Hargreaves Lansdown Share Discussion Threads

[ochs] 28/2/2022 13:39

Yes, I've got to the end of the CMD now - David James the marketing guy was very impressive and I also liked the digital man who's come from Experian.

25% of 2026 new business is expected from Active Savings, aprox 25% from the new advice service and the other 50% from their more traditional business.

I'd be tempted to buy more under £11 before the xd on Thurs.

You'd think most shorters would have closed by now - they've made a decent profit and no point in paying the dividend...

[lomax99] 28/2/2022 13:14

I thought the CMD went well, I have added several times since the results last week. They go XD on Thursday.

[ochs] 28/2/2022 12:14

Just been struggling through the Capital Markets Day presentations, a lot of waffle but well worth watching the bit about scaling up Active Savings, which I strongly agree with - it starts from 59 mins in.

[ochs] 28/2/2022 11:49

Yes, that's appalling. Surely the easiest thing would have been to simply offer to honour the trade... everyone happy, minimal cost to HL and a happy client. Chris Hill talks about the outstanding service HL provide and "client led strategy"... but he appears to be living the HL experience of 10 years ago!

Why not make him aware of this directly, think it's [e-mail]

[ochs] 25/2/2022 08:13

It may have been missed with all the noise yesterday, but HL announced that Amy Stirling (the new CFO) purchased close to £100k worth of shares in the market on results day (22/2) at under £11.

[growthpotential] 23/2/2022 23:55

Strong buy here but already in!

[robinnicolson] 23/2/2022 17:04

A couple of analyst views on the interim results:

Analysts at Jefferies commented that Hargreaves was now 'grasping the nettle' and sacrificing profitability for growth in the face of headwinds. But it added some scepticism saying that the targets were high, while no other company had made a success of automated or so-called robo-advice. "Technology projects have a tendency to overrun budgets," it added.


Analysts at Peel Hunt maintained their buy rating for HL with a target price of 1,835p.

"Hargreaves’ interim results this morning were ahead of consensus expectations (adjusting for strategic investment costs), with the lower levels of profitability reflecting revenue headwinds from both trading activity and prevailing interest rates. The business continues to generate high returns and retains a strong balance sheet (cash of £433 million)."

They added that rising interest rates globally should bolster HL revenues.

"The business does have strong long-term prospects, in our view, which should be improved given the strategic elements of today's update, albeit at some short-term cost."

[ochs] 23/2/2022 16:44

@Porsche1945 thanks re: Upstart - it does look interesting and I like the fact it already has relationships with banks. Shares are pretty volatile as they're on Nasdaq, but the current sell off might provide a good entry point, so I will keep an eye.

[giltedge1] 23/2/2022 12:04

Exactly my point high wages for Tech projects shows just how high the barriers are for new entrants, almost impossible might as well buy an existing business like HL.
I work in the Regulated sector & the regs are mindblowingly complex, one slip up eg Metro Bank & you are sunk.
HL. is extremely profitable & any start up will burn hundreds of millions before they even open for business.
The hardest thing in the world is to gain clients, & HL. has plenty of these, & they are sticky unlikely to move, the 50+ I am talking about, they are very conservative.

[robinnicolson] 23/2/2022 11:49

A couple of analyst views on the interim results:

Analysts at Jefferies commented that Hargreaves was now 'grasping the nettle' and sacrificing profitability for growth in the face of headwinds. But it added some scepticism saying that the targets were high, while no other company had made a success of automated or so-called robo-advice. "Technology projects have a tendency to overrun budgets," it added.


Analysts at Peel Hunt maintained their buy rating for HL with a target price of 1,835p.

"Hargreaves’ interim results this morning were ahead of consensus expectations (adjusting for strategic investment costs), with the lower levels of profitability reflecting revenue headwinds from both trading activity and prevailing interest rates. The business continues to generate high returns and retains a strong balance sheet (cash of £433 million)."

They added that rising interest rates globally should bolster HL revenues.

"The business does have strong long-term prospects, in our view, which should be improved given the strategic elements of today's update, albeit at some short-term cost."

[robinnicolson] 23/2/2022 11:38

This article may provide some insight into the reason why staff costs are sharply increasing:

"A recent job advert for a senior developer at Coinbase came with a salary just shy of USD 1m annually, including stock options."



I agree with the article's comment about HL's digital interface.

[giltedge1] 23/2/2022 10:52

I don't currently hold the shares, Looks like good value to me, as dominant in wealth market, who would like to hold their £1M SIPP in an app Robin Hood? for example. People over 50+ are looking for security of their investment portfolio first priority.

