Glenn Surowiec presented his in-depth investment thesis on Harley-Davidson (NYSE: HOG) at Best Ideas 2016.
Harley-Davidson is a world-class brand that occupies a dominant share ~50%) of its market. Though the company does face some short-term headwinds due to greater competition and unfavorable currency, Harley-Davidson intends to increase spending by $70 million to increase brand awareness, grow North American ridership and accelerate new product development. Harley-Davidson also issued $750 million in long-term debt to fund an aggressive share repurchase plan. During the nine-month period ending September 30, 2015, the company spent almost $900 million to repurchase stock. It planned to complete an additional $600 million in repurchases during Q4 2015. That aggressive repurchase program compares to Harley-Davidson’s recent market capitalization of ~$8.8 billion and should provide great value for shareholders at recent prices. Harley Davidson trades in the bottom 10% of historical price to FCF, P/E, and enterprise value to EBITDA, despite having greater market share, long-standing price leadership, and a more balanced return profile for shareholders.
About the instructors:
Glenn Surowiec started GDS Investments in 2012. From 2001 to 2012, he worked for Alsin Capital Management, Inc. as an equity research analyst (2001-2003), co-portfolio manager (2003-2008), and portfolio manager (2008-2012). Since inception in December 2008, Glenn’s client portfolios are up 25.83% annualized through December 2013. Glenn serves as a strategic advisor of ValueConferences, the leading provider of fully online investment conferences for value investors worldwide. Glenn has a BA in Management (Accounting concentration) from Gettysburg College and an MBA (Finance concentration) from Southern Methodist University. He graduated in the top 10% of his MBA class and participated in study abroad programs both as an undergraduate (Seville, Spain) and graduate student (Melbourne, Australia). His hobbies include running, cycling, golfing and youth coaching.
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