HLG - Hallenstein Glasson

[winner69]

I read one of his books many years ago, which I enjoyed. Students of Hayek are likely a bit extreme.

Ever read Karl Popper’s ‘The Open Society and Its Enemies’?

[Beagle]

Question is - do we think Mr. or Mrs. Market are wrong? Nothing of what you said is unknown to them, and while they might be bipolar, they are not stupid.

Which just means that the HLG SP is (compared to the dividend yield) that cheap because

a) market thinks interest rates will go up (and therefore divi not anymore that outstanding) or
b) market thinks HLG will not be able to maintain this amazing dividend.

I don't see any other reason which would not be a subset of b).

Personally I think option b) is more likely than option a, but whatever it is - HLG is not cheap considering the risks. Obviously - risks might not eventuate, but this would be luck.

Obviously - I realize that HLG does not fly nor float (which is good for an investment), but still - remember how everybody told us still 12 months ago what an amazing investment AIR is. I understand some people still believe that today. Who knows what happens to HLG in 12 months from now?

Enjoy the amazing divvie as long as it lasts ... but I am not convinced that the total return of HLG over say the next 10 years would be higher than e.g. that of FPH, OCA, SUM or MFT.

Mr market gave us a valuable lesson yesterday, (very valuable for those already well positioned lol.)
Consider this, how is it possible in the midst of a Covid crisis with stores shuttered in Melbourne and some in Auckland that sales year to date in FY21 are up ~ 11% compared to FY20 when all stores were open and nobody had even heard of Covid ? How has for example Nike done so well on the US market despite the lack of live sports ? The answer of course is brand power and its clear Glassons has much more brand power than the market had previously ascribed to it.

Consider this, HLG was north of $6 before Covid hit but the company is currently performing year to date in FY21 better than before Covid hit !
On the interest rate front the risk free rate has dropped hundreds of basis points so that suggests some PE expansion is quite plausible compared to say last year. Combined this suggests that surely HLG is worth at least what it was before Covid hit, low $6's and arguably more, I don't think talk of $7 is silly at all.

Thanks to Couta1 who has done the research, the company has paid dividends every single year in the last 16 years, during the GFC and now during Covid. The average has been 31.5 cps but its clear in recent years the company has grown from a circa ~ $220m a year business up to very close to a $300m a year business.

I think the current dividend is sustainable or something very close to it. How many other truly resilient companies are there on the NZX paying a ~ 10% gross yield ? I am all ears mate of you can name some more for me.

My opinion of the level of the resiliency of the company and its operations changed quite dramatically yesterday. I had them pegged for a 10-15% sales decline YTD in FY21 and had got my head around those modest expectations and holding a reasonable stake as a look through Covid impact investment case but the way this company has demonstrated resiliency during Covid has quite frankly been nothing short of truly remarkable. I am back to a fulsome holding after two top up's yesterday but I am keen for more with that ~ 10% gross yield.

[Biscuit]

Ever read Karl Popper’s ‘The Open Society and Its Enemies’?

Never read anything by Karl Popper but my American third year molecular biology lecturer used to quote him all the time. Apparently he invented modern science.

[Baa_Baa]

It was an astoundingly good buy under $2 recently but that’s what happens when the market goes mental, a fleeting glimpse at value investing but gone in a heartbeat.

Now maybe not such a good proposition unless one is convinced there’s an upside above past cyclical highs, or maybe just for the ROI from dividends which history shows is robust

[dibble]

Mr market gave us a valuable lesson yesterday, (very valuable for those already well positioned lol.)
Consider this, how is it possible in the midst of a Covid crisis with stores shuttered in Melbourne and some in Auckland that sales year to date in FY21 are up ~ 11% compared to FY20 when all stores were open and nobody had even heard of Covid ? How has for example Nike done so well on the US market despite the lack of live sports ? The answer of course is brand power and its clear Glassons has much more brand power than the market had previously ascribed to it.

Thats a confusing, somewhat contradictory lesson. One thing I've gleaned is that this seems to be run by people who really, genuinely know what they are doing...regardless of the regular oscillation of the shareprice between about 3 and 6, they continue to respond to threats, evolve and make consistent returns.
Indeed if NZ embarked on a decade of nudity I suspect we would still get a sustainable dividend

[jimdog31]

Thats a confusing, somewhat contradictory lesson. One thing I've gleaned is that this seems to be run by people who really, genuinely know what they are doing...regardless of the regular oscillation of the shareprice between about 3 and 6, they continue to respond to threats, evolve and make consistent returns.
Indeed if NZ embarked on a decade of nudity I suspect we would still get a sustainable dividend

That last sentence made me choke on my cornflakes haha!

[BlackPeter]

I think your outlook lends itself to putting your money under the nearest mattress.

Not quite. I just prefer to buy undervalued stocks. At this stage I don't consider HLG as undervalued, but hey - at times the market disagrees with my views (and so it does with yours );

[Balance]

An economic show-stopping economic crisis like the GFC or Covid-19 reveals and brings out the best or worse in a company.

We can all remember how just about all the finance companies collapsed post the GFC but how Marac emerged from crisis to become Heartland.

I believe there is overwhelming consensus from the majority of posters (& the market this year) that HLG stands out in the retail sector as having the right competitive advantages to power on from the aftermath of this pandemic crisis.

The company is however in the fashion industry and we have seen how it can get itself out of step from time to time with what the market demands. So HLG will and should never trade as a low risk high yielding stock for investors.

There are 3 major factors I am picking which will be driving HLG’s sp in the next 3 months easily pass $6.00 and beyond.

Watch this space!

[Beagle]

Thats a confusing, somewhat contradictory lesson. One thing I've gleaned is that this seems to be run by people who really, genuinely know what they are doing...regardless of the regular oscillation of the shareprice between about 3 and 6, they continue to respond to threats, evolve and make consistent returns.
Indeed if NZ embarked on a decade of nudity I suspect we would still get a sustainable dividend

That's gold right there !
Beautifully encapsulates how resilient the dividends are and in a world of zero interest rates for as far ahead as anyone can foresee, gives plenty of food for thought.

[King1212]

Hlg targets mid to low income people.

They sell clothing that affordable, fashionable and reasonable quality. They up to the trend and n well managed.

Interest rate will remain low possible negative for the next three years...as the Fed already mentioned it.