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Wish I did! Googling has revealed nothing at all.
Anyone know the reason for the drop this morning?
I’m not convinced that was the main reason behind Friday’s rise.
The gold price was almost as high as now back in March 2023, yet HAT’s share price DROPPED about 5% during March:
https://www.royalmint.com/gold-price/
Lordloadsoflolly, I need to be careful in my terminology.
MMs provide liquidity in the sense that they offer bid and ask prices with a maximum volume of shares. I see a market size of 1,000 shares on this page, but I don't think MMs are tied to this, rather I think its an indicative guide for investors.
The spread represents the best ask and best bid offered by a the participating MMs. To clarify this point, looking at Friday's closing quotes, 472p - 475p, an individual MM may be offering a bid of 472p but an ask of 477p. Another might have a bid of 470p and an ask of 475p. The spread based on the offers from those two MMs is 472p - 475p. Clearly, adding a 3rd MM or a say, a 10th, offers more competition in the market and would likely reduce the spread. The MM whose 472p offer is accepted is at risk of being unable to exit the trade in a fast moving market, though given a wide spread the risk is low.
If you're a quote and trade investor in modest volumes then that's the market your in.
But there is also an order book where investors can place limit orders. In the case of H&T's Friday closing price these orders will be outside the 472p-475p spread or at a volume that is unacceptable to MMs. The order will remain on the book until the market moves in it's favour or the order times out. If you want to trade well above the typical market volume then this is where you can trade with a limit on the price you buy or sell. Incidentally, the spread can narrow dramatically when both sides of the book meet.
That's the market background though with many nuances, such as manipulating the order book with 'ghost' orders which may be used to influence the market but are subsequently pulled. But these are short term influences and of little consequence to investors taking a patient approach to building or selling a stake in a company. (I built up my current stake in H&T between May and Sept with 7 orders)
In my post I was careful to use the phrase 'a relatively illiquid market'. Given the background to the market I describe above, and the low daily volume of trades that are made in H&T shares, an individual or several trades combined, in one direction, and of a size many times an MM's quoted volume while mopping up the order book, which at times may be small, can easily result in a significant move in the share price.
Then there are algorithmic trades that for an oil company may be linked internet comment on the price of Brent, or perhaps for H&T the price of gold. I don't know what if any algorithmic trading occurs in H&T shares. Whether manual or auto trading, I don't think the movement in H&T's share price on Friday was unconnected to Gold hitting a (British Pounds) high.
Londoner7 - I think we’re broadly in agreement.
Over all, a high gold price will benefit H&T, though it’s not exclusively one way traffic.
You say there’s a relatively illiquid market for H&T. Could you elaborate on this? Short term price movement certainly seems manipulated by market makers, with the spread often expanding & contracting rapidly within the same trading day. But the FT quotes a HAT free float of 41.45m.
Lordloadsoflolly, you say, "sales of new jewellery are becoming more significant".
True, but this is only a factor within H&T's retail segment which accounted for just 17% of 2022 gross profit by sector. They address this adjustment to inventory with the following comment:
'Sales of pre-owned products represented 82% (H1’2022: 82%) of total sales by value. Supply of some
pre-owned jewellery categories continues to be constrained, particularly 14ct and 22ct gold jewellery.
This requires us to source higher volumes of new jewellery in substitution. We expect this dynamic to
persist for the time being and ultimately to reverse as the strong recent pawnbroking pledge book
growth reaches maturity.'
However, these are factors affecting H&T's business over the medium to long term, which will be reflected in share price over the medium to long term. In the short term the share price is impacted by short term effects, like the price of gold, which was the point of my post. In a relatively illiquid market for H&T shares it doesn't take much additional buying to raise the share price.
This is what Benjamin Graham meant when he said, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
Londoner7 - a high gold price has traditionally been beneficial for H&T.
Though I guess this might be increasingly offset by the higher price they have to pay to buy in new jewellery stock.
From what I recall in their recent updates, sales of new jewellery are becoming more significant. And in a sticky retail market, it might be tricky to pass on the full cost price increase to customers.
The price of gold is at all time highs (British Pounds), which is good for H&T's business.
From latest latest interims:
'The Group purchases gold, jewellery, and watches from customers. The prevailing gold price has a
direct impact on gold purchasing as it affects customer demand. The gold price has been elevated
since March 2022. The average gold price per troy ounce during the period was £1,566 (H1’2022:
£1,445) and coupled with the impact of inflation on customers disposable income, we have seen a
44% increase in purchase values year on year. Some of this volume is yet to be processed and is
currently held in inventory at cost. '
When H&T rose to around 450p just before mid October, I said I couldn't see any specific reason behind this sudden rise & assumed the share price was just playing catch up.
Given the short to medium term prospects, I'd always felt it was undervalued when it sank below 400p in Sept and I added then at around 396p.
Well, the catch up continues - with H&T rising another 20p today at the time of writing.
Again, there doesn't seem to be any specific news triggering this movement. And it's uncharacteristic for H&T to be this volatile. I very much doubt there's any prospect of a takeover. But I guess a fund could be doing some stake building. Simply because it likes the company's prospects, yield & conta-cyclical nature. Time will tell.
Either way I'm not complaining. It's one of relatively few shares that's risen significantly over the past 2-3 months, despite general falls in UK & global markets.
Thanks Hardboy
As I said on the advfn thread, I too can’t spot any specific reason behind it. Reported LSE trading volume today was just under 54,000, which is fairly trivial. And there didn't seem to be any larger than normal trades within that.
Unless some H&T-specific news subsequently emerges, I suspect this is just a case of the share price playing catch up. H&T's prospects were largely being ignored by investors between early Aug & early Oct, with the price remaining tightly rangebound. I couldn't understand why, given the company's last (bullish) TU. So I added just before September's ex div date.
