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T H E # 1 B U S I N E S S M A G A Z I N E F O R T H E A M E R I C A N V- T W I N A N D C U S T O M M O T O R C Y C L E PA R T S I N D U S T RY
JAN 2017 Harley-Davidson share price recovers ISSUE #210 strongly in final quarter and posts FREE impressive 58 percent gain for 2016 WITH aving been as high as $62.07 at the start of December 2016, HarleyDavidson’s share price staged a remarkable rally in the final three months of 2016. From being seemingly moribund and vulnerable at $49.70 on October 17th, around the time that Harley’s third quarter 2016 fiscals were due for release, it closed out 2016 at just under the $60.00 mark to post a 20 percent recovery in the final quarter of 2016, and a remarkable 58 percent recovery from its 2016 low last January of $37.23. Speculation continues to swirl connecting the share price recovery to the activities and intentions of any one of a number of hostile riders whose names have been connected with making a move on Harley, not least (despite denials) with Kohlberg Kravis and Roberts (KKR), who are believed in some quarters to have the Milwaukee based manufacturer locked into their cross-hairs as a long-term “target of opportunity.” Specializing in leveraged buyouts and headquartered in New York, KKR was
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founded by a group of Bear Stearns alumni in 1976. Early pioneers of the leveraged buy-out concept while at the now defunct Wall Street investment bank, KKR is best known for deals such as the 1989 RJR Nabisco buy-out in 1989 (at that time the largest such transaction ever seen). Since that time KKR has had considerable media and high tech involvements, not least
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making a sizeable investment in Sun Microsystems around 10 years ago. However, whether or not KKR’s fingerprints are on the 2016 Harley share price recovery is a moot point, because regardless of whether or not it is being driven by one particular investor or general sentiment, the performance out-performs the market, even in the post-election weeks, by a
considerable margin and points to Harley’s assiduous attention to investor welfare as having been money well spent, even if some of the effort has had workforce number implications. In fact, in cycle terms, Harley’s share price performance in 2016 follows that of other powersports industry businesses such as Polaris, Yamaha and Kawasaki quite closely – the primary difference being though that those others are diversified enterprises – Harley remains a “one trick pony”. There remain those who think that going private may not actually be such a bad thing for Harley-Davidson. However, Harley has played a smart game. Adding debt to fund its share buy-backs has reduced the headroom for an LBO, and having managed expectations by lowering guidance three times since the end of 2014, the better than anticipated October earnings data has rewarded the company’s conservatism. Contrary to what many have been thinking, the signals are that the company is after all successfully positioning itself to be able to fend off any unwanted suitors – or to Continues on page 8 >>>
Michael Naumann's 'Simple Iron' - second place in the Freestyle class at the 2016 AMD World Championship of Custom Bike Building - see pages 32-33
THIS ISSUE
2016 SHOW REVIEW