Australian retail icon Gerry Harvey is having a great time buying the dip in his ASX 200 company’s shares.
As we reported yesterday, the chair and co-founder of Harvey Norman Holdings Limited (ASX: HVN) splurged almost $50 million on new shares for himself between 2 March and 15 March.
Another change of director’s interest notice lodged before the market open today reveals the party is continuing.
What’s the latest on Harvey’s ASX 200 shares buy-up?
According to the notice, Harvey spent another $22 million buying shares between 16 March and yesterday.
This means he’s bought more shares every single trading day between 2 March and 21 March.
And, yes, all of these purchases (now totalling $72 million) were made on-market with his own money.
He is buying the ASX 200 retail shares indirectly through a trust.
Including the purchases revealed today, Harvey is estimated to hold about 412 million Harvey Norman shares in total.
That’s one hell of a stake considering there are only 1.25 billion shares on issue.
Harvey Norman shares worth ‘six to eight bucks’, says boss
This appears to be a buy-the-dip strategy of mammoth proportions.
Harvey’s buying spree began two days after the company revealed its 1H FY23 results on 28 February.
The Harvey Norman share price took a dive on the day, falling by 12% at its intraday low.
The company revealed a 15.1% decline in net profit after tax (NPAT) and slashed the interim dividend by 35%.
The next day, Harvey criticised the market response, calling it a “total overreaction“.
But he seems to be enjoying it.
He launched his epic ASX 200 buy-up the day after he made the comments.
And why wouldn’t he, given he reckons his ASX 200 retail shares are worth “six to eight bucks”, according to recent reporting in the Australian Financial Review (AFR), not $3.74, which is where they’re at today.
Should you buy Harvey Norman shares?
According to my Fool colleague James, Goldman Sachs expects this ASX 200 share to rise to about $4.70 by this time next year. That implies a potential 25% upside for investors who buy today.
Shaw and Partners investment advisor Jed Richards also recommends Harvey Norman shares.
He specifically points to the significance of the company’s $3.9 billion retail property holdings, which have delivered an incredible three-year compound annual growth rate (CAGR) of 74% in capital value.
Not to mention contributing 36% of the entire company’s operating profits.
Richards says:
In our view, the market is underestimating the value of Harvey Norman’s property portfolio, which represents a large portion of the company’s entire market capitalisation.
‘Sell your house’, says Harvey
On the day Harvey Norman presented its 1H FY23 results to the media, the larrikin retail boss said:
My advice to you is sell your house, sell your boat, sell your car, put the lot into Harvey Norman [shares] and then ring me in three or four years, and you won’t need to be a journalist any more.
Run the numbers just for fun, incorporating a more than 6% annual dividend yield fully franked.
It’ll knock your socks off.
