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One scoop to start: Bill Ackman has told investors he plans to raise tens of billions of dollars through two new funds, including one that has not been previously disclosed, even as he faced questions about whether his increased social media presence is a distraction.

And one thing to start: In addition to Third Point, hedge fund Baupost Group has had preliminary discussions with Adam Neumann’s team about possibly backing a bid for WeWork, the FT reports in this deep dive.

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In today’s newsletter:

  • Short sellers take on Soho House

  • SoftBank’s Arm bet gains more than $30bn

  • Hedge funds eye Korea as the next Japan

Soho House: If you can’t get in, short it?

Soho House has famously been on the hunt for more creative types to become members of the exclusive hospitality group, which has hosted celebrities such as Kate Moss and Prince Harry.

It’s unlikely the folks at GlassHouse Research will be welcome, and that’s not just because they’re accountants.

“We believe Soho House & Co is a zero,” the short seller wrote in a report released this week where it disclosed a bet against the business.

The report sliced 20 per cent off the New York-listed hospitality group’s share price in intraday trading on Wednesday, which closed at $5.

Soho House declined to comment. GlassHouse did not immediately respond to a request for comment.

A growth strategy reliant on expanding into less-affluent cities, such as São Paulo, a failure to turn a profit in its 28-year history and overcrowding hurting “member satisfaction” amounted to “a company with a broken business model”, GlassHouse claims.

The short seller also took issue with Soho House’s “mountain” of debt maturities, with $607mn coming due in 2027 and its decision to pull forward millions of dollars of revenues by introducing a credits programme for new members.

A person close to Soho House insisted the short seller report misunderstood the business. “By growing members and increasing membership fees a bit every year, that’s what’s really driving the profitability and nowhere in the report do they talk about that,” the person said.

GlassHouse itself has also come under criticism for some of its research, including by rival short seller Fiat Lux.

Soho House, which is majority-owned by American retail billionaire Ron Burkle, went public to much fanfare in 2021, floating 18 per cent of its stock at a listing price of $14. Soho House’s founder Nick Jones and the owner of the Ivy restaurant chain Richard Caring continue to have large shareholdings in the business.

Despite having yet to turn a profit, Soho House has trimmed its losses in recent years. In the nine months to the start of October last year, net losses totalled $61mn, down from a net loss of $234mn.

Arm becomes a golden asset for SoftBank

In September, when SoftBank took Arm Holdings public, the Masayoshi Son-led conglomerate chose to float just a tiny piece of the semiconductor maker, believing that the laws of supply and demand could be used to its advantage.

SoftBank listed a 10 per cent stake in Arm at a $52.3bn valuation, a disappointing figure given that 18-months earlier regulators had effectively nixed its sale to rival Nvidia for $66bn.

But Son appeared to bet the small float would lead to a scarcity in Arm shares that could eventually propel the semiconductor far higher, bolstering the valuation of the key asset within his broader tech empire.

That strategy paid off in spades on Thursday when Arm reported better than forecast quarterly earnings that sent its stock soaring nearly 50 per cent, generating more than $30bn in gains for SoftBank, by DD’s calculations.

Arm closed at $114 per share, or a $116bn market capitalisation, more than double its September IPO price.

Arm’s surging value could become a panacea for SoftBank after a brutal stretch in which many bets inside its Vision Funds soured. It owns more than 90 per cent of Arm and is treating the chip designer as a valuable asset to borrow against to fund new ideas.

On Thursday, SoftBank shares surged nearly 20 per cent, propelled by Arm’s gains and the group’s own better than forecast earnings.

SoftBank earned a $6.4bn quarterly profit — its first for more than a year — bolstered by gains from companies such as TikTok owner ByteDance, food delivery app DoorDash and a “recovery in public assets”.

However, despite what SoftBank chief financial officer Yoshimitsu Goto called “a steady improvement” in performance in the Vision funds, they are still running at a cumulative loss of close to $20bn. “We are . . . so very close to being above the water now,” he said.

The gains could fuel SoftBank’s planned “counteroffensive” after years of asset sales and losses such as WeWork, the once high-flying desk-renting start-up that declared bankruptcy last year.

