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Hargreaves Lansdown Investors - HL.

Hargreaves Lansdown Investors - HL.

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Hargreaves Lansdown Plc HL. London Ordinary Share GB00B1VZ0M25 ORD 0.4P
  Price Change Price Change % Stock Price Last Trade
24.50 1.42% 1,748.50 16:35:23
Open Price Low Price High Price Close Price Previous Close
1,732.00 1,727.00 1,756.50 1,748.50 1,724.00
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lomax99: Telegraph today:Questor: Hargreaves is the investment platform to buy as the Neil Woodford effect lingersQuestor share tip: rivals AJ Bell and IntegraFin are great businesses too but their shares are more highly valuedHargreaves Lansdown's shareholders cared more about its involvement with Neil Woodford than its customers did, it seems.Shares in the investment shop stand 27pc below their level just before the suspension of the Woodford Equity Income fund in June 2019, while shares in rival firms AJ Bell and IntegraFin have risen by 10pc and 39pc respectively. But Hargreaves still managed to attract 220,000 new customers last year to take its total to 1.4m.Despite this vote of confidence by the people who matter, investors' apparent anxiety about the Woodford connection has meant that readers who followed Questor's advice to buy Hargreaves shares in January 2017 have made only a modest 24pc, whereas IntegraFin has gained 82pc since our tip in December 2018 while AJ Bell's shares have risen almost threefold over the same period, annoyingly for this column in view of our decision to bank a quick 50pc profit just weeks after our "buy" advice.We did so on the grounds of valuation, although these three companies fall into the enviable category of businesses that can grow sustainably with minimal need for capital and at very high profit margins. This is a potent mix that offers the opportunity for long-term compounding of returns – and there is no better way for patient readers of this column to grow rich. It also means that, within reason, a high multiple of earnings is no reason to avoid the shares.The key attribute of these businesses is that their revenues can grow while their costs remain broadly fixed. Once they have built the platform that allows customers to trade and hold shares and funds, their costs are little more than those of running a call centre.Meanwhile, there are several avenues to rapid growth. These firms make a percentage of the value of the assets that their customers own on their platforms, so signing up more customers, more investment from existing ones and investment growth when markets rise all contribute.There is every reason to expect more customers to sign up. With each year that passes, fewer workers benefit from final salary pension schemes and are forced to save for their own future. Many existing customers naturally pay in more money to their Isas and pensions on these platforms every year, while fewer cash in their pensions in their entirety for annuities following the introduction of the pension freedoms in 2015.America is ahead of Britain in this respect and gives some idea of the scope for growth in personal investment here."About 3m DIY savers invest via platforms in Britain now, whereas in America Charles Schwab has 30m and Fidelity something similar," said Ben Needham of Ninety One, who owns stakes in Hargreaves and AJ Bell in his UK Equity Income fund, while other funds run by his firm invest in IntegraFin."Probably one in five or six Americans invest, whereas here it is one in 20. So there is evidence that the market in the UK is only in its embryonic stages."Platforms can also make money from share dealing commission and from new lines of business such as "active savings" services, which allow customers to move money from one bank to another in search of higher interest rates with the same ease with which they can switch from one fund to another.Share dealing and the savings services both offer ways to attract new, younger customers – customers who will often in time invest in Isas and pensions and start to accumulate large sums.The three firms, two of which, AJ Bell and IntegraFin, update on trading next week, have different mixes of clients. Hargreaves concentrates on individuals who look after their own money while IntegraFin services financial advisers; AJ Bell does both.AJ Bell's shares are most highly valued at a forecast price-to-earnings ratio in the low 40s. Hargreaves is in the high 20s and IntegraFin is in between. AJ Bell's rating reflects greater growth prospects both for the assets it looks after and for its profit margins.Although we sold far too early we don't see a compelling reason to go back into the stock at a much higher price; IntegraFin is a hold but for new money our pick is Hargreaves, whose shares still seem unfairly punished by the lingering association in investors' minds with Mr Woodford.Questor says: buy Hargreaves Lansdown, hold IntegraFinTicker: HL., IHPShare price at close: £16.59, 540p------It's a shame that they do not include a comparison of Gross Margins.......