Over the last week, there suddenly seems to have been a sea change in sentiment. I doubt this will continue in a straight line. These things rarely do. But it wouldn't surprise me at all if we breached 500p again by the time/soon after next January's TU is released. Barring a black swan event, H&T is set for a record-breaking full year. In which case, the dividend is also likely to get a significant further boost, given their progressive payment policy.
Gladly.
Can not see the reason for this sudden upswing, but not complaining. The volumes have not gone up, so doubt it's someone stake building. It's a while till the next announcement. No obvious reason.
Hardboy - your talk of the share price wallowing has worked wonders.
Could you do the same every day now please!
Ta
Not sure about that. I added just before the last ex dividend date, paying slightly under 396p a share. Factor in the dealing commission + the 6.5p dividend paid since & you're talking a rise from the equivalent of around 395p a share to around 420p currently.
That's up approx. 6.5% in just over a month. Admittedly, largely down to luck with timing, which by no means always happens with me!
But it's important not to overlook the dividend with H&T, as it forward yields around 5% at current share prices.
And yet the share price wallows.
An interesting BBC article on pawnbroking this morning, highlighting a surge in new loans:
https://www.bbc.co.uk/news/business-66993004
It also mentions the FCA's attempts to police the industry more effectively. I found it a balanced article, referring to certain charities' more critical stance towards pawnbroking & their high interest rates. Tellingly though, customer comments are universally positive, describing pawnbrokers as a "lifeline" & a "godsend". Which is unsurprising if loan sharks are the only real alternative. This also bears out H&T's very high Trustpilot rating, with 92% being 5 stars (from over 6400 reviews).
Ilovemycombover - thanks for posting IC's latest update. For those who can't access via the paywall, the link below may help.
Whilst I generally don't pay much attention to IC/ST, I do actually think they've got it right on this occasion.
https://www.investorschronicle.co.uk/ideas/2023/08/08/markets-are-ignoring-h-t-s-soaring-profits/#:~:text=Diversified%20financial%20services%20group%20H%26T,market%20shunned%20by%20mainstream%20lenders
Https://www.investorschronicle.co.uk/ideas/2023/08/08/markets-are-ignoring-h-t-s-soaring-profits/
Hardboy - glad we agree! Markets (hence individual share prices) do seem less predictable right now. Some (like H&T) appear unloved. Others (like Nvidia) seem ridiculously over valued. But generally, anomalies like this eventually come out in the wash.
I've usually managed to call H&T reasonably well, selling part of my holding above 500p, when I felt things started to look prematurely frothy back then. But I've been caught out by this latest downcycle, buying back in at around 450p, before adding yet again at just over 395p. As I said though, I'm not unduly worried at this stage. For me, the fundamentals stack up still. And the dividends offer some compensation for any premature, overzealous top ups!
On a 12 month view, I'd be more surprised to see a share price below 450p than above it.
I completely agree with you. my Lord, given traditional valuations, the recent trading updates, the current fundamentals, this should be way over 500, in my assessment, but a well known cliche goes: "Markets can stay irrational longer than you can stay solvent." I keep topping up at what seems bargain prices, and the prices fall further. My reading of markets is a lot of of shares are just drifting until some specific news makes them move, but even then the move is short lived. Maybe, I'll try one more small tranche!
Odd how the share price has dropped since the beginning of the year, whilst HAT’s prospects have - if anything - improved even more. Its progressive dividend policy means this now yields around 5%. H2 is traditionally stronger than H1 and the company has consistently issued positive outlook statements this year. Also, strong Director buying since Sept 22 (CEO c. £277k, Chair >£66k at prices between 425p & 444p).
I added recently at a fraction over 395p. The 6.5p ex dividend date is 7 Sept, so I decided
to lock that in. I really can’t imagine this dropping below 350p (short of a major general market crash) and can quite see it moving beyond 550p post FY results. Next trading update is in January ‘24, which should generate record results (though this may already be partly priced in, as it’s already widely predicted). Still, I expect a strong upward re-rate within the next 12 months and will be happy to add even further if the share price continues to drift.
H&T #HAT H123 presentation given by management last week with Q&A.
In summary:
· PTP +31% to £8.8m
· EPS +24% to 16.3p
· H1 dividend +30% to 6.5p.
· Profit contribution from Pawnbroking +42% to £32.4m
· Driven by growth in the pledge book +14% to 114.6m. Pledge book growth is expected to remain strong in H2.
· Retail sales +11% to £23m but actions taken to clear slower-moving high-value watches meant a reduction in operating margin from 42% to 28%. This is expected to improve in H2 when they also expect an increase in sales.
· NAV £166.8m
· H2 weighting with Christmas and fx for Summer holidays
· 19% cost increases due to staff, insurance and couriering
On updated forecasts of aEPS of 53.7p, it leaves HAT trading on a PE 7.6, PEG 0.6 and a divi yield of 5.5% in a market where there is reduced competition and increased demand.
Video: https://www.piworld.co.uk/company-videos/ht-group-hat-2023-interim-results-presentation-august-2023-2/
Podcast: https://piworld.podbean.com/e/ht-group-hat-2023-interim-results-presentation-august-2023/
Just watched excellent (in my view) results presentation.
Will definitely pick up a few more shares, especially if it dips below 400p.
Increased interim dividend of 6.5p (up 30% - LY 5p) payable on 6 October 2023 to shareholders on the register at the close of business on 8 September 2023.
I've noticed today the dividends have gone up :) ex dividends date is not long away now too :) looking forward to it again :)