Billionaire Gerry Harvey claimed anyone could get rich quick by selling all their assets and ploughing the cash into Harvey Norman shares.
But the business titan’s supposedly hot stock tip, issued on Tuesday, has been exposed as merely recycled advice he originally gave five years ago.
The retail giant boss, who is worth $1.7billion, claimed that his company’s shares are undervalued by as much as 50 per cent – 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 the lot into Harvey Norman and then ring me in three or four years, and you won’t need to be a journalist any more,’ he told the Australian Financial Review’s Chanticleer column.
However, it has now been revealed that Harvey said almost exactly the same thing five years ago – when shares in his company fell to the exact same price.
Billionaire Gerry Harvey has trotted out the exact same stock tip as he did five years ago (Pictured, Harvey with second wife and Harvey Norman CEO Katie Page)
In February 2018, Harvey branded his investors ‘mad’ for fleeing his business, claiming: ‘If the share price goes down to $4, then sell your house. Sell your boat, sell your car, sell your house. Buy Harvey Norman shares.’
Shares closed that day at just $3.85 – the exact same price they closed at this week when Harvey trotted out 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 stock holders in a bid to raise $163.8 million in September 2019.
‘This is called burning the furniture to keep yourself warm,’ Mr Aston said.
Over the five-year period between Harvey’s similar tips, the company’s shares delivered total shareholder returns, including dividends, of 67.2 per cent, which outperformed the ASX 200 index by over 11.5 per cent.
Meanwhile, house prices have increased just over 8 per cent over the same period, meaning any investor brave or foolish enough to follow his advice may have seen a cash return on their investment.
The company revealed that its sales in January had dropped by 10.2 per cent and that its profits for the first half of the year were lower than expected
As Harvey Norman executive chairman Harvey controls a huge property portfolio worth between $3.9billion and $5billion, which he says the market has not accounted for in the value of the stock price.
But critics claim investors have undervalued the property because of Harvey Norman’s lack of transparency around their assets.
Interim results released on Tuesday paint a grim picture for Harvey Norman.
The company revealed that its sales in January had dropped by 10.2 per cent and that its profits for the first half of the year were lower than expected.
Investors also enjoyed a smaller dividend than they had hoped for.
But Harvey has given an upbeat assessment of the company’s fortunes, claiming the stock is worth ‘six to eight bucks’.
After the company disclosed lower than expected profits and sales for the six months to December, 2022 down 10.4 per cent, its share price tumbled 7.5 per cent to $3.85
He believes 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.
Last week Harvey said he doubted Australia was headed for a recession, as some pundits have predicted.
He said life will be ‘tougher’ in Australia due to surging electricity prices and climbing 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 per cent. And you’re going to have unemployment above 8 or 10 per cent. Neither one of those things is happening,’ Harvey said.
Harvey Norman has been approached for comment.