robinnicolson: Troy Global Income Fund have initiated a position in HL: We have established a new investment in Hargreaves Lansdown (HL). HL describe themselves as “the UK’s no.1 investment platform for private investors” which we think is fair. It is an excellent business operating in a very attractive market. A number of structural tailwinds such as pension legislation, stretched government finances, demographics and increased levels of digital and investment sophistication are leading to a growing number of people taking increased control of their investment lives. As the dominant operator in this industry HL is well placed to take advantage of these trends. Scale and longevity have enabled the company to build a large, loyal customer base allowing them to invest in technology, delivering excellent customer service. As a result, they enjoy pricing power, driving excellent financial productivity without recourse to debt. Despite their size, HL represents a relatively small percentage of a growing market. Returns on capital and revenue growth have been declining from elevated levels but remain sufficiently strong for us to regard this as a very attractive long term investment. We were able to buy the shares when trading at an unlevered 4.4% free cash flow yield. This valuation combined with a clear run way for growth, means we expect good returns for years to come. The company’s revenues are exposed to the valuation of asset markets which we believe are currently fully valued. As such we have initiated a modest holding which we expect to build up over time.
ochs: Yes, Woodford has stated that himself in recent interviews... he believes that if he'd been allowed to carry on managing the fund he would have ridden out the storm to the benefit of his investors. This may be true as some of his stocks did recover, but it might not have been enough, and he would still have been stuck with too much unlisted (mostly) junk.
growthpotential: Your financial adviser is supposed to encourage you to stick to your strategy and explain what's happening in the markets. Generally, due to the emotional biases of retail investors, this is a huge plus as lots of amateurs typically panic and sell literally at the bottom at the point of capitulation. The advisor is supposed to give guidance but ultimately it's your decision. If I had an advisor I wouldn't be afraid to tell him to offload Woodford but keep my other exposures.
growthpotential: If you were a Woodford investor I personally think it's your own responsibility for the fund performance. After all, HL is a DIY platform. It's so hilarious that investors will cheer when it's going up but cry like a baby if it doesn't work out. Get over it
ygor705: Ochs.....Leigh Day seem to be busy sueing the Woodford administrators for £100 million at the moment. One would think that they would probably need to go after Woodford himself next before coming after bodies acting on a brokerage basis like HL. Unfortunately for Woodford investors, the FSA seems very reluctant to close him down thereby thereby making an easier legal route for them to get at him. If this does get to HL it looks to be quite a way down the track.
lomax99: IC today:Buy the Hargreaves Lansdown dipIn the long term the DIY investment platform giant should remain a dominant playerWith its 42.5 per cent market share, Hargreaves Lansdown (HL) is the big beast of the UK's do-it-yourself investment platform market. Many readers of this title will be among its 1.5m clients, and some may have even read our various missives questioning the sustainability of its business model. In short, Hargreaves provides a service that is trusted by huge numbers of people, but at a price which does not always seem compelling. Is it all just a clever marketing exercise propping up margins destined to contract?We think not, even if revenue margin compression seems possible or even likely in the coming years. Neither are these two views contradictory, because Hargreaves sits atop one of the great secular growth stories in finance: the use of investment platforms by ever-greater numbers of savers in the ever-growing UK savings market. This means it should be able to swallow growing pressure on prices thanks to scale and operational gearing.Judging by current market sentiment – reflected in a price to cash flow ratio of 23, a five-year low – this seems like a contrarian view. The shares have failed to hang on to ground first broken in the autumn of 2017, and barely outperformed the FTSE All-share Index in the five years to December 2020. That seems odd for a company that routinely posted after-tax profit margins above 50 per cent and a 27 per cent average return on assets over the same period. While analysts expect fee pressure and slightly higher costs to hold back profits over the next two financial years, bottom line growth should resume at pace thereafter.A beaten-up valuation (at least relative to the historical average) is also at odds with recent performance. Whatever you make of Hargreaves' value-for-money (more on which below), it added 222,000 customers in the 2020 calendar year, and hung on to 92.9 per cent of clients in a period marked by extreme financial market turbulence and, for many investors, reams of spare time to compare and