Five New Short Reports and a Big Week for the AI Bears
Weekly Wrap Up: Sunday, July 5, 2026
The trading week ended a day early with markets closed Friday for the July 4th holiday, but short sellers packed plenty into four sessions. Five new reports hit the tape, and two of the biggest names in shorting made headlines of their own. Michael Burry expanded his bet against the AI trade with new positions in Tesla, Caterpillar, and the chip complex, while Carson Block took to the pages of The Economist to argue the coming AI reckoning could make 2008 look manageable. On the report front, Culper Research went after Tarsus Pharmaceuticals with allegations of an illegal Medicare copay scheme, The Bear Cave teamed up with Hunterbrook Media for its first joint investigation, targeting StepStone Group's $2.3 billion buyout obligation, and White Diamond Research warned that Quantum Cyber shareholders are sitting on a 477 million share dilution bomb. Shortfinder's flag on FreeCast proved the week's most effective call, with the stock shedding more than 43 percent. We also published our June performance report, which you'll find below.
- Shortfinder flagged FreeCast (CAST) in its systematic short rankings. Stock closed the week down 43.3%.
- White Diamond Research targeted Quantum Cyber (QUCY), formerly Mainz Biomed, alleging the company is a stock promotion with fake business segments whose CEO holds securities convertible into 477 million shares at roughly $0.013 each. Stock closed the week down 11.0%.
- Fugazi Research targeted Redwire Corporation (RDW) alleging the space company is a capital extraction vehicle funding its existence through serial ATM dilution while concealing chronic losses and an adverse KPMG audit opinion. Stock closed the week up 3.5%.
- Culper Research targeted Tarsus Pharmaceuticals (TARS) alleging the company illegally buys down Medicare copays for its sole drug XDEMVY through a charitable foundation while overstating its addressable market fivefold. Stock closed the week up 6.8%.
- The Bear Cave targeted StepStone Group (STEP) alleging the asset manager faces a $2.3 billion obligation to buy out insiders' interests in its retail arm against just $213 million in corporate cash. Stock closed the week up 1.2%.
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Fourteen investigators published 22 reports in June, producing a 63.6% success rate and an average impact of -7.23% by month-end. Fugazi Research's Astrotech campaign led the month at -58.7%, while five campaigns cleared the 25% decline threshold. Our full report breaks down the month by exchange, geography, industry, and firm.
New Activist Reports
Shortfinder Short Report on FreeCast, Inc.
| Metric | Price | Change |
|---|---|---|
| Close (Day Before) | $7.65 | — |
| Low (Report Date) | $5.52 | -27.84% |
| Close (Report Date) | $5.60 | -26.8% |
| Close (End of Week) | $4.34 | -43.27% |
Stock Price Impact
FreeCast shares came under immediate and severe pressure when Shortfinder's flag published on June 29. The stock plunged as much as 27.8% intraday, touching a low of $5.52 against the prior close of $7.65, and finished the session at $5.60, down 26.8% on the day. There was no meaningful recovery. Selling continued through the holiday-shortened week, and shares closed Thursday at $4.34, a weekly decline of 43.3%. That made CAST the most effective call of the week by a wide margin, with the stock losing nearly half its value in four sessions. The steady deterioration after the initial drop suggests sustained distribution rather than a one-day repricing.
How the Flag Works
Shortfinder is a quantitative platform rather than a traditional activist short seller. Instead of building a narrative case against a specific company, it ingests SEC filings daily and runs machine learning models that score small and micro cap equities on the likelihood and magnitude of near-term price declines, based on factors such as dilution risk, financial health, insider behavior, ownership networks, and enforcement history. Because the output is a model-driven screen rather than a written investigation, there is no set of allegations to summarize here.
