Tuesday, December 1, 2020

A Small Cap Equity holding: Hamilton Lane, Inc. (HLNE, $75.26): “Continuing Down the Lane for Profits” by: Ben L’Empereur, AIM Student at Marquette University

 Hamilton Lane, Inc. (HLNE, $75.26): “Continuing Down the Lane for Profits”

By: Ben L’Empereur, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Hamilton Lane, Inc. (NASDAQ: HLNE) is one of the largest global private market investment managers. They work with their clients to buy, manage, and sell funds and investments. Their clients include investors from the United States, Europe, the Middle East, Asia, Australia, and Latin America.

• EPS is up from $0.02 in Q1 of FY2021 in June to $0.66 to Q2 as reported on November 4th. This increase nearly brings EPS back to HLNE’s pre-COVID number of $0.74 

• From Q2 of FY2020 to Q2 of FY 2021, total assets under management grew nearly 11% from year-to-year to $73 billion. Fee-earning assets grew by almost 9% to reach $39 billion in the same period.

• HLNE builds and customizes private market funds to meet each of their customer needs. This segment of revenue accounts for $57 billion of their AUM. Their advisory service segment holds nearly $474 billion assets under advisory for some of the largest private market investors in the world.

• HLNE continues to expand worldwide. The company announced on October 28th, 2020 that they just opened an office in Singapore. This office is the 5th location they now have in the Asia Pacific area. 

Key points: Hamilton Lane, Inc has yet to reach its peak when considering their growth potential. With the FOMC projecting interest rates to stay near 0% for the next couple of years, there is a higher demand for investment services. Consumers would rather put their excess income in riskier assets with a higher chance of return than settle for next-to-nothing gains on their investments.

With more investors moving towards the use of FinTech, HLNE already has significant technological developments that sets them apart from their peers. Bundled into their investment solutions offerings is a wide variety of data analytics monitoring their client’s investments and reporting real-time data. For an industry that is important to monitor and report timely information on, Hamilton Lane has already differentiated themselves from the competition.

The company also has a strong management team who have years of experience with the company and within the industry. As the firm continues to navigate the difficulties COVID-19 poses and a transition to a more technology-based investment environment, it is reassuring to be led by a management company that knows the company inside and out.

HLNE provides investment services to institutional investors all over the world. Their revenue has grown double digits year-to-year in countries like Mainland China, Japan, France, and Italy. With their continuous global expansion and effort to open offices in different countries, HLNE will continue to grow their market share in the United States and internationally.

What has the stock done lately?

Following a nearly 20% drop in stock price due to the announcement of a new stock issuance, HLNE has been steadily increasing for the past 3 months. As of November 16th, it had hit a 52-week high at $76.42. As the market continues to recover from the COVID-19 pandemic, and the confidence in a vaccine become stronger, the price will continue to increase. 

Past Year Performance: HLNE has increased 32.70% in value over the past year, even with the effect of the selloff in March after news of the nation-wide lockdown was announced. In the past year, HLNE has outperformed the benchmark 22.79%. Since it has been purchased at the end of September, the stock has posted about an 18% gain.

Source: FactSet

My Takeaway

Hamilton Lane, Inc. still has a very bright future ahead of them with a lot of growth potential. As reflected in the consistent rise in the price of the stock for the past three months, investors are confident in this firm’s ability to grow its bottom line and market share. With the hopes of a vaccine and an economic recovery, the firm has more potential as investors have more excess income. I recommend that we hold the stock for the foreseeable future to benefit from HLNE’s future growth.

Source: FactSet