With the share price of Boohoo reaching new all-time highs following a 45% increase in first-quarter profits, you can see how Cawkwell earned his nickname.
The basis for the ‘substantial short’ position is underpinned by Cawkwell’s views on the way the business is governed and managed.
“I’m surprised people have not criticised [Boohoo’s management] more but they will in due course. They will come unstuck.”Simon Cawkwell as quoted by thisismoney
He also draws reference to the damning report by ShadowFall, a hedge fund that specialises in taking short positions in companies – suggesting that the market has largely ignored it. The comprehensive report asserts that Boohoo is misleading investors on its cashflow and profits.
The report also draws reference to ISawItFirst, a fast-growing online retailer that looks incredibly similar to Boohoo and some of its brands. It is run by the brother of the chairman and major shareholder of Boohoo. This is suggested not only to show a lack of barriers to entry but could lead to an acquisition of ISawItFirst that will not benefit shareholders other than the family involved in both entities.
And the timing of this short seems compelling – reports from the Telegraph indicate that on Friday 19th June, one third of investors revolted a bumper pay rise for senior executives, including a £50m bonus for its CEO should the company reach a market cap of £6bn.