Market Thinking

making sense of the narrative

THG life..

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After, yet another, glossy puff piece in the Times about ‘Buff Billionaire’ Matt Moulding of THG, I posted a comment suggesting that they should consider tagging it as Advertorial. I got a few likes and replies before the comment was deleted as seemingly contradicting the Times’ Policies – presumably on objectivity. Truth hurts obviously.

Importantly, in a world seemingly obsessed with ESG we believe that with the exception perhaps of the FT (Wirecard etc) not enough importance is being attached to the G (governance) part and from a regulatory standpoint, it is important that due attention is paid to the role of Financial PR in aggressively spinning positive stories about stocks that retail investors are herded into. In the case of THG, one of the more egregious corporate governance issues was about how Matt Moulding and his backers not only awarded him a substantial share of the business but also allowed him to take over the property division, previously acquired with debt and including a spa and a luxury townhouse hotel as well as the warehouses – debt that was paid off at the floatation – and then lease it back to the company for around GBP20m a year. Also the ridiculously low bar of awarding him a further GBP1bn of shares on achieving a laughably low target of the share price being over 670p for something like 15 consecutive days. This was achieved in a brief window before Christmas as the company was pushed into the Stoxx Index and thus picked up by index trackers with no assessment of governance. These factors, together with the controlling Golden Share he also has, were reasons for why it never went in the FTSE in the first place and probably why the stock went south shortly after achieving his target for that extra billion (-20% ytd). Plus of course the powerful and connected insiders from the retail industry conveniently had their lock-ups waived in January, allowing them to get out close to the high.

Recently the DB derivative traders turned investors from SoftTouch have turned up with a fancy structure allowing them to own the ‘tech’ part of THG, which while currently very small was the dubious justification for the Brokers listing THG as what the PR spinmeisters call ‘one of the UK’s biggest tech companies’ when it is really just another online retailer. As part of that they have subscribed to some more stock – at around 596p, considerably lower than the 760p that the insiders sold out in January and also lower than the brief period at 670p that triggered the extra billion for the Buff Billionaire (who really doesn’t like all the fuss. Honestly.) Meanwhile, here’s a picture of him on a jet/yacht/with Obama….

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