Harvey Norman’s (HVN) big institutional shareholders appear to be very happy and very contented, judging by the lack of action at the top of the share register.
In fact the ASX filings for Harvey Norman reveal no changes in substantial shareholdings (that’s 5% or more) since January 2015 when Perpetual appeared with just over 5% in early January, and then almost immediately started selling its 55.8 million shares, so that by June 30, Perpetual no longer had a holding of 0.9% or more (that was the size of the 20th largest holding as revealed in the list in the 2014-15 annual report).
Had Perpetual remained in the the shares, their owners (a bunch of local and foreign investment funds) would have been around $2 a share, or collectively more than $110 million richer (so not a very smart decision to sell).
But that is the only major institutional change in 20 months, which is very unusual given that Harvey Norman is a major retailer, with a high profile chairman in Gerry Harvey, who is not afraid to speak his mind on all topics business, investment, the economy and horse racing.
The four biggest institutional holdings at June 30, 2015 (the latest list) were HSBC Custody Nominees with 10.4%, JP Morgan Australia Nominees with 9.8% National Nominees with 8.19% and Citicorp Nominees with 6.2%. These are shares held in portfolios managed by these banks for clients – internal or external. All are among the largest holders/managers of investors funds in the country.
Hedge funds would not like the stock because with Gerry Harvey and his family and close associates controlling around 36% of the stock, no one is going to launch a takeover unless it is at a very high price designed to win and take the Harvey interests out of the stock.
Given that Harvey Norman would be the 4th largest listed retailer after Wesfarmers, Woolies and Metcash to have no major shareholders selling or adding to their holdings for 20 months is highly unusual.
It indicates a higher level of satisfaction with the company and its management – and that is supported by the rise in the share price from around $3.30 at the start of 2015 to around $5.30 yesterday.
That has matched the strong performance from the company – especially in the year to June with profits up strongly, a higher dividend and 8% plus growth in same store sales – perhaps the key measure of a retailer’s selling efforts and one of the highest reported for 2015-16.
It’s not there is a shortage of shares – over 11 million traded yesterday and on Wednesday, it is just one of those oddities in the market and has been for nigh on two years. Harvey Norman shares fell half a cent yesterday to $5.33.