Read the Full Report Summary →
White Diamond Research Short Report on Quantum Cyber (formerly Mainz Biomed)
| Metric | Price | Change |
|---|---|---|
| Close (Day Before) | $1.63 | — |
| Low (Report Date) | $1.47 | -9.82% |
| Close (Report Date) | $1.60 | -1.84% |
| Close (End of Week) | $1.45 | -11.04% |
Stock Price Impact
Quantum Cyber shares wobbled but did not break on report day. The stock fell as much as 9.8% intraday to $1.47 before buyers stepped back in, closing June 29 at $1.60, down just 1.8% from the prior close of $1.63. The muted day-one reaction is notable for a microcap facing promotion allegations, a category that often sees sharper immediate drops. The selling arrived more gradually instead. Shares drifted lower across the rest of the week and closed Thursday at $1.45, down 11.0% overall. For a stock that had been riding announcement-driven momentum, including a SpaceX share acquisition announced days before the report, the steady weekly erosion suggests White Diamond's dilution math began to weigh on the shareholder base.
About The Company
Quantum Cyber (QUCY) is a Nasdaq-listed company formerly known as Mainz Biomed (MYNZ), a molecular diagnostics business that changed its name and business focus entirely in March 2026. The company now claims exposure to drones, quantum photonics, and cybersecurity. On May 13, 2026, it announced an IP license agreement with BP United for drone technology; on June 15, it announced a license of quantum photonic array IP from an entity called Project Lightshift; and on June 26, it announced plans to acquire shares of SpaceX. Financial websites report 22.77 million shares outstanding, but the report identifies a fully diluted share count of 499.8 million, implying a market cap of approximately $750 million at the $1.50 share price referenced in the report.
Key Points from the Report
- According to White Diamond Research, an SEC filing discloses that CEO David Lazar invested $6 million in exchange for securities convertible into 477 million ordinary shares at approximately $0.013 per share, against a market price near $1.50. Including the conversion, the fully diluted share count reaches 499.8 million versus the 22.77 million shown on Yahoo Finance.
- The report alleges the BP United drone IP deal is not a real business, citing direct examination of BP United's broken website showing $0 prices and blank product pages.
- White Diamond found no evidence that Project Lightshift, the claimed quantum photonics licensor, existed prior to the announcement, with Google searches turning up nothing and LinkedIn records linking its named individuals to Crowdpoint Technologies, a blockchain company.
- The report frames the June 26 SpaceX acquisition announcement as an insider pump-and-dump opportunity rather than a legitimate business development, warning that conversion and sale of the CEO's 477 million shares would mean catastrophic dilution for existing shareholders.
Read the Full Report Summary →
Fugazi Research Short Report on Redwire Corporation
| Metric | Price | Change |
|---|---|---|
| Close (Day Before) | $10.93 | — |
| Low (Report Date) | $10.94 | +0.09% |
| Close (Report Date) | $11.69 | +6.95% |
| Close (End of Week) | $11.31 | +3.48% |
Stock Price Impact
Redwire simply refused to go down. The stock never traded below its prior close on report day, with the session low of $10.94 actually sitting a fraction above the June 26 close of $10.93. Shares then rallied 7.0% to finish June 29 at $11.69, one of the more defiant day-one reactions we have tracked this year. Some of that gain faded over the holiday-shortened week, with the stock closing Thursday at $11.31, still up 3.5% from before the report. The resilience echoes what we saw in our June monthly report, where RDW finished the month higher despite Fugazi's thesis. Dilution-focused cases often take time to play out, since the pressure builds as new ATM supply actually hits the market rather than on publication day.
About The Company
Redwire Corporation is an integrated space and defense company operating two segments: a space segment focused on orbital infrastructure and hardware, and a Defense Tech segment added through the $1.02 billion acquisition of Edge Autonomy in 2025, an AE Industrial Partners portfolio company paid for largely in stock. Last twelve months revenue stood at $370.96 million, with Edge Autonomy contributing roughly one-third of 2025 revenue. Redwire went public through a SPAC merger with Genesis Park Acquisition Corp in September 2021 and has been controlled by private equity sponsor AE Industrial Partners since inception. According to the report, the company has never generated sustained positive free cash flow, with FY2025 operating cash outflow of $177.3 million against $335.4 million in revenue.
