The big problem with Harvey Norman billionaire’s promise to make Aussies rich in four years

Billionaire Gerry Harvey claimed that anyone could get rich quick by selling all their assets and investing the money in Harvey Norman stock.

But the trading titan’s supposedly hot stock trading advice, issued on Tuesday, has been exposed as merely recycled advice he originally gave five years ago.

The head of the retail giant, which is worth $1.7 billion, claimed his company’s shares are undervalued by as much as 50 percent, at $3.85, and that the market will eventually correct.

“My advice to you is sell your house, sell your boat, sell your car, put everything in Harvey Norman and then call me in three or four years, and you won’t need to be a journalist anymore,” he said. Australian Financial Review Chanticleer column.

However, it’s now been revealed that Harvey said almost exactly the same thing five years ago, when his company’s stock fell at exactly the same price.

In February 2018, Harvey called his investors “angry” for running away from his business, stating, “If the stock price goes down to $4, sell your house.” Sell ​​your boat, sell your car, sell your house. Buy shares of Harvey Norman.

Shares closed that day at just $3.85, exactly the same price they closed this week when Harvey brought up his old line again, according to Rear Window columnist Joe Aston.

Harvey’s original advice was roundly mocked when the retailer was forced to offer free shares to existing shareholders in a bid to raise $163.8 million in September 2019.

“This is called burning the furniture to keep warm,” said Mr Aston.

Over the five-year period between similar Harvey tips, the company’s stock generated a total return to shareholders, including dividends, of 67.2%, outperforming the ASX 200 Index by more than 11.5%. .

Meanwhile, house prices have risen just over 8 percent over the same period, meaning any investor brave or foolish enough to take his advice may have seen a cash return on their investment.

The company revealed that its sales in January had fallen by 10.2% and that its profits for the first half of the year were lower than expected.

As chief executive of Harvey Norman, Harvey controls a huge portfolio of properties worth between $3.9 billion and $5 billion, which he says the market hasn’t accounted for in stock price value.

But critics say investors have undervalued the property because of Harvey Norman’s lack of transparency around its assets.

Interim results released Tuesday paint a bleak picture for Harvey Norman.

The company revealed that its sales in January had fallen 10.2 percent and that its earnings for the first half of the year were lower than expected.

Investors also enjoyed a smaller dividend than they had expected.

But Harvey has made an optimistic assessment of the company’s fortunes, saying the shares are worth “six to eight dollars.”

After the company reported lower-than-expected earnings and sales for the six months to December 2022, down 10.4%, its share price fell 7.5% to $3.85.

He believes that the real estate shortage for major retailers and the return to face-to-face stores after the boom in online sales during the pandemic will see his company grow again.

Last week, Harvey said he doubted Australia was headed for a recession, as some experts had predicted.

He said life will be “tougher” in Australia due to rising electricity prices and rising interest rates.

‘We don’t see how [a recession is] possible. Because if you’re going to have a recession, you’re going to have interest rates above 8 or 10 percent. And you are going to have unemployment above 8 or 10 percent. None of those things are happening,” Harvey said.

Harvey Norman has been contacted for comment.