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🌟 Inspiring Encounter in Manchester 🌟

What a fantastic day it has been! Last week, we at Team Internet Group (TIG) had the honour of being invited to meet with the senior leadership of The Hut Group (THG). It was a true meeting of minds that brought together two UK headquartered businesses, each driven by global aspirations and an unwavering commitment to innovation and excellence.

🏢 Exploring the THG Corporate Campus

Our visit to the impressive new corporate campus of THG was nothing short of awe-inspiring. The energy and ambition palpable in the environment were truly motivating.

🎥 Witnessing Creativity at THG Studios

At THG Studios, we got a behind-the-scenes look at their cutting-edge video productions. The creativity and expertise on display were remarkable, underscoring the power of compelling visual storytelling in today's digital world.

🤖 A Glimpse into the Future of Innovation

The highlight of our visit was experiencing the synergy of creativity and automation, especially at the THG Ingenuity AutoStore™. Witnessing such innovative integration of technology in operations sparked numerous ideas. It opened up exciting possibilities for future collaboration, where both TIG and THG can leverage our shared passion for innovation to enhance customer experiences in new and dynamic ways.

🔗 Forward Together

We are grateful to THG for this opportunity to connect and share insights. As we both continue on our paths of innovation and global expansion, this meeting has laid the groundwork for potential collaborative endeavours that could redefine how we engage with our customers and the world.

Stay tuned as we continue to explore these exciting opportunities!

#TeamInternetGroup #TheHutGroup #Innovation #GlobalBusiness #CustomerExperience #Manchester #CorporateVisit #LeadershipMeeting

https://www.linkedin.com/posts/michael-riedl-_teaminternetgroup-thehutgroup-innovation-activity-7142606843448606720-p4-Z?trk=public_profile

All of a sudden sounds alot more conciliatory and measured from Kelso. Have they been told over the weekend RELAX, we have a plan??

Whatever Matt has planned to unlock the huge value gap, one thing we can be guaranteed, no one will hear about it beforehand. Pond scum will be off the list 😉

I said this a few days ago...

"Whatever anyone's views are on MM, what I think everyone can agree on is THG is massively undervalued, this is from us small PI's, to MM, BOD, Kelso, Sparta, Apollo, SOTP, peers, recent deals like HOTC and all the other PE firms that have knocked on the door before:

OVMK Asset Management, and now add Sir Tom Hunter to the list. And I'm sure all other holders feel exactly the same, true value of the company is at multiples. Unlocking event has to happen one way or another.

In no world THG can be valued at £2.50 in 2017, £3 in 2018, £5 in 2020, £5.95 in 2021 and now just 87p today LMAO. Market is totally broken.

DYOR

"Kelso totally agrees with Sir Tom Hunter in The Times article today (link below). Matthew Moulding has built a great company but the stock market doesn’t truly recognise its value. We also support Matt in his fight to show the City the true value. Whether splitting THG into three or by some other route, Kelso supports all such value enhancement strategies. A good clear equity strategy should help unlock the value"

Https://www.retailgazette.co.uk/blog/2023/03/thg-activist-investor/

https://www.proactiveinvestors.co.uk/companies/news/1012094/will-thg-results-see-concessions-made-for-two-new-activist-investors-1012094.html

@Yorek - Yes widely reported Sparta Capital and Frank Tuil are onboard THG. When it comes to activist investors Frank Tuil is regarded as one of the best, recent senior appointment from Elliot Management is Intriguing and anything but coincidental.

The official letter to THG BOD is classic Elliot/Sparta/Frank Tuil MO. Sparta sent an official letter to Wood Group before they also recieved an offer from Apollo soon after 🤔! Would I be surprised with another PE offer to drop soon, nope, these guys all run in the same circles, they must know what's coming. Kelso may just be doing Sparta's bidding with the former Elliot appointment!

