TIP659: Hermès Stock Deep Dive w/ Shree Viswanathan
We Study Billionaires - The Investor’s Podcast Network
The Power of Luxury: Growth and Valuation
This chapter examines the competitive advantages of luxury brands like Hermès, focusing on strong pricing power, market growth, and resilience during economic downturns. It also emphasizes the importance of terminal value and cash flow analysis in understanding the brand's overall valuation in a rapidly expanding luxury market.
On today’s episode, Clay is joined by Shree Viswanathan for a stock deep dive on Hermès. Hermès is a luxury goods manufacturer renowned for its high-quality craftsmanship. The brand is known for its iconic products, such as the Birkin and Kelly bags, silk scarves, and equestrian-inspired items.
Since the IPO in 1993, shares of Hermès have compounded at 20.6% (excluding dividends), while the S&P 500 had a total return of just 10.4%.
Shree Viswanathan is the founder and portfolio manager of SVN Capital.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
02:38 - A business overview of Hermès.
10:28 - Examples of Hermès thinking exceptionally long-term in their business strategy.
30:16 - The attempted takeover of Bernard Arnault.
37:59 - The strength of Hermès’ moat.
56:01 - The growth opportunities ahead for Hermès and the luxury industry more broadly.
01:03:22 - How Hermès approaches capital allocation.
01:14:15 - Shree’s thoughts on Hermès’ valuation.
01:29:51 - Risks that investors should monitor for Hermès.
And so much more!
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- Shree’s fund: SVN Capital.
- Follow Shree on Twitter.
- Best Anchor Stocks write-ups on Hermès.
- Books mentioned: 100 Baggers, The Founder’s Mentality, The Luxury Strategy.
- Stewart Brand’s seminar on long-term thinking.
- Howard Marks’ podcast with Morgan House.
- Related Episode: WSB585: Concentrated Value Investing w/ Shree Viswanathan.
- Mentioned Episode: WSB645: The King of Luxury w/ Christian Billinger.
- Follow Clay on Twitter.
- Check out all the books mentioned and discussed in our podcast episodes here.
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