Billionaire Gerry Harvey has recently repeated his advice from five years ago, telling Australians to sell all their assets and invest in Harvey Norman shares to get rich quickly.
He claims the company’s shares are undervalued by as much as 50% and that the market will eventually correct.
However, this advice has been criticized as recycled and mocked by some, as Harvey said almost the same thing five years ago when shares in his company fell to the same price.
Over the five years between Harvey’s similar tips, the company’s shares delivered total shareholder returns, including dividends, of 67.2%, which outperformed the ASX 200 index by over 11.5%. Meanwhile, house prices have increased just over 8% over the same period, suggesting that any investor who followed Harvey’s advice could have seen a cash return on their investment. However, the advice remains controversial due to the potential risks involved.
Harvey controls a huge property portfolio worth between $3.9 billion and $5 billion, which he says the market has not accounted for in the stock price value. However, critics claim investors have undervalued the property due to Harvey Norman’s lack of transparency around their assets.
Despite Harvey’s optimistic outlook, interim results released on Tuesday show that the company’s sales in January had dropped by 10.2%, and its profits for the first half of the year were lower than expected. Investors also enjoyed a smaller dividend than they had hoped for.
However, Harvey remains bullish about the company’s future. He believes that the scarcity of real estate for major retailers and a swing back to face-to-face stores after online sales boomed during the pandemic will see his company boom again. He has also dismissed concerns about a potential recession in Australia, claiming that interest rates and unemployment are not currently high enough to cause one.
»Billionaire Gerry Harvey repeats his advice from five years ago«
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