From Kelso's letter

""whilst the share price remains low, THG is susceptible to an opportunistic bid""

Only good news for us small PI's. Whatever anyone's views are on MM, what I think everyone can agree on is THG is massively undervalued, this is from us small PI's, to MM, BOD, Kelso, Sparta, Apollo, SOTP, peers, recent deals like HOTC and all the other PE firms that have knocked on the door before.

An unlocking event has to happen. DYOR.

Https://www.thetimes.co.uk/article/moulding-turns-pac-man-to-gobble-up-more-kelso-shares-z9rzw9vpt

From Kelso's letter, they want an official announcement on demerger (doesnt have to happen right away) to drive up the share price, otherwise they see an opportunistic bid coming along!

I'm pretty sure they know interested parties are waiting in the wings, hence their urgency. We have already had 3 bids. And MM has said pretty much all the PE firms have knocked on the door.

Either MM gets a move on to drive up the share price, or PE will do it for him.

IMO what Kelso are suggesting is totally correct.

Https://www.autostoresystem.com/news/autostore-launches-pay-per-pick-service-option-to-address-fast-growing-demand-for-fulfillment-automation

HUGE NEWS if they incorporate ingenuity's pay per pick model. Only asked this question last week. Its a win win win for anyone using Autostore, just common sense really.

@AS1 - Funny how we never ever get a 5p rise with the same speed Lol

A reminder of a very simple business case....

Let's take an ultra pessimistic view.

In Kelso's latest letter they state Nutrition peers are valued at 3-7x revenue and Beauty at 3-5x revenue.

To simplify the matter and take an ultra pessimistic view on valuations for all divisions, forget the lowest 3x revenue multiples, lets go even lower, and use 2x Revenue multiple instead!!:

THG INGENUITY

Apollo offered Significantly more than 69p.

Let's just stick with 69p, we will totally ignore what Significantly means!

Market Cap - £900 million

THG NUTRITION

At 2x Revenue

Market Cap - £1.5 BIllion

THG Beauty

At 2x Revenue

Market Cap - £2.4 Billion

TOTAL - £4.8 Billion or 370p per share (current shares in issue 1.3b)

Would love to know what MM has been saying to the big holders to keep them so quiet for so long. No one knows what MM's plans are to keep the 50% supportive and on his side! Looks like everything is coming to a head.

DYOR

So another Indirect Director Buy 😉

Add another £600k to the £12.2m of BOD buys. LOL

Https://www.theguardian.com/business/2023/dec/13/federal-interest-rates-us-inflation

Markets look 6-9 months ahead.

This should now be rocket fuel for shares like THG.

DOW at all time high.

Nasdaq at year high

Cash will switch over to equities again.

Jerome Powell conceded yesterday, cuts will be made in 2024, and then no surprises also stated the most recent rises in interest rates haven't even taken effect in the real economy!!

IMO central banks went to quick too far as they were initially late, so panicked, now they will quickly unwind.

Matthew Moulding - £10.3m

Charles Allen - £1.5m

John Gallemore - £448k

Susan Farr - £50k

Total - £12.3m

Includes MM buying £700k of shares and gifting the shares to his friends.

MM also bought £2.5m of the charity shares, with the promise of returning the full upside back to the charity to complete the Seashell Trust Project.

www.business-live.co.uk/enterprise/thg-boss-matthew-moulding-frees-24375396.amp

This must be one of the highest if not the highest on the whole FTSE. Tells you all you need to know.

I think that's just a generalised statement for Ingenuity.

If you then read the Nutrition and Beauty divisions sections, they also state manufacturing, production and product development. Like the following from the THG Nutrition section:

"THG Nutrition manufactures and develops over 80% of its nutrition products by revenue in-house through a network of global facilities across the UK, USA, and Europe"

And the following from Beauty section:

"THG Beauty is informed by market and brand trend insights from its global consumer base to support brand partners with their new product development capabilities while its in-house product development and manufacturing capabilities enables independent brands to scale"

What I would also like to know is any developments for the Autostore Pay per Pick deal announced earlier this year. Could be exciting if this has taken off. Ingenuity then also becomes a software provider.