settle on a preferred financial service provider.On one hand...Granted, like any service provider, the group also relies on some client inertia. An ongoing 0.45 per cent annual charge on the first £250,000 of funds held with Hargreaves is pricier than that of key rival AJ Bell (AJB), whose YouInvest platform charges 0.25 per cent. Ongoing charges of up to 1.56 per cent on Hargreaves' own multi-manager funds, even before the annual 0.45 per cent platform fee, look particularly steep against the 0.22 per cent flat charge on Vanguard's LifeStrategy portfolios. Share traders may save money with ii's all-you-can-eat price model, too, versus Hargreaves' charges of up to £11.95 per deal.Beyond fat margins and chunky prices, there are concerns about lower-quality earnings. For example, in the year to June 2020 just over 12 per cent of client assets on the platform were held in cash, and contributed 17 per cent of the £551m in revenues generated in the period. This was very profitable business, as Hargreaves simply held clients' cash in higher-yielding accounts, banking the interest on billions of pounds.This seems less terrible when you consider that banks routinely earn greater margins (albeit with greater risk) from customer deposits, and that it is ultimately up to platform users to move their cash into higher-yielding products or accounts. But much of these margins have now gone as interest rates have dipped. At the same time, recent hiccups in customer service – be it on the dedicated phone dealing line, or platform outages during bouts of market volatility – have all added to the perception of "high cost, poor service, quasi-monopolistic behaviour", to borrow the words of one investor group.At the same time, Neil Woodford's not-so-long march from exile and back into the headlines was another unwelcome reminder of the goodwill chewed up by Hargreaves' long-term promotion of the stricken fund manager. Optically, none of the above has been helped by several major share sales by founder Peter Hargreaves, who this month sold a £300m stake to institutional investors. Although the former chief executive still owns 19.7 per cent of the FTSE 100 group, it's fair to say that the market took the discounted placing as a negative....on the otherHowever, to characterise Hargreaves as a mere beneficiary of investor inertia is neither fair to the business or its customers. A more charitable and balanced take is that the company's dominant and growing market position is evidence of a client base that feels secure and empowered by a strong proposition to help them manage their money.Increasingly, these customers are also younger, and their needs are changing. But while it's important not to lump investors into one group, it's also worth remembering that most people are risk averse and cautious with their money. Sure, cryptocurrencies, leveraged equities and meme-led investing may be in vogue, but that's a drop in the pond compared with the £300bn sitting in low- or no-interest cash individual savings accounts (Isas).Pensions reforms and the auto-enrolment scheme mean growing numbers are aware of the need to get their 'savings working harder', to borrow Hargreaves' tagline. To this end, the launch of Active Savings – a portal giving savers the flexibility to easily move between fixed interest rate products – represents an opportunity to cement the brand and wider platform in the minds of customers who otherwise wouldn't view themselves as investors.This, together with strong client flows in recent quarters, go a long way to explaining why forecasts for assets under administration have rebounded and are set to climb in the coming years (see chart).Cash savings are also one of many intensely competitive areas. Just this week, Aviva (AV.) launched its own portal, suggesting the 75 per cent uptick (£4.5m) in Hargreaves marketing spend seen in the first half of FY2021 may not be a one-off. But as the market leader, Hargreaves has already stolen a march on new entrants, with large footholds in multiple asset classes. Numis analysts go one further, arguing that Active Savings represents "another staging post in HL evolving to provide a comprehensive financial platform".Even in structural growth markets, competition is always a threat. So while investors can expect Hargreaves to adapt, no one can say for certain which segment of DIY investment will be in the ascendency in five years' time. The challenge from low-cost passive funds isn't going away, and we expect robo-advice to gain traction as Goldman Sachs adds an investing platform to its popular Marcus account later this year in the UK.Has Hargreaves invested enough in this future? The hugely cash-generative nature of the business has been good for dividends and the corporate bank account, but the coming years might require a more creative recycling of cash should market share come under pressure.Then again, the end-game – the sort of AI-powered consolidated platform which Numis reckons Hargreaves could build and eventually render traditional financial advice obsolete – sounds like a prize worth pursuing. After all, if there's one thing Hargreaves has shown, it's that people are happy to pay up for convenience.Thrones can be both a target and their own peculiar source of power.
