Thursday, 24 July 2014

Hargreaves Lansdown - Portfolio Purchase

I think most people reading this will be familiar with this private client investment ‘supermarket’ and platform based in Bristol.

Founded in 1981, they have grown rapidly and currently have over 600,000 clients and employ around 800 staff. In total, as at March 2014, Hargreaves Lansdown had approximately £45 bn of assets under administration or management on behalf of private investors.

The Group also provides independent financial advisory and stockbroking services to private investors and advisory services to companies in respect of group pension schemes.

The company have been on my watch list for some time but until recently, I felt the share price was too high. In recent weeks however, the stock has fallen from favour and the price has pulled back from a high point of over £15 in the early part of the year to currently £10.55. The company is a member of the FTSE 100 with a market cap of just over £5 bn.

The company’s most recent IMS was in April and which was very positive

  • Record level of Assets under Administration ("AUA"), an increase of £2.3 billion in the three months to 31 March 2014 to £45.7 billion (31 March 2013: £35.1 billion).
  • Record quarterly net inflows of £1.83 billion in the three months to 31 March 2014 (2013: £1.80 billion).
  • Record cumulative total net inflows of £4.63 billion in the nine months to 31 March 2014 (2013: £3.44 billion).
  • Year-to-date total net revenue up by 8% to £216.0 million.
  • Net new active Vantage clients up 33,000 in the quarter (2013: 30,000)
  • Total active clients as at 31 March 2014 617,000 (31 March 3013: 483,000)

I have been a little surprised at the degree of sell off - around 30% - since the Spring. Of course, there may well be further share price volatility but I view the long term story for HL as a positive given the opportunities arising from RDR and the recent changes to pensions announced in the March budget.

6m price chart
(courtesy of Digital Look - click to enlarge)

The full year dividend last year, including special of 8.91p, was 29.59p. I am looking for an uplift of around 10% for this year- interim of 7p already paid - which will give a figure of around 32.5p and a yield of 3.1%.

The full year results are due in early September.

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