Key Points from the Report
- Fugazi Research alleges Redwire funds its entire existence through serial ATM equity issuance, noting that Q1 2026's $50 million cash increase came entirely from $63.5 million in net ATM proceeds while operating cash flow ran negative $6.7 million. A new $500 million ATM facility opened June 9, 2026, which the report projects could mean roughly 27% additional dilution.
- Common shares outstanding nearly tripled from 67.0 million in December 2024 to 198.9 million by March 2026, a 197% increase in 15 months, while the accumulated deficit reached $698.3 million, or 188% of last twelve months revenue.
- The report documents a repeat adverse KPMG opinion on internal controls in 2025, material weaknesses dating to the 2021 SPAC merger, and an $8 million class action settlement over falsified revenue at subunit LoadPath.
- Fugazi raises governance concerns around AE Industrial Partners, which sold Edge Autonomy to Redwire at a $1.02 billion valuation and then converted and sold its entire preferred stack into the market while the company ran parallel ATM issuance, all atop $776 million in goodwill the report says has never been tested for impairment.
Read the Full Report Summary →
Culper Research Short Report on Tarsus Pharmaceuticals, Inc.
| Metric | Price | Change |
|---|---|---|
| Close (Day Before) | $61.26 | — |
| Low (Report Date) | $60.73 | -0.87% |
| Close (Report Date) | $62.94 | +2.74% |
| Close (End of Week) | $65.44 | +6.82% |
Stock Price Impact
Tarsus shareholders barely flinched. The stock dipped just 0.9% at its report-day low of $60.73 before reversing to close June 30 at $62.94, up 2.7% from the prior close of $61.26. Buying continued into the holiday, and shares finished the week at $65.44, up 6.8%. That is a strong show of confidence against a report alleging Anti-Kickback Statute exposure, and it fits a familiar pattern: larger-cap names with heavy institutional ownership and sell-side coverage rarely reprice on publication day. Culper's central catalyst, potential Department of Justice action, carries no fixed date, which gives the market room to wait. If the report's math on patient support costs proves right, the pressure would surface in future earnings rather than in the first week of trading.
About The Company
Tarsus Pharmaceuticals is a single-product biopharmaceutical company whose sole commercialized product is XDEMVY (lotilaner ophthalmic solution), an eyedrop prescribed twice daily for six weeks to treat demodex blepharitis. FDA-approved in July 2023 and launched that August at a wholesale acquisition cost of $1,850, XDEMVY has grown to $519 million in reported LTM revenues as of the report date, having treated over 600,000 patients. The company distributes through six specialty pharmacies, with BlinkRx alone accounting for at least 63% of revenues in 2025. Tarsus reports revenues net of rebates and discounts, with 2025 gross product sales of $819 million against net sales of $451.4 million, implying roughly 45% gross-to-net.
Key Points from the Report
- Culper Research alleges Tarsus illegally buys down Medicare copays through the Healthwell Foundation's blepharitis fund, launched one month after XDEMVY's debut. Culper's implied Tarsus donation figures of $5.7 million in 2023 and $31.2 million in 2024, reverse-engineered from tax disclosures, closely track the fund's total inflows of $5.1 million and $30.0 million those years, a correlation the OIG-HHS has flagged as indicative of Anti-Kickback Statute violations.
- The report alleges Tarsus scrubbed incriminating language from its filings, replacing the 2024 10-K's explicit "patient assistance donations" line with the vague "patient support functions" in 2025. Culper estimates this expense grew by $84 million from 2023 to 2025, rising from 11% to 22% of total SG&A, and to 29% in Q1 2026.
- Culper argues the company's 25 million patient addressable market rests on a logical fallacy that equates collarette presence with disease. In Culper's own survey of 30 XDEMVY prescribers, physicians reported only 18% of patients have demodex blepharitis versus the company's 58% claim, and Tarsus itself acknowledges just 1.5 million patients have ever been diagnosed.
