HFA Holdings is a stock which provides a strong yield and opportunities for medium term earnings growth. The company operates a hedge fund-of-funds in the USA called Lighthouse Partners which manages US$8.5bn and was formed 16 years ago. The key funds have shown a return of over 5% p/a over the past ten years, with very low volatility, which has created a loyal customer base. The medium term growth opportunities lie primarily in fund performance (which grows the overall fee base), additional investments from endowment funds and other institutions, and new products. The company recently became debt free and expects to pay out up to 90% of EBITDA in unfranked dividends. This high payout ratio places the stock on an estimated dividend yield of around 8%.
Was a holder of HFA, sold it because I was uncomfortable with the poor quality of the Australian business. 2 weeks later they sold Certitude to Ironbark and the price jumped 18% over the next 2 weeks. Oh well, I guess luck can't always go my way.
Very happy holder of HFA and looking forward to a US/AUS exchange rate gravitating to 60 cents in 2016.