincided with Ryan Cohen’s share sales and occurred just before the wide circulation of Cohen’s Form 144, which declared his intention to sell. The timing and nature of Mr. Arnal’s sale drew legal scrutiny, resulting in an insider trading lawsuit against him. On September 2, 2022, Chief Financial Officer Gustavo Arnal plunged to his death. He was dropped from the shareholder lawsuit in November 2022 after his passing. The company has since filed for bankruptcy.
Jesse Felder recently interviewed Ben Hunt on his podcast and the “busting out” of Bed, Bath and Beyond was discussed in a very entertaining conversation.
Gamestop (GME) Short Squeeze:
In January 2021, Mr. Cohen became a member of the board of directors of GameStop. Prior to that, he had acquired a stake in the company in 2020.
The GameStop short squeeze in early 2021 garnered international interest as retail investors, utilizing online platforms like Reddit’s WallStreetBets, orchestrated a significant buying spree of GameStop’s stock. This unexpected surge in demand led to a rapid and unprecedented rise in GameStop’s stock price. As a result, hedge funds and institutional investors with short positions in the stock faced significant losses and were forced to cover their positions at inflated prices.
We wrote the following about GameStop in our Insider Weekends article last year when discussing a cluster of insider purchases at the company,
“The billionaire founder of online pet retailer Chewy, Ryan Cohen, became the chairman of GameStop in April 2021 and brought along other Chewy executives and investors to join the GameStop board. Alain Attal, who purchased 1,500 shares of GameStop was previously the Chief Marketing Officer of Chewy. Lawrence Cheng, a Managing Partner of Volition Capital, purchased 4,000 shares of GameStop. Volition Capital was an early investor in Chewy, putting $15 million into the company after Ryan Cohen was rejected by over 100 venture capital firms. Chewy sold to PetSmart in April 2017 for $3.35 billion.
“GameStop became popular on Reddit boards during the pandemic and a short squeeze ensued that saw the stock jump from around $4 in the summer of 2020 to nearly $400 in early 2021. The stock eventually came down to earth but remains elevated on any fundamental or valuation metric one can imagine. The Australian hedge fund manager John Hempton summed the situation up best in the following tweet earlier this month. Mr. Hempton rose to prominence after his very public taunting of Bill Ackman over Valeant Pharmaceuticals as discussed in this 2015 Reuters article.”
On Tuesday, Ryan Cohen increased his position in GameStop by approximately $10 million, pushing his stake up to 12.1%. Two other directors including Alain Attal and Lawrence Cheng also purchased shares this month.
Valuation
GameStop Stock is down almost 19% percent over the last year. The company has a market cap of $8.21 billion, an enterprise value of $7.55 billion on account of $660M of net cash on the balance sheet, and trades at an EV/Sales ratio of 1.30. Operating income and net income were both negative for the trailing twelve months. Short interest at 20.90% is high and a huge red flag.
Q1 2023 Results:
Gamestop reported that it will not host a conference call to discuss its performance for the current quarter with investors.
Conclusion
GameStop’s stock continues to remain very volatile. While the stock is down 19% over the last year, it has rebounded more than 49% this year despite four consecutive quarters of revenue declines. The company has not been profitable in years. Average analyst earnings estimates for fiscal 2024 and 2025 are negative. It is possible that Mr. Cohen and his crew can turnaround this melting ice cube but as we saw with Bed, Bath and Beyond, the process of turning around a struggling retailer is extremely difficult if not impossible.
The impact of Ryan Cohen as Executive Chairman of GameStop is a matter of debate, with some expressing concerns about his lack of experience in the gaming industry. However, the long-term consequences of his leadership remain uncertain.
Appointments
1. AZZ (AZZ): $39.73
Effective June 6, 2023, the Board of Directors of AZZ appointed Tiffany Moseley as Chief Accounting Officer.
| MarketCap: $993.12M | Avg. Daily Volume (30 days): 80,688 | Revenue (TTM): $1.32B |
| Net Income Margin (TTM): -4.00% | ROE (TTM): 8.72% | Net Debt: $1.09B |
| P/E: 17.05 | Forward P/E: N/A | EV/EBIDTA (TTM): 7.88 |
| P/S (TTM): 0.75 | P/B (TTM): 1.16 | 52 Week Range: $29.81 – $46.94 |
2. Kaiser Aluminum (KALU): $69.72
On June 7, 2023, Kaiser Aluminum Corporation appointed Vijai Narayan as the company’s Vice President and Chief Accounting Officer, succeeding Jennifer Huey.
| MarketCap: $1.11B | Avg. Daily Volume (30 days): 97,491 | Revenue (TTM): $3.29B |
| Net Income Margin (TTM): -0.66% | ROE (TTM): -3.24% | Net Debt: $1.12B |
| P/E: -50.86 | Forward P/E: 18.59 | EV/EBIDTA (TTM): 17.58 |
| P/S (TTM): 0.34 | P/B (TTM): 1.75 | 52 Week Range: $56.72 – $94.37 |
3. Chico`s Fas (CHS): $5.22
On June 6, 2023, David M. Oliver, has been appointed Executive Vice President, Chief Financial Officer, and Chief Accounting Officer of the company, effective June 24, 2023.
