The Hermès Acquisition Saga

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This chapter explores the tense and dramatic attempts by a conglomerate to acquire a significant stake in the luxury brand Hermès, detailing the strategic maneuvers and resistance from the Hermès family. The discussion highlights the cultural conflicts between major luxury brands, the importance of legacy preservation, and the unique positioning of Hermès in the luxury market. Furthermore, it delves into the intricacies of luxury branding, consumer behavior, and the exclusive allure of Hermès' iconic products.

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.
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