- Bullish remarks from City analysts coincides with a chunky insider purchase
- Former Schroders executive John Troiano acquired £196k-worth of stock
On several important metrics, the third quarter of 2020 was another great one for Hargreaves Landsdown (HL.). Clients using the FTSE 100 firm’s DIY investment platform edged up 31,000 to 1.44 million, while strong share dealing volumes meant revenue was 12 per cent ahead of the same period in 2019, despite the FTSE All-Share Index trading 18 per cent lower.
The market instead “[chose] to focus on the £0.8bn of net inflows”, argued analysts at Numis. Believing investors are overlooking the structural growth story, expansion opportunities and a valuation “near a historical low”, the brokerage subsequently upgraded the stock to a ‘buy’.
Numis isn’t the only sell-side team to have refreshed the bull case. The following day, Peel Hunt increased its full-year earnings forecast by 5 per cent and bumped its recommendation to ‘buy’, arguing that concern around falling income earned on cash deposits is overdone. The previous week, headwinds to interest income sparked Canaccord to cut their FY2022 forecasts, even as it lifted its price target on expectations of stronger inflows.
Sharing the optimistic tone is John Troiano, who joined the DIY investment group’s board as a non-executive director in January. On 21 October, the same day Numis published its note, the former Schroders lifer acquired 14,400 shares over 38 separate transactions, at an average price of 1,363p.
On its own, the purchases are unlikely to catalyse a sudden re-rating in the shares. Nor for that matter are the broker upgrades, which have led to a mere 2.6 per cent rise in the consensus forecast for the year to June 2021 over the past month, per FactSet. The market now expects earnings of 52.4p per share for the period, and 50.7p for FY2022. At 1,360p, that equates to 27 times’ next year’s profits –fair for a quality long-term holding, but hardly cheap given the risks to market values. Hold.
Last IC View: Hold, 1,502p, 8 Oct 2020
Buys | |||||
Company | Director/PDMR | Date | Price (p) | Aggregate value (£) | Comments |
Superdry | Julian Dunkerton (ceo) | 20 Oct 20 | 149 | 222,389 | |
Hargreaves Lansdown | John Troiano | 21 Oct 20 | 1,363 | 196,134 | Average price |
Oxford Biomedica | Martin Diggle | 22 Oct 20 | 780 | 194,895 | Purchased by PCA |
Energean | Efstathios Topouzoglou | 16 Oct 20 | 528 | 112,100 | |
Energean | Efstathios Topouzoglou | 15 Oct 20 | 533 | 106,600 | Purchased by PCA |
Capital & Counties | Henry Staunton | 22 Oct 20 | 103 | 103,295 | |
Capital & Counties | Ian Hawksworth | 23 Oct 20 | 106 | 94,612 | Purchased by PCA |
Superdry | Julian Dunkerton (ceo) | 21 Oct 20 | 154 | 90,859 | |
Watches of Switzerland | Ian Carter (ch elect) | 23 Oct 20 | 412 | 78,515 | |
Victoria | Gavin Petken | 23 Oct 20 | 499 | 40,000 | |
Triple Point Social Housing REIT | Tracey Fletcher-Ray | 23 Oct 20 | 106 | 39,999 | |
Bodycote | Kevin Boyd | 27 Oct 20 | 677 | 20,312 | |
Sabre Insurance | James Ockenden | 27 Oct 20 | 230 | 20,119 |
Sells | |||||
Company | Director/PDMR | Date | Price (p) | Aggregate value (£) | Comments |
Gamma Communications | Andrew Stone | 22 Oct 20 | 1,750 | 1,050,000 | Sold by PCAs. Andrew Stone is a trustee but not a beneficiary |
Liontrust Asset Management | John Ions (ceo) | 22 Oct 20 | 1,230 | 814,875 | |
Liontrust Asset Management | Vinay Abrol (cfo) | 22 Oct 20 | 1,230 | 814,875 | |
Gamma Communications | Andrew Stone | 19 Oct 20 | 1,755 | 702,040 | Sold by PCAs. Andrew Stone is a trustee but not a beneficiary |
Avacta | Alastair Smith (ceo) | 21-22 Oct 20 | 180 | 448,073 | Average price. Residual interest 2.5% |
Bunzl | James McCool | 16 Oct 20 | 2,558 | 57,639 |