- Culper models peak revenues below $800 million versus the company's $2 billion claim, notes XDEMVY revenues declined sequentially in Q1 2026 for the first time since launch, and reports that its own investigators obtained an XDEMVY prescription with a one-year refill through the company's telehealth partner after submitting photos of healthy eyelids.
Read the Full Report Summary →
The Bear Cave Short Report on StepStone Group Inc.
| Metric | Price | Change |
|---|---|---|
| Close (Day Before) | $40.66 | — |
| Low (Report Date) | $38.86 | -4.43% |
| Close (Report Date) | $41.13 | +1.16% |
| Close (End of Week) | $41.13 | +1.16% |
Stock Price Impact
StepStone saw the sharpest intraday swing of the week's larger-cap targets. Shares sold off as much as 4.4% after the report published July 2, touching a low of $38.86 against the prior close of $40.66, before buyers absorbed the selling and pushed the stock back to a $41.13 close, up 1.2% on the day. Because markets closed Friday for the July 4th holiday, that report-day close was also the final print of the week. The intraday reversal on a report alleging a $2.3 billion balance sheet problem shows real two-way debate, and with the report landing on the week's last trading day, the more telling reaction may come when trading resumes and investors have digested the full investigation.
Worth noting: this is the first joint investigation from The Bear Cave and Hunterbrook Media, whose journalists authored the report following Hunterbrook's acquisition of The Bear Cave earlier in 2026.
About The Company
StepStone Group is a global asset manager valued at roughly $5 billion on the fees it charges for managing assets. The firm went public in 2020 and helped popularize the "retailization" of private markets, packaging stakes in private companies and private funds into public products sold to retail investors through stockbrokers. Its fastest-growing business is its retail arm, StepStone Private Wealth, which has grown from about $3 billion in managed assets in 2024 to around $18 billion today. According to the report, StepStone charges a 15% performance fee booked each time it marks a holding higher, meaning fees are collected on unrealized paper gains, while its evergreen retail funds tightly gate redemptions and management retains the right to freeze withdrawals entirely.
Key Points from the Report
- The report alleges StepStone faces an estimated $2.3 billion obligation to buy out profits interests in its retail arm held by CH Equity Partners LLC, an entity affiliated with the executives who run that business. The put right became exercisable April 1, while the corporate balance sheet holds just $213 million in cash, with management guidance implying dilution of roughly a fifth of existing shareholders.
- The buyout formula is pegged to fees generated by StepStone's own paper markups. The report estimates the firm is paying roughly 43 times the trailing recurring fee-related earnings it is acquiring, about triple StepStone's own 13x trading multiple. StepStone calls this math "fundamentally flawed," saying the price accounts for continued growth.
- The report alleges StepStone did not disclose the original 2019 contract granting CH Equity Partners the buyback option when it filed its 2020 IPO prospectus, and that the recorded liability has already pushed book value below zero.
- The gains underpinning the fees are largely unrealized: the flagship SPRING retail fund booked $1.87 billion in net unrealized gains against just $3 million realized last fiscal year, per Wall Street Journal figures cited in the report. A SpaceX stake purchased for roughly $270 million was marked up to about $587 million by the end of March, with the report estimating tens of millions in performance fees charged on the markup while gated retail investors cannot freely exit.
Read the Full Report Summary →
Activ8 Newswire
Carson Block warns the AI reckoning will dwarf the financial crisis — In a By Invitation essay, the Muddy Waters founder argues AI will displace knowledge workers within a few years, flip retirement account flows net-negative, and hit the passive-fund AI mega-caps hardest, making the eventual market stabilization the easy part compared with reordering society. Source: The Economist
Michael Burry cites "beginning of the end" with new AI short bets — Tesla, Caterpillar, Applied Materials, and an ETF tracking chip makers join the Big Short investor's monthslong wager designed to pay off if the hype around artificial intelligence sours. Source: The Wall Street Journal
