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However my patience with Hargreaves achieved little reward

Posted on 03 September 2010

However, my patience with Hargreaves achieved little reward.My hope is that I have not missed the party. The shares are therefore trading at 21 times expected earnings.Buying shares around the halfway point between the interim and final profit announcements is often a sound policy. If there has been a lack of information – and that is usually the case – the shares tend to drift lower as investment interest wanes. It spreads over bulk haulage (moving coal and other aggregates around the country); waste handling, industrial services and importing and producing coke.These activities made interim profits of £3m (up from £1.2m) and stockbroker Brewin Dolphin is looking for an annual pre-tax figure of £6.6m. If I waited I hoped they would surrender some of their exuberance.

They have, however, steadfastly refused to give much away, displaying unwelcome resilience. So, despite the obvious dangers of what is after all a fancy price, I have decided to join the party, paying, I feel, rather dearly for the privilege.
So what makes Hargreaves special? Well, it overcomes its lack of sex appeal by offering basic services that should prosper in the next decade or so. Floated at 243p in November, they are as I write around 417p. It was in February, when the shares had already made dramatic headway, that I became aware of the company and its attractions. Although involved in the sweat and toil segment of the business world, it could blossom into a future star of the Alternative Investment Market (AIM) Indeed, the shares have already made remarkable progress.

If the firm is in profit, excess profits can be channelled into the pension fund, so reducing the corporation tax bill.Clark recommends a low-cost mainstream plan – annual charges are just 0.6 per cent at Legal & General, say. When he is ready to purchase commercial property, he should switch to more adaptable property Sipp managers, such as Merchant Investors or Central Tax and Trustee Planning. Nathan’s pension fund could then lease back the property to his company. This would mean rent was paid back to his pension rather than to another landlord, Clark says..

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