Frasers Group PLC (LSE:FRAS), the retail company, has once again topped up its Asos shareholding, this time to 18.9%, only a few hours after it lifted its stake in Boohoo to 16.5%.
Mike Ashley’s retail conglomerate is now the largest shareholder in Boohoo Group PLC (AIM:BOO), ahead of its co-founder Mahmud Kamani and a string of other investment firms, and the second-biggest stakeholder in ASOS PLC (LSE:ASC) behind only Bestseller, the Danish clothing company.
“It's got a long history of taking stakes in retail businesses, and companies from various other industries, the rhyme and reason of which is not always clear,” Clive Black told Proactive.
Black noted that sometimes Ashley is focused on developing a holding with the view of one day taking a company over, while other times he builds a standing in a company to influence its board or develop a commercial relationship with the business.
“These are all quite rational motives, but you don't really ever see any consistency with any of them and in that respect, it feels quite opportunistic, the success of which is often questionable,” Black added.
One of the biggest examples of Ashley’s failures was in his stake in Debenhams, which after collapsing during Covid, caused the group’s £180 million stake in the retailer to become worthless overnight.
Interestingly, both are the two most shorted stocks in London, with Boohoo sitting at a net short position of 6.65% and Asos at 7.04%, according to ADVFN.
So, what is it that Ashley and his CEO/son-in-law, Michael Murray, see in these companies that others don’t? Or have they taken inspiration from the Redditors behind the GameStop saga.
Wayne Brown at Liberum told Proactive: “More recently the group’s been slightly more emboldened when looking at buying stakes in companies where the equity money remains incredibly low.
“It made a lot of money in its Hugo Boss stake and there’s clearly an idea of buying into online women's apparel with Boohoo and Asos. It’s obviously been buying these stakes at very attractive prices.”
Shares in Frasers Group lifted 1% on Thursday, having opened at around 790p, up over 60% from its pre-pandemic level.