Lots of cash on Balance Sheet & investing in new system which is sensible to me, rather than dishing out to Shareholders.
Also channelling client money into own funds, which have a higher margin & rising interest rates will help, on Billions of client cash.
Equivalent US share Charles Schwab is trading at PE over 30+.

Only one question, why is staff costs increasing so rapidly?, I thought technology is suppose to save money on staff etc.

[spoole5] 22/2/2022 23:48

I had this, they blamed my bank for refusing the payment!

[ochs] 22/2/2022 19:12

Bull case from here :-

- Takeover approach from Bank, Private Equity or US competitor more likely with the today's further share price decline.

- 1.7 million 'active' customers, that's got to have a lot of value (to HL or to somebody else) as many of these will be above average in terms of wealth, savings and earnings.

- no debt, despite planning further investment.

- UK base rates are likely to increase this year and that will improve the margin HL can get on the high levels of client cash they hold.

- Improving UK interest rates should make the Active Savings brand easier to market to existing clients and potential new clients, and so ought to be an area for strong growth over the next few years.

- Highly profitable and cash generative, with a dividend yield of 3.52% (despite dropping special dividends) - xd date for the interim of 12.26p is 3rd March.

[jason29] 22/2/2022 18:54

Made the mistake of getting in recently, anyone give me a Bull case from here as I'm struggling to see it and probably going to sell. Takeover from a Bank looking for a Platform aside I can't see Organic Growth?

[wolansm] 22/2/2022 16:26

Back in for a few

[medieval blacksmith] 22/2/2022 12:45

If it is great tech with wonderful growth opportunities care to suggest why it would be buying back its own shares and not investing in the business?

[ochs] 22/2/2022 12:20

Well done @Porsche1945 you've been calling this one right for a long time - and certainly in terms of the share price fall today it's what you predicted. We are now even lower than the March 2020 pandemic lows, which were about 1,148p.

They've certainly made a hash of this so called new strategy of "Redefining Wealth Management" and the market is unimpressed with the need for more investment and no guarantees of better returns to come.

Having said that I've bought more this morning at 1036p and 1103p on the basis that today's move ought to put HL in play for a takeover and I'd expect a bounce and semi-recovery.

If the shares can finish today above the pandemic low of 1,148p that would look more positive.

[growthpotential] 22/2/2022 12:03

Agreed but also HL has a very small amount of debt so unlike to cause any issues. Same for ii, it has no debt. Your biggest risk is market risk guys, I wouldn't worry too much about broker defaults. Just make sure you're with a top one broker with low debt levels

[medieval blacksmith] 22/2/2022 11:59

oppositeofme

Yes, same here generally. Certificates were more common too before the turn of the century.

As I read it and understand, nominee accounts are generally ring-fenced and the administrator can only come after assets to cover the costs of administration - not losses incurred by creditors. This would be after any capital level the institution holds for these purposes has been used. I think once you consider the admin costs across all accounts it would come to very little and you would be able to claim this against the FSCS compensation scheme. So I wouldn't let it keep you awake at night or indeed cause you to run multiple pensions across many service providers. Whether you like them or not you are generally safe with HL. One thing to bear in mind with your investments is ISAs are not recognised within double-tax treaties but SIPPS sometimes are depending on country. It also differs between SIPP service providers. If you hold US shares in a SIPP with HL, for example, dividends from those US shares will come free of withholding tax (i.e. gross). If they were held in an ISA the dividends would be subject to US withholding tax and arrive net or would also arrive net if the pension (SIPP) provider couldn't be bothered to recognise this fact and execute appropriate arrangements in their administrative duties.

[cynicalsteve] 22/2/2022 11:47

I like their web site but I quickly realised it was a selling tool and what they were selling was expensive.
HL had a very successful business model, they used their market dominance to negotiate special deals with some fund managers but charged their clients high fees in return.
They gave with one hand and took with the other.
If their market dominance is slipping that business model no longer works and things will get much worse for them.

[oppositeofme] 22/2/2022 10:54

"I don't think you should worry about that at all. It will be the same everywhere else anyway."

Medieval Blacksmith agreed, I meant I opened a new SIPP in addition to hopefully reduce my concentration with the one provider.

I'm actually from Australia originally where its much less common (at least it was 20 years ago) for shares to be held on your behalf by a nominee and instead you held the shares in your own name and their was a common electronic registrar (CHESS). Admittedly they don't have ISAs and I never had a pension there so not sure how it works with that but it would make me feel so much better if there was a way to hold shares in ISAs and SIPPS in my own name rather than my assets being on the hook for bad financial management/dodgy practices. I'm sure I shouldn't worry though - after all the FCA et al have such a great record of being on top of their game.