Harrods

In April 2013 I analysed the investment of Qatari Holding purchasing Harrods in May 2010. The purchase price was 1.5 billion GBP (it was $2.3 billion at that time).

OK, so what would've happened if they had invested those $2.3 billion into a S&P 500 index fund? Well, they would have a gain of 100%. So they would have $4.6 billion. Plus on top of that, they would make 1.8% yield every year from dividends. So in 2010 they would have a payment of $41 million in dividends and in 2016 they would have $83 million in dividends. And when converted back into GBP, they would have 3.8 billion GBP.

Is Harrods worth 3.8 billion GBP today? Well let's see shall we?

Apparently Harrods' pre-tax profit for 2016 was around 150 million GBP, sell that at the yield of 5%, they could eventually sell Harrods for 3 billion GBP.

What if they would invest that money into Berkshire Hathaway, how much would $2.6 billion of BRK.B shares be worth in March 2017? Well they would have $5.9 billion or 4.9 billion GBP, but no dividends.

And what if they would have invested that money into Apple? They would have $9.7 billion or 8 billion GBP. Plus from 2012 they would have dividends of 1.6% yield.

And what if they would have invested that money into Amazon? They would have today $16.2 billion or 13.4 billion GBP.

Was it so difficult to recognise the genius of Steve Jobs in May 2010? Was it so difficult to recognise obsession of Jeff Bezos? I don't think so. Time has shown I was right. You can scroll down and read my comments from 4 years ago when I said Harrods was a bad investment. Whoever recommended this investment to them, they should fire them.

I am sorry, but too much money is being wasted on ego, consultants, and wannabe hedge-fund manager who are just after their 2% management fee.

Damian