Goto said Son is “exploring AI strategy . . . but anything that he likes to do always leads to Arm”.

When asked if SoftBank would sell Arm’s surging shares, Goto pointed elsewhere, noting that the conglomerate could increase its borrowing against Arm shares using margin loans.

“Arm is the great asset for us. I think that’s something that I can say now,” he said.

Hedge funds eye Korea, a new frontier for gains

As authorities in Japan push for corporate governance reforms, shares are soaring. That is putting pressure on neighbouring South Korea to address the perennial so-called “Korea discount”.

Calls for reform are mounting ahead of parliamentary elections in April. Against that backdrop, some hardy foreign funds have decided it is worth betting on deeply-discounted Korean companies.

They include US hedge fund Whitebox Advisors and UK fund City of London Investment Management, which along with Seoul-based fund Anda Asset Management have called on the management of Samsung’s de facto holding company Samsung C&T — which trades more than 65 per cent below its net asset value — to increase dividends and institute share buybacks.

They do so with a fair wind at their backs. The number of South Korean retail investors tripled during the coronavirus pandemic, transforming the public’s attitude towards activist investing and corporate governance issues.

Foreign funds once portrayed in the Korean media as “vulture capitalists” are now more likely to be seen by a new generation of local investors as allies in the battle against the conglomerates’ controlling families.

But scepticism remains as to whether the families’ grip has really been loosened.

Seoul-based hedge funds, lawyers and investment bankers all tell the FT’s Christian Davies that bigger foreign investors need to see concrete signs of progress before redirecting more capital from larger markets.

Job moves

  • NatWest has poached UBS executive Emma Crystal to become chief executive of private bank Coutts, following the exit of Peter Flavel after the Nigel Farage “debanking” scandal.

  • Aleksander Čeferin said he would not seek re-election as Uefa president moments after European football’s governing body voted through changes to its rule book that would allow him to run for another four-year term.

  • JAB has hired Gordon von Bretten as a partner. He served as chief transformation officer of Coty since 2020.

  • Alat, a Saudi Arabian company established by PIF to focus on electronics and industrials, has appointed Amit Midha as CEO. He was previously with Dell Technologies.

  • RBC has hired Adam Miller as a managing director and head of UK corporate broking. He joins from HSBC.

  • Goldman Sachs’s Allison Beller has resigned to join Prelude Growth Partners, Bloomberg reported. She had been a managing director focused on making consumer bets within Goldman’s private equity arm.

  • Jefferies vice-chair of equity capital markets and head of west coast TMT investment banking Cully Davis is leaving the firm as soon as this summer, Bloomberg reports.

  • Boston Consulting Group has appointed Juergen Eckel to lead its tech design and build unit BCG X in the UK and Benelux.

Smart reads

The go-between Former Barclays chief executive Jes Staley maintained contact with Jeffrey Epstein for longer than he has disclosed, Bloomberg writes.

Enshittification The term describes the slow decay of online platforms such as Facebook. But what if we’ve entered the “enshittocene”?, the FT asks.

Burn Book Over the past three decades, technology has obliterated the media. Kara Swisher has had a front-row seat to a slow-moving catastrophe, she reports for New York Magazine.

News round-up

Norway oil fund boss criticises ExxonMobil’s ‘aggressive’ climate lawsuit (FT)

Packaging group Mondi approaches UK rival DS Smith for £10bn tie-up (FT)

Petrobras plans $100bn in spending to persist through ‘fade-out of oil’ (FT)

Unilever warns group ‘needs to improve’ as it seeks to rebuild market share (FT)

British American Tobacco to sell down stake in India’s ITC (FT)

Gucci owner Kering fails to reverse sales slide (FT)

Saudi Arabia lines up Goldman, Citi for Aramco Share Sale (Bloomberg)

Due Diligence is written by Arash Massoudi, Ivan Levingston, William Louch and Robert Smith in London, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Antoine Gara in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco, and Javier Espinoza in Brussels. Please send feedback to due.diligence@ft.com

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