A couple of weeks ago, one of my companies was hit by a short call by Edwin Dorsey using the moniker, The Bear Cave. Never having heard of this guy, having him move the needle with his thesis gave me pause. Granted, the company in question gets plenty of grief as a Multi-Level Marketing company – but this, in and of itself is not an illegal pyramid scheme. As long as the focus is on sales versus recruitment, the blurry line between legal and not has yet to be crossed.
But today is not of Primerica’s marketing and/or ethics of some their VPs, their dividend growth or even about them at all. The spotlight today is squarely on The Bear Cave, what it is and most important the track record. Keep in mind one of my favorites to bash is Jim Cramer and his ~43% accuracy. And apologies in advance for any pain my irreverent style inflicts today.
Setting the stage, the soon to be Stanford graduate Edwin Dorsey came of age in the time of social media marketing, the rise of Trumpism, the economic disruption of the pandemic, a renewed vigor on Chinese accounting methods and largely scam-bait SPAC craze with a dash of crypto thrown in. Essentially, he had initial success and established a subscription-based newsletter.
In hindsight, much of his success can be attributed to no-brainer calls. In fact, I dabbled in Chinese stocks and SPACs before coming to the same conclusions – although mine were long versus short positions. During this early period, his self-reported results weren’t too shabby – as far as they go. Short campaigns generally have a finite goal – an imbalance based on financials, operational metrics and/or valuation. Rarely are they open-ended or calendar-based as his results portray. Costs associated with his calls are not reflected – both borrowing and carrying. Notably, he doesn’t even reference the short interest his selections have or the level of difficulty in obtaining shares to borrow.
In a nutshell, Edwin has a knack for identifying a position but closing or rolling it is left to the subscriber. He self-reported results in 2021 and 2022 with the report card being:
This only reflects deep dives for paying customers, although mentions/criticisms across the entire platform don’t significantly alter these numbers per my investigation.
His first full year was 2020 but the mentions and deep dives are intermixed as his current format was a work in progress.
One caveat to the 2020 numbers – he was premature on at least three of the issues by two years. But being ultimately correct doesn’t necessarily make the short trade profitable.
It was a different story in 2023 and YTD 2024. A little bit of historical normalcy in the economy doesn’t appear to translate nicely to Bear Cave theses.
In case you’re wondering, Edwin’s track record with DGI stocks is abysmal losing 6 of 8 times when reporting against the ones in my portfolio. The two he won – HSY has commodity pricing constraints (a not reported follow up is under water) and Amalgamated Bank called off a merger. (negatives DGI won, Bear Cave lost)
In summary, our opinion is Edwin’s SCO marketing prowess doesn’t translate into results worthy of the premium subscription fee required ($640 annually). Hitting his zenith in 2021, it’s been a downhill slog since. Frankly, we’d invest the subscription fee into dividend paying stocks rewarding you via compounding.
Have a good week!
Seeking Returns 