Hargreaves Lansdown (LSE: HL) – a stock held by star portfolio manager Nick Train in his Lindsell Train UK Equity fund – is a FTSE 100 stock I hold in high regard. Not only does Hargreaves Lansdown have plenty of growth potential, but it’s also an extremely profitable company.
Yesterday, there was some big news in the UK retail investment management space that could give Hargreaves Lansdown a major boost. After this news, I think its shares may be set to move higher.
Robinhood has cancelled its UK launch
One concern many investors have in relation to Hargreaves Lansdown is that it might have to reduce its trading fees in the near future. You see, in the US, ‘zero commission’ trading is currently all the rage. Thanks to innovative FinTech trading platforms such as Robinhood – which now has 13m users in the US – traders and investors can trade stocks and pay no commissions.
Robinhood had been planning to launch in the UK. Late last year, the FinTech company said it expected to launch during the first quarter of 2020. And, as of last week, the company had a waiting list of more than 250,000 people in the UK.
However, yesterday, Robinhood announced it has cancelled its UK launch in order to focus its efforts on the US market. “We’ll be closing our waitlist and taking down our UK website shortly,” it said.
This is great news for Hargreaves Lansdown. With Robinhood cancelling its UK launch, it means less competition for the FTSE 100 company. It also means the company may not have to slash its fees to the extent that some investors thought it might have to in order to remain competitive.
It’s fair to say the market liked this news. Hargreaves Lansdown shares jumped about 10% yesterday.
Train will certainly be happy with that share price jump. Recently, he was adding to his position in the FTSE 100 company.
A Train favourite
It’s worth pointing out Train recently discussed Hargreaves Lansdown shares in the monthly portfolio commentary for the Lindsell Train UK Equity fund. He said the fact that Hargreaves Lansdown shares have outperformed the FTSE All-Share index this year is a reflection of the company’s cash-rich balance sheet, recurring revenues, and strong profitability, as well as the expectation that the business will actually grow in 2020.
Train also discussed the fact that some investors see the FTSE 100 stock as too expensive (its P/E ratio is about 30). His take was concerns that any company’s shares are too expensive “have not been particularly helpful” over the last few years. The star fund manager pointed out that expensive companies with strategic growth opportunities “have often carried on doing well in share price terms.”
I’m bullish on this FTSE 100 stock
Like Train, I’m bullish on Hargreaves Lansdown shares. The stock isn’t without risks. However, in my view, the risk/reward proposition is attractive. I see the stock as a ‘buy.’
