Pure Beauty

THG’s Matthew Moulding embroiled in spat with US hedge-fund

By Alessandro Carrara | Published: 22-Aug-2023

Moulding has previously expressed his frustrations with the press, hedge funds and bank analysts

THG’s founder and CEO Matthew Moulding has found himself at the centre of a spat with US hedge fund Quintessential Capital Management (QCM).

It comes after Moulding criticised the New York-based asset management firm’s renewed “attack” on UK cyber security firm Darktrace.

QCM published a 70-page report in January 2023 alleging accounting errors and fraud at Darktrace, which triggered an investigation into the company by EY.

EY’s report found no evidence of foul play, but on 19 August 2023 QCM called for the Big Four accountancy firm to publish the full details of its investigation.

In a heated response, Moulding claimed that the company had intentionally bet that Darktrace shares would fall prior to releasing its allegations against the company in January.

“Six months after Quintessential’s attack, an independent review by EY confirmed the wild allegations had no basis and that Darktrace is a UK tech darling after all,” Moulding said in a Linkedin post.

“And so, Quintessential sold c£25m of shares in Darktrace it didn’t own, a bizarre but legal transaction which is banned in some countries.

“For pennies, you can make hundreds of millions by wreaking havoc against a company and its share price.

“Hence, rogue bankers and hedge funds show no limits, often with the help of some friendly media."

In response, Gabriel Grego, founder of QCM, took to Linkedin to defend the company, “clarify” its stance and “correct some misunderstandings”.

“We echo Mr. Moulding's concern for integrity in the market, but it's essential to note that the EY report, despite our vocal requests, has not been made public,” said Grego.

“The conclusions shared were made by Darktrace insiders, thereby lacking the impartiality necessary for transparent evaluation.”

The business owner Grego also stressed the “vital role” that short selling plays in market efficiency and price discovery.

Short selling refers to the practice of betting and profiting on a drop in a company’s stock price.

THG owns brands including Espa and Lookfantastic

THG owns brands including Espa and Lookfantastic

“The short thesis on THG's stock, validated by a significant drop in its value, might reflect underlying concerns that cannot simply be attributed to malicious intent,” he added in the post.

Moulding quickly responded to the statement and said: “Lot of words but just waffle.

“Darktrace has gone above and beyond any LSE requirements, but you’re still unhappy and argue for more transparency.

“Trying to argue your actions against LSE companies are a force for good is like a house burglar arguing he’s helping to de-clutter homes.”

There have been no further posts from either individual at the time of writing.

It is not the first time that Moulding has publicly expressed his frustrations with the press, hedge funds and bank analysts.

In April, Matthew Moulding hit back on social media about the UK media’s coverage of the beauty company, in the wake of a takeover proposal from US buyout firm Apollo.

A LinkedIn post by Moulding targeted the British, which he said “regularly build negative coverage” against UK listed companies.

He claimed this is done by the three groups to bet on which share prices will fall.

This is achieved by “discrediting” companies using aggressive claims, which aim to impact  share prices, Moulding continued.

THG later terminated discussions with Apollo Global Management, after it rejected the offer based on an inadequate valuation of the company.

Moulding also purchased London-based finance newspaper City AM in July 2023.

The British businessman acquired the company through a pre-pack administration process for an undisclosed sum.

City AM, which has been loss-making in recent months, was put up for sale in July 2023 by its owners seeking either investment or disposal - but failed to find a buyer.

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