lomax99: imo not over valued at all. FT Lex: Hargreaves Lansdown: platform game Investment platform Hargreaves Lansdown attracted a record 84,000 new clients in the second half of 2020, with an average age of 37. Over three-fifths of its clients are now under 55, up from just over half in 2015. Their share of assets under management has not grown so fast. Hargreaves Lansdown, launched in 1981, has reached middle age. The financial services company has no fashionable credentials to appeal to the online warriors piling into heavily shorted stocks. Even so, it has been boosted by a rush of younger investors on to its platform. They helped push up its pre-tax profits for the six months to December by a tenth. Recent conditions have been exceptional and investors, reasonably, are not getting carried away. Although the results were better than expected, its shares edged down 3 per cent. They are priced at 30 times forward earnings, in line with their 10 year average. With a record 84,000 new clients, the average age of new joiners has dropped to 37 – from 45 in 2012. For many, it might be just a lockdown fad. But Hargreaves maintains that the behaviour of its coronavirus-era clients is little different to the rest. Younger people are becoming more focused on managing their financial futures. Newbie investors are always advised to keep costs down. Hargreaves is far from the cheapest. Indeed, online investment service Interactive Investor claims the average ISA investor can save £30,000 in cost over 30 years by switching to it from Hargreaves. There must be a risk that Hargreaves’ juicy operating profit margins come under pressure. It has been forced to lower the annual management charge on some of its funds. But the client retention rate remains high, at about 93 per cent, despite complaints over its cheerleading of the doomed Woodford Equity Income Fund. It is a hassle changing investment platforms and customers appear happy with the services and investment options they receive. Hargreaves is a steady prospect when judged by its hefty share – 42.5 per cent – of the direct-to- consumer fund market. But rock bottom interest rates are encouraging people to move money out of cash into other investment products. It has just 5 per cent of a £2.4tn savings market. Judged by that yardstick, it has plenty of room to grow.
micha14: The bears are missing the crucial points- HL is gaining market share in a growing market at a double digit clip. crucially, the increased share dealing volumes is here TO STAY+ the average investor is younger so HL has them for longer, growth often comes from existing investors too. brilliant company, fabulous family management, growth, fantastic returns, most profitable family owned biz in Europe. What about valuation?? 7750m market cap. So if we assume 10pc growth from 2020 to 2021 (and profits grew 10pc in first half of the year) we arrive to 288x 1.1= 316m. Net cash position of 390m. So (7750-390)/316= 23 MULTIPLE. 23 MULTIPLE. THE SNP500 IS currently trading on 23, but this company is so muhc more quality than the snp500 due to- growth, returns, management, margins, assett light biz model. CONCLUSION- AT 1631P THE COMPANY IS UNDERVALUED, mainly because its UK based.
lomax99: FT: Hargreaves' Brexit buffer:Brexit bothers investors and periodically slows down the whole Hargreaves Lansdown moneymaking machine, writes Cat Rutter Pooley. Not noticeably this quarter though, even as the next Brexit deadline looms.In the three months to September, HL attracted 31,000 net new customers, it said on Thursday, despite both Brexit and Covid-19 giving investors the collywobbles. This time last year when Brexit trouble bubbled it only brought in 17,000 on a comparative basis. Many will be day traders lured by the stock market machinations since March. Elevated trading volumes helped lift HL's revenues above analysts' expectations. The new clients are potentially less lucrative than others on Hargreaves platform.They did not bring as much money with them per head as those who joined a year ago, and won't necessarily stick around once markets quieten. But flighty as day traders may be, they are helpful at a time when uncertainty is building and interest rates are at rock bottom. Many UK equity investors are already choosing to wait out the current bout of turbulence. UK shares have proved unpopular in recent months. The FTSE 100 has been slower than global peers to recover from March's plunge. Data from the Investment Association show net retail outflows from UK funds of £748m in August and £912m in July. If clients build up cash balances that is bad for HL, since rock-bottom interest rates mean it earns measly margins on the pooled money placed with banks. Those margins have historically accounted for a decent chunk of overall profits, says Shore Capital analyst Paul McGinnis: about 27 per cent in the year to June and 24 per cent in the year before that.But rates have fallen significantly since April as central banks loosened purse strings. The headwind to profits from lower rates could be about £70m if extrapolated over the course of a year, Mr McGinnis reckoned in August. HL hopes it can convert its new stockbroking clients to other assets, making them as sticky as the rest of its customer base. It does not matter too much if it can't. They are nice to have for now as a Brexit buffer.Even after Brexit is done and dusted, Hargreaves will continue to reap the benefits of the shift from defined benefit to defined contribution schemes and an ageing population with money to invest. It is as close to a perpetual motion machine as one is likely to find on the stock market.
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