Hargreaves Lansdown flotation

Liz_the_Whizz

I feel less inclined after reading the article in The Times:

http://business.timesonline.co.uk/tol/business/columnists/article1663292.ece

mutley74

prospectur is now available online to vantage account holders who signed up for the offer. I have had a flick through it already.

Midnight_Cowboy_2

I've now received the offer from HL. At a guide price of £1.40 - £1.60, the shares don't look especially cheap. Based on last years profit, at the mid-price that would give a PE of about 29.3. However, profits are up 58% in the last six months, but even then the best case scenario (end-year profits about £34m, float at £1.40) would give a forward PE of 19.5 (as stated in the Times article).

So, the pros: good sound business with nice profits growth.

The cons: not cheap.

The unknows: the retirement of Mr H & Mr L can't be that far away. That could mean that the business flounders. On the other hand, it could be ripe for takeover.

The verdict: This would seem to be a growth rather than value investment at this price. I'm doubtful of a quick profit, because the 2 main parties who would be interested (institutions, HL customers who know about the quality of the company) will have had their chance to buy pre-flotation (ie. now). The remaining party that might want to buy (non-HL private investors) are probably blind to the qualities of the company and so won't force the price upwards. However, there is case for the prospects of a long-term buy and hold strategy.

Note: this is all just my opinion! Do your own research before making an investment decision.

By the way, the link to the Investors Chronicle feature is here:

http://www.investorschronicle.co.uk/content/free/2007/News/news_20070420_18.html

and here

http://www.investorschronicle.co.uk/content/free/2007/News/article_gen_05783.html

Primrose

Unfortunately the articles in the Investors Chronicle only seem to be available to registered users only, so none the wiser. Perhaps better to hang fire until tomorrow at least and see what the various analysts in the business sections of the quality press have to say. Am personally still undecided at the moment.

cheerfulcat

Primrose, registration with the IC site is free, though you'll only have access to some of the articles ( the HL article is one of them ). Having said that, it isn't particularly helpful.

FWIW I'm still undecided though I am inclining towards the " wait and see " option. I am slightly reluctant to buy shares in a company where the major shareholders are the directors and employees of that company. I am also slightly concerned by the fact that so much of their income is dependent on stock market performance...

ajmace

This firm holds a monopoly position with regard to ISA and SIPP funds. Its profits are bound to rise year by year. The shares will be in short supply - they haven't even made them available to all of their own clients. If you have been offered shares then I suggest that you take them up. This is a rare opportunity to buy a quality business at zero commission and at a price that simply has to be heavily discounted in order thast it gets away....

DYOR but I'm in.

markj1

Could somebody please post a link to the Hargreaves Lansdown prospectus?

Many thanks

DRS1

I don't know if this will work:

https://www.h-l.co.uk/offers/download_prospectus.pdf

iantheman

I guess from all the information one question is going to be, are those who are invited by HL to participate in the initial offer going to be in a priviliged position with their £5k worth of shares to see a fairly short-term gain? Otherwise it becomes an investment (as it should be I suppose) in the long-term profitability of the compay to produce a share value rise and/or reasonable dividends and also the possibility of a take-over bid sometime after Messrs H&L sell off the rest of their shares.

Midnight_Cowboy_2

ajmace wrote: »

This firm holds a monopoly position with regard to ISA and SIPP funds.

No they don't.

ajmace wrote: »

...at a price that simply has to be heavily discounted...

I disagree. They don't need to discount the price, there should be enough takers. And looking at the earnings per share, I don't see any evidence of discounting within their target price range of 140-160p.