| MarketCap: $644.44M | Avg. Daily Volume (30 days): 2,280,628 | Revenue (TTM): $2.14B |
| Net Income Margin (TTM): 5.34% | ROE (TTM): 37.64% | Net Debt: $414.87M |
| P/E: 5.68 | Forward P/E: N/A | EV/EBIDTA (TTM): 5.47 |
| P/S (TTM): 0.32 | P/B (TTM): 1.93 | 52 Week Range: $4.33 – $7.31 |
4. PubMatic (PUBM): $18.88
On June 5, 2023, PubMatic appointed Lisa Gimbel as Chief Accounting Officer
| MarketCap: $980.58M | Avg. Daily Volume (30 days): 451,870 | Revenue (TTM): $257.24M |
| Net Income Margin (TTM): 7.02% | ROE (TTM): 6.29% | Net Cash: $147.7M |
| P/E: 58.27 | Forward P/E: 172.41 | EV/EBIDTA (TTM): 17.64 |
| P/S (TTM): 4.10 | P/B (TTM): 3.20 | 52 Week Range: $11.73 – $23.60 |
5. Logitech International (LOGI): $56.81
On June 13, 2023, Logitech International appointed Guy Gecht Chairperson of its Technology and Innovation Committee, as Interim Chief Executive Officer of Logitech, effective immediately.
| MarketCap: $8.93B | Avg. Daily Volume (30 days): 423,335 | Revenue (TTM): $4.54B |
| Net Income Margin (TTM): 8.03% | ROE (TTM): 15.66% | Net Cash: $1.15B |
| P/E: 25.24 | Forward P/E: 22.12 | EV/EBIDTA (TTM): 13.09 |
| P/S (TTM): 2.30 | P/B (TTM): 4.49 | 52 Week Range: $41.81 – $68.17 |
1. Definitive Healthcare (DH): $10.59
On June 8, 2023, Joseph Mirisola notified the Board of Directors of Definitive Healthcare Corp. (DH) of his intent to resign as its Chief Revenue Officer on or before effective December 31, 2023.
| MarketCap: $1.65B | Avg. Daily Volume (30 days): 701,498 | Revenue (TTM): $231.73M |
| Net Income Margin (TTM): -3.98% | ROE (TTM): -1.67% | Net Cash: $407.9B |
| P/E: -119.19 | Forward P/E: 49.02 | EV/EBIDTA (TTM): 72.73 |
| P/S (TTM): 4.75 | P/B (TTM): 1.18 | 52 Week Range: $8.71 – $30.11 |
2. Wayfair (W): $52.73
On June 7, 2023, Wayfair announced that Steve Oblak, Chief Commercial Officer, will retire from the company.
| MarketCap: $5.92B | Avg. Daily Volume (30 days): 6,084,339 | Revenue (TTM): $12.00B |
| Net Income Margin (TTM): -11.39% | ROE (TTM): 58.81% | Net Debt: $2.95B |
| P/E: -4.03 | Forward P/E: N/A | EV/EBIDTA (TTM): -8.02 |
| P/S (TTM): 0.46 | P/B (TTM): N/A | 52 Week Range: $28.11 – $76.35 |
3. Life Time Group Holdings (LTH): $20.63
On June 6, 2023, Life Time Group Holdings received notice from Jeff Zwiefel, President and Chief Operating Officer, of his intention to retire from the company after 25 years of service, effective December 31, 2023.
| MarketCap: $4.02B | Avg. Daily Volume (30 days): 989,344 | Revenue (TTM): $1.94B |
| Net Income Margin (TTM): 3.28% | ROE (TTM): 3.00% | Net Debt: $4.09B |
| P/E: 62.93 | Forward P/E: 52.08 | EV/EBIDTA (TTM): 21.69 |
| P/S (TTM): 2.13 | P/B (TTM): 1.90 | 52 Week Range: $8.75 – $21.75 |
4. Commvault Systems (CVLT): $70.52
On June 6, 2023, James Whalen tendered his resignation as Chief Accounting Officer of Commvault Systems effective August 17, 2023.
| MarketCap: $3.10B | Avg. Daily Volume (30 days): 469,563 | Revenue (TTM): $784.59M |
| Net Income Margin (TTM): -4.56% | ROE (TTM): -16.19% | Net Cash: $275M |
| P/E: -88.04 | Forward P/E: 23.53 | EV/EBIDTA (TTM): 44.60 |
| P/S (TTM): 4.03 | P/B (TTM): 16.72 | 52 Week Range: $50.26 – $72.44 |
5. Gamestop Corporation (GME): $25.70
On June 5, 2023, the Board of Directors of the company terminated Matthew Furlong as President and Chief Executive Officer of the company, effective immediately.
| MarketCap: $7.82B | Avg. Daily Volume (30 days): 6,253,832 | Revenue (TTM): $5.79B |
| Net Income Margin (TTM): -3.56% | ROE (TTM): -15.11% | Net Cash: $659.5M |
| P/E: -37.76 | Forward P/E: N/A | EV/EBIDTA (TTM): -62.69 |
| P/S (TTM): 1.42 | P/B (TTM): 6.46 | 52 Week Range: $15.41 – $47.99 |
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