Member Info for Hosai

I sometimes view AFDFN board, the BLDM poster is hilarious, apparently "invested" yet writes paragraphs every day about how terrible THG is.

People are fearful today because it fell 35% after the capital markets day and then 20% after the Q3 results. So market is now fearful of official comms updates and sp reaction. As I said before though one shouldn't assume this pattern will keep happening...the market doesn't make it that easy

I agree Mando, people also forget the context of the GQ interview where he was in-front of young, budding entrepreneurs. He is obviously going to "play to the room" and talk more bluntly in such a context and not dry and corporate.

What have they "learnt" since then that makes it far cheaper?

THG were rejecting £3.9 billion take-over bids in 2018...hardly that surprising that MM is unhappy and aghast at the current share price - https://www.retailgazette.co.uk/blog/2018/09/hut-group-rejected-3-9bn-takeover-bids-continues-aggressive-growth/

Agree Mando, though in terms of the potential of Matt Moulding increasing I believe some of that money he received from the property sale may have gone towards him paying off the loan from the council?

This was the article:

"Title - The Hut Group’s Matt Moulding offloads controversial £100m warehouse to LondonMetric

The Hut Group boss Matt Moulding has sold a distribution centre handed to him as part of a controversial arrangement that installed him as landlord to the online beauty retailer.

A company controlled by Moulding sold the Omega distribution centre in Warrington, roughly the size of 11 football pitches, to property investor LondonMetric for about £100 million last month.

In the run-up to THG’s float in 2020, the board signed off on a sale and leaseback deal that saw companies controlled by Moulding take ownership of THG’s commercial properties, which included warehouses, a hotel and a country club.

Moulding paid for the properties by cancelling share options he was entitled to as part of the float, yet appears to have received payment for the Warrington facility in cash. Of the £19 million in annual rent received by Moulding from THG, £4.1 million came from the warehouse. Moulding and THG declined to comment.

Corporate governance concerns have contributed to a 76 per cent slump in THG’s shares over the past year. Moulding has agreed to surrender his golden share, which allowed him to block hostile takeovers, and his dual role as chief executive and chairman.

The Warrington deal has paved the way for Moulding, whose net worth was recorded at £2.1 billion in last year’s Sunday Times Rich List, to settle part of a controversial £151 million loan he took from Warrington borough council last year. MCL Omega Propco, a company that holds rights over part of the Warrington facility and is controlled indirectly by Moulding, satisfied an outstanding charge to the council in full last week.

LondonMetric paid £47.5 million for Omega in 2014 and signed a pre-let agreement with THG, which exercised an option to buy it for £53.7 million in 2016."

I'm not that surprised at the lack of a run-up in a way because the market will be aware that the price fell a lot after the last two presentation/updates and may feel it will fall whatever the results. IMO this won't happen again though, the stock market doesn't make it that easy and the pattern will be broken this time (assuming results aren't bad).

Seems like growth stocks have been pricing in higher interest rates and inflation for around 5-6 months now. At what point is it priced in? I almost wonder if when they actually do raise interest rates, growth stocks will actually rise as a kind of reverse "buy the rumour, sell the news". Almost the reverse equivalent of when they cut the interest rate around covid time and the market actually dropped because the cut had already been so heavily priced already in.
Obviously the interest rates make a different to the discount factor applied in future price projections but will increased interest rates really effect growth stocks as much as markets seem to be pricing?

That makes no sense Ford, how could shorting or "hounding by MM" ever cause the results to be weak they are completely separate things? It's like you're trying to get creative now for new ways to bash THG.

Why do they only choose the examples where the shorts were shown to be right, what about Tesla where they were completely wrong. The idea that short sellers always eventually get it right seems to be a myth spread by short sellers. They only focus on the times they were right, but ultimately if you follow the big short sellers like Fraser Perring who correctly shorted wirecard, they are often shorting loads of companies and casting negative aspersions about companies all the time. The ones that don't work out for them and the price rises get ignored but the ones they get correct get remembered.

Does anyone find it slightly strange that of the $1.05 billion raised in May at £5.96 ($730 million of this from softbank), around $630 million of the capital raised was spent on "beauty" - Cult Beauty and Bentley Labs. One would have thought softbank were only interested in ingenuity but a lot of their funds were spent on THG beauty?

I think it's the topless holiday photos they can't get over. There is an impression of him as an instragram party animal type. However he doesn't actually post on social media (at-least publicly) that often. Secondly most of his photos are actually of him with his family including with his disabled son in regular hospital visits but the impression the media give is he's always partying somewhere with his shirt off (obv I understand they want to spice up the business sections).

"Moreover, disclosure was excellent, nothing was hidden, and since IPO the company has reported some very positive news."

I liked this part of Liberum report. Goes against the idea often brought by the bearish analysts who hint THG is too mysterious.

Mando I also re-watched Q.3 update recently. For whatever reason MM comes across a lot better in this then in the ingenuity update where he seemed slightly more defensive and less good at answering the questions. It's strange because at the Q.3 update the sp had fallen even lower so you'd have thought he might come across worse when actually he comes across well in Q.3 update and answers the questions well.
Maybe the defensiveness in the ingenuity investors day was influenced by the fact that the report by the analyst had come out only days before and the sudden increase in negativity from the press had just began.

Not sure when the new Liberum note was published but the Times seems to be suggesting it was priced in today which surprises me as no-one seemed aware of it on either forum until after the market close.

"After its shares tumbled by more than 15 per cent last week, THG must have been hoping that a new week would mean a new start for its battered stock. No such luck. Despite Liberum advising its clients that the embattled ecommerce businesss was a “buy”, investors in the company formerly known as The Hut Group were set on selling, driving down the share price a further 15p, or 7.7 per cent, to 179½p.

The broker’s Wayne Brown said that there may be some good things to come this year, which would be a relief after the online retailer endured some tough times since its float in 2020 — corporate governance concerns, big shareholders selling off chunky stakes and doubts over its Ingenuity technology platform, to name but a few. “The extent of the share price decline we saw last year is excessive,” the analyst said. Excessive enough that Matt Moulding, THG’s boss, handed a dossier of data to the City regulator hoping that it would prove that hedge funds and stockbrokers had co-ordinated an attack on the share price, according to The Sunday Times. The saga looks far from over."

I wouldn't say they are an outlier but they are on the bullish side with pt of £7.50. Citi has a price price target of £9. The average I believe is around £5.97.
Bank of America said they valued each of the main 3 divisions more than the current market cap so presumably also view fair value around the £6 mark.

Thanks for the share Lawriee, was good reading.

Does it not seem like online retailers such as THG, ASOS and Boohoo have strangely low valuations?
When I compare to other companies such as Ocado, Darktrace, Just Eat, Deliveroo, Fever tree, they all have far higher market caps compared to their revenue - often 2-4 times revenue, so pricing in a lot more growth than THG price currently is. And these are UK listed companies - i.e low value compared to Europe and USA listings. Yet despite this the media seems particularly obsessed with whether THG can "live up" to its valuation.

Well obviously it could eventually become an issue I meant an imminent issue as the article posted implied.