The Hour Glass -- Rampant Buybacks

Solid N-shaped chart. Solid management. Steady business even during the Covid-19 pandemic. Company seldom initiates buybacks for many years and now they started it, and they did it rampantly. As I wrote, the last buyback was done on 25 Jun 2021, with a total outlay of $735,771.87 and an average price of $1.49164 apiece from the open market. 

The last that they gave a 3-for-1 bonus issue was many many years back. 

Hour Glass has actually a strong economy moat in that the supply of Swiss luxury watches is tightly controlled. Its long-standing relationships with brands such as Rolex and Patek Phillipe are giving it the edge in the markets they participate in.

Those who want to buy these branded first-hand watches in the markets they operate in have little choice but to come to its physical shops.

Its share price peaked at $0.88 in 2015 and there has not been much movement since. It has been a very disappointing investing journey for those shareholders like me who have held onto it for years even though its fundamentals have improved a lot since 2015. For their business to remain solid during the pandemic, one simple logic that I can think of is that with less travelling, consumers will use their extra savings to buy luxury watches for themselves or their loved ones. 

However, I think the Hour Glass’ management must have also felt that they have to do something to make Mr Market reflect the price fairly and they started their rampant company buybacks this year.  This is definitely a positive development for all its shareholders as share buybacks will reduce the outstanding share count and shareholders will get to enjoy a larger percentage of shareholding in the company with the reduced total outstanding shares when the treasury shares are scrapped. The effect is even larger especially if the buybacks are made at grossly depressed levels.

Even if there is no bonus issue this time, Hour Glass will be able to pay higher dividend per share going forward since the number of total outstanding shares has been reduced.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” --- Benjamin Graham.

It is worth the wait as my weighing machine now says it should be worth $1.70 apiece within 3 months based on my N-shaped chart estimation. It will be more than a 2-bagger for those shares that I bought after the previous 3-for-1 bonus issue and more than a 6-bagger for those shares that I bought before the bonus issue.

Superphang
http://superphang.blogspot.sg