Sunday Times article - "THG hands FCA dossier on City ‘conspiracy’ over share price plunge"9 Jan 2022 00:42
"THG has handed a dossier of data to the City regulator that chief executive Matt Moulding hopes will prove that hedge funds and stockbrokers colluded to drive down the online retailer’s share price.
In recent weeks, THG (formerly The Hut Group) has passed on what it believes to be irregular stock market trading and short-selling data to the Financial Conduct Authority (FCA). Moulding is understood to be particularly suspicious of trading after THG’s investor day on October 12, when a raft of sell orders wiped almost £2 billion off the company’s valuation in a matter of hours.
THG has had a torrid first year since floating at a £5.4 billion valuation. Its shares rose at first, triggering a controversial £830 million share-based bonus for Moulding, who co-founded THG in 2004, but have since slumped by three quarters to £1.94 amid doubts over the value of its tech licensing business Ingenuity, weak cashflows and a lack of strong corporate governance.
In an interview with GQ magazine last November, Moulding claimed that THG had suffered a “pretty aggressive short attack” orchestrated by the media, investment banks, fund managers and hedge funds.
THG convened its investor day last October with the intention of dispelling doubts over Ingenuity, which licenses technology that brands can use to sell online — only for the move to backfire spectacularly when its shares finished the day 33 per cent lower.
A source close to THG claimed the slump was the result of co-ordinated sell orders designed to trigger automated trading algorithms that pushed the shares into free fall. At the time, analysts attributed the share price drop to Moulding’s lack of financial disclosure and an absence of detail on Ingenuity’s large clients.
THG’s submission to the FCA forms part of the regulator’s inquiries into the actions of a sales person at Numis, one of eight banks to have worked on THG’s listing. The sales person sent a note to hundreds of clients in November alleging “accounting irregularities” at THG and recommending they sell the shares.
THG executives are said to be furious with Numis, believing the bank has played a broader role in its woeful share performance. Numis said that after learning of the note, it quickly issued a corrected version, removed the reference to accounting irregularities and apologised.
Another part of THG’s submission to the FCA relates to a sceptical research note published in October by The Analyst, the firm whose recommendation to short THG’s shares helped precipitate their spectacular decline. Among a range of concerns raised by The Analyst was the contention that 13 of THG’s recent Ingenuity deals had yet to go live. A source close to THG said only a handful had not gone live and this was because clients were not ready; they added that the researcher had spread “misinformation”.
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