It's a win win win for Autostore, Ingenuity and any Autostore clients. Ingenuity can provide the full solution for any Autostore clients as opposed to multiple providers which increases cost, time and complexity.

https://www.thg.com/news/thg-ingenuity-signs-global-distribution-partnership-with-autostore

Ingenuity has no involvement in manufacturing, manufacturing of Beauty and Nutrition sits within those respective business.

Ingenuity is a technology platform enabling E2E Ecommerce for all THG Businesses and all external clients.

Let's take an ultra pessimistic view.

In Kelso's latest letter they state Nutrition peers are valued at 3-7x revenue and Beauty at 3-5x revenue.

To simplify the matter and take an ultra pessimistic view on valuations for all divisions, forget the lowest 3x revenue multiples, lets go even lower, and use 2x Revenue multiple instead!!:

THG INGENUITY

Apollo offered Significantly more than 69p.

Let's just stick with 69p, we will totally ignore what Significantly means!

Market Cap - £900 million

THG NUTRITION

At 2x Revenue

Market Cap - £1.5 BIllion

THG Beauty

At 2x Revenue

Market Cap - £2.4 Billion

TOTAL - £4.8 Billion or 370p per share

And this is the gravity of the problem, the disconnect to real value is simply insane. Markets are totally broken. Hence why Kelso and OVMK (maybe others) want strategic actions immediately to close the gap.

Kelso and other major holders know predators are waiting in the wings to pounce and the gap has to close. And unlike all other undervalued companies out there, with THG's 3 separate businesses the fix is easy, its in a unique situation, just needs actioning.

For major PE firms, THG is their perfect buyout target, buy it, split it, sell it, and voila, they have instantly multiplied their money . What Kelso are saying, take defensive actions immediately, to drive up the share price.

If you then go to AVERAGE peer valuations, and you could easily argue for 600p, however il leave this to others 😉. Most of us are ONLY after the magical 250p LOL

I can guarantee however small or big the investor is, absolutely nobody is going to be happy with this situation, everyone wants a return. Funny how quickly things can change. One minute MM has 50%+ support, next minute gone like domino's. If PE offered 250p-300p today, would they still back him? I'd guess not!

No one knows what MM's plans are to keep the 50% supportive and quiet.

Always said, MM's greatest deal would be to take it private for 250p. When the environment improves, it would be worth alot lot more.

HOTC proved to everyone real world value is multiples.

DYOR

@Ahanada

If THG is listing Nutrition in the US, officially announce it via RNS, Kelso's job would be done, that's exactly what they are asking for! Imagine what that would do to the share price.

IMO I reckon Kelso and Co know PE firms are circling again!

They are advising MM to drive up the share price as a defensive mechanism to ward off any predators. They are not calling for him to sell up, quite the opposite.

John Goold..

"To avoid UNWANTED PREDATORY INTEREST at the wrong levels"

"Announce a strategy for the demerger of its three stand out global businesses WITHOUT FURTHER DELAY"

We will have to wait and see.

@Hardwell - Exactly right.

Apollo or someone else comes to the table today and offer £2.50 a share, how is everyone going to vote?? Now without that golden share! I reckon majority would vote for the deal. Simply as.

With Golden Share they were all yes men/women, knowing its pointless to have a differing view. It's a totally different ball game now.

Message to MM, do something, or someone else will do it for you.

In the corridors of power is there a leak eg Apollo are/will be back or another PE firm about to pounce, hence why they are urging Moulding to take immediate defensive actions???

Remember Apollo were very interested. They were willing to up their offer further. And bought in 2 industry experts to advise them. Now with golden share gone, and some big shareholders shifting positions, who knows what will happen.

https://news.sky.com/story/former-coty-ceo-puts-gloss-on-apollo-bid-for-beauty-retailer-thg-12871291

So one of the major holders have broken ranks.

As Kelso indicated, they have been speaking to the major holders, no surprise.

Right then, form an orderly queue, who is it going to be next, Sofina, Balderton...

Everyone and their dog can see the huge undervaluation, and it's an easy fix.