Hargreaves Lansdown Share Discussion Threads

[b1nky] 05/3/2021 11:28

This is about to pop. Sellers stock been slowly mopped up over the last few weeks. Hold on tight!!!

[growthpotential] 27/2/2021 21:12

Yeh, bit of a frustrating one at the moment

[lomax99] 25/2/2021 17:42

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] 25/2/2021 13:38

Refer to C Hill's letter to N Morgan, W lied to them, over a prolonged period. I believe any general 'tone' pre-dated current senior management.

[ochs] 25/2/2021 13:06

Yes, but HL should have been asking more probing questions and not taking Woodford's answers at face value. I think there was a culture of being too chummy with Woodford and other 'favourite' fund managers. That has hopefully changed now and lessons have been learnt.

[lomax99] 25/2/2021 11:17

They were being lied to by Woodford!

[ochs] 25/2/2021 11:16

@micha14, thanks. I agree re: Funds Library sale, that was good business. You've conveniently forgotten management failings re: the Woodford fund and allowing their Investment Department to carry on without checks & balances from the main board (something they've corrected since via at least 1 new non-Exec).

[micha14] 25/2/2021 01:18

@Ochs I know a lot about the management by a analyzing their desicion making. Just look at the fundslibrarysale-outstanding. See how they treat owners vs themselves. Consider dividend policy. Think about their biz strategy. Treatmnt of employees. Listen and read their market insights. See their Ns for last 4yrs. Finally team up with Nick Train, largest owner and billionairs Hagreaves and Landsdown. Ehh. The most profitable family owned biz in Europe. UNDERVALUED

[lomax99] 24/2/2021 13:37

Well I rate the current management and think they are doing a good job.

[seanp] 24/2/2021 13:11

Thanks for your comment Ochs. I hope they get on top of it as I recommended HL to several of my friends.

[ochs] 23/2/2021 18:07

@seanp, sorry to hear that, I'd guess organising a large helpdesk with many staff working from home is problematic and that might explain the slower phone answering. However what has always distinguished HL from the competition has been the quality of the customer service, and that is something they need to maintain, but it becomes harder the bigger they get, and is certainly something management need to keep a handle on. One of the best compliments regularly heard about HL in the past was the personal touch meant that you felt like you were dealing with a small company, rather than a large one. @m_kerr, I agree the numbers are fantastic, and its amazing to see the dividend increase when so many companies have cut or cancelled, but the market is not currently rating the shares due to various headwinds specific to HL.

[seanp] 23/2/2021 12:00

Unfortunately HL have not been able to do what they used to do pre covid 19. They used to be able to answer their phones and resolve your queries. Now all I get are help lines that go round in a circle and messages saying they are very busy. This doesn't assist me in the service I need. Eventually this will impact on the share price.

[m_kerr] 22/2/2021 18:57

go and look at the numbers ochs. they speak for themselves. consistent growth through the financial crisis, and covid 19, when the economy is down 10% this year (depression level). it's a great business, and great businesses are far easier to manage than poor ones. so wouldn't call management 'wonderful', but it doesnt really matter. it's the quality of the business that allows them to get away without having great management.

[ochs] 22/2/2021 07:55

@micha14, just out of interest, you always say 'wonderful management' but what do you know about the current management and their experience and track record?

[micha14] 22/2/2021 06:59

@rodfelix You are better than safe. Buy more if you can.Wonderful company with wonderful managmnt and winderful prospects. Probably the safest thing out there to keep your money in. Safer than your house

[f0rl0rn] 21/2/2021 22:23

If someone says bail out, would you sell?

[rodfelix] 21/2/2021 20:02

Hi any advice please. I own 40k of HL stock which has taken a bi recent drop, am I safe holding onto them or should i bail out. down 7%.

[xamf] 19/2/2021 22:55

You’re welcome.

[stockready] 19/2/2021 21:45

XAMF Thanks mate, You are right . ..could be he/she (or even it) as i don't know the difference lol as i am not native enough for this stupid dummy arrogant lol Don't worry he (or it) doesn't get to me I dealt with his/her/it kinds before lol Thanks again

[xamf] 19/2/2021 20:49

Stock. There’s no excuse for it but don’t let him/her bother you. He/she’s quite clearly just rude to anyone who has a different viewpoint. It’s not right, very immature and quite sad really. Hey apparently I’m not native British either - It’s quite funny. Clearly being a ‘true Brit’ now gives us all a genetic competitive advantage!😝🤪. So you’re in good company mate. Keep up your insightful posts.

[ochs] 19/2/2021 19:45

Sorry to say it Stock, but for me it's currently Porsche1945 1 stockready 0 I personally welcome all views on this thread, it keeps it interesting (and entertaining) - I think we should all be willing to learn from each other and share ideas. None of us should be telling another poster to 'get lost from this thread'... that's not in the spirit of a free bulletin board surely?

[m_kerr] 19/2/2021 18:49

IMO, a 3.5% bulletproof dividend (including the regular special dividends) that will grow over time, is a hugely valuable income stream. it's not been cheaper on this measure in the last 5 years. if valuation stays static this means almost a 15% total return over the long run. as an indirect comparison, spirax sarco is trading at 50 times earnings, with a 1% dividend yield. as a direct comparison, aj bell trades at 45 times earnings with a roughly 1.5% yield. the reason for this massive disparity in valuation to these very high quality businesses is possibly due to selling pressure expected over time from peter hargreaves. but that should be of no concern to long term investors.