Fund Manager Loads Up On Harley Davidson

Long-term investor William Von Mueffling bought a whole lot of shares in Harley-Davidson (HOG) last quarter, suddenly making the venerable motorcycle maker one of the largest holdings in his Cantillon Capital Management Fund. It’s a decided vote of confidence in a company that gets a lukewarm reception from Wall Street analysts these days.

Cantillon purchased about 3.53 million Harley shares for about $193.8 million shares in the second quarter, according to its latest 13F filing. Those purchases made Harley about 6% of the fund’s total holdings, according to fund watcher It held no Harley shares prior to last quarter’s purchases.

HOG Chart

HOG data by YCharts

Harley sells more custom and touring motorcycles in America than any other company, and cost cutting measures domestically and abroad have helped keep its shareholders happy even when poor economic conditions cut into sales. A little market research yields a worry about the slowing growth of its core demographic – middle aged men. Competition is ramping up from Indian brand maker Polaris Industries (PII), and its current customers are eventually expected to dump a lot of used product on the market as they age out of the hobby. In recent days, Wedbush Securities downgraded the shares from outperform to neutral. The analyst community is roughly split between buy and hold recommendations.

So what does Von Mueffling see in Harley? Von Mueffling is now a true long investor who tends to avoid deep discounts and speculative plays. He made a killing for himself and his clients in the early 2000s by shorting tech stocks. But he surprised many in 2010 by abandoning short strategies altogether, declaring them too risky.

Harley’s return stats, such as return on invested capital, are strong but not astounding, and its share price valuations, such as PE ratio, are modest but not cheap.

HOG Return on Equity Chart

HOG Return on Equity data by YCharts

HOG Forward PE Ratio Chart

HOG Forward PE Ratio data by YCharts

The company has raised its dividend several times in recent years. Its dividend yield is now 1.5%.

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at You can also request a demonstration of YCharts Platinum.

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