Harry Winston (HWD): A Cut Above the Rest - Barron's
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Harry Winston Diamond Corporation (NYSE: HWD) shares are rocking today, following an article in Barron's that says that diamonds may actually be an investor's best friend.
As the global economy rebounds, HWD is set to benefit from both the newly rich, and Old Money, as wallets open up further. The jeweler, best known for starting the trend to dress celebrities in their finest on the red carpet, is getting back into the groove.
CEO Robert Gannicott recently commented that there was actually a surplus of diamonds in the market until about 1996; creating new venues to absorb excess was a challenge. However, with new discoveries of diamonds fewer and further between, and wealth around the globe increasing at a rapid click, HWD is the best pure-play on the market.
Barron's notes that the price of "rough diamonds," which are unrefined versions of their jeweled brethren, has risen 50% over the last four years, with prices of smaller cuts jumping 50% in just the last few months. The stones also carry less volatility than gold and other precious metals.
HWD's retail jewelry chief, Frederic de Narp, commented that buyers from the Middle East and China have a hankering for larger stones. In China particularly, "they don't hesitate" to buy, de Narp said. China itself has the second most billionaires in the world, just behind the U.S., and has become the second-largest market for diamonds globally. De Narp also points out that, following a surge in Q410 sales, the 56% increase in European revenues was largely due to buyers from Russian, Middle Eastern and Asian countries shopping in European locations.
Gannicott also points out that the newly rich in developing nations have turned to diamonds as a portable store of wealth in politically unstable regions.
HWD owns a 40% stake in Canada's Diavik mine, the largest in North America. The company estimates that they could realize about $4 billion in future revs from the site, which is set to be harvested over the next 12 years, and Barron's said that the site highly levered against diamond prices.
The news should make investors salivate, with HWD having market cap of just over $1 billion, making the potential profits from Diavik a potential windfall.
The company is also making headway in the luxury watch business. The company aimed to create technical masterpieces with their offerings, not just ornamental showpieces. And the division has taken hold, with mens watches now outselling their womens brand.
HWD is also looking to expand their presence, with several new stores slated for opening, planning for an additional four stores in Europe and nine in Asia. The challenge will be to keep the exclusivity and mystique of the stores, but with still exclusive numbers, that shouldn't be a challenge for this jewel.
Harry Winston shares are up 5.2% on the day.
As the global economy rebounds, HWD is set to benefit from both the newly rich, and Old Money, as wallets open up further. The jeweler, best known for starting the trend to dress celebrities in their finest on the red carpet, is getting back into the groove.
CEO Robert Gannicott recently commented that there was actually a surplus of diamonds in the market until about 1996; creating new venues to absorb excess was a challenge. However, with new discoveries of diamonds fewer and further between, and wealth around the globe increasing at a rapid click, HWD is the best pure-play on the market.
Barron's notes that the price of "rough diamonds," which are unrefined versions of their jeweled brethren, has risen 50% over the last four years, with prices of smaller cuts jumping 50% in just the last few months. The stones also carry less volatility than gold and other precious metals.
HWD's retail jewelry chief, Frederic de Narp, commented that buyers from the Middle East and China have a hankering for larger stones. In China particularly, "they don't hesitate" to buy, de Narp said. China itself has the second most billionaires in the world, just behind the U.S., and has become the second-largest market for diamonds globally. De Narp also points out that, following a surge in Q410 sales, the 56% increase in European revenues was largely due to buyers from Russian, Middle Eastern and Asian countries shopping in European locations.
Gannicott also points out that the newly rich in developing nations have turned to diamonds as a portable store of wealth in politically unstable regions.
HWD owns a 40% stake in Canada's Diavik mine, the largest in North America. The company estimates that they could realize about $4 billion in future revs from the site, which is set to be harvested over the next 12 years, and Barron's said that the site highly levered against diamond prices.
The news should make investors salivate, with HWD having market cap of just over $1 billion, making the potential profits from Diavik a potential windfall.
The company is also making headway in the luxury watch business. The company aimed to create technical masterpieces with their offerings, not just ornamental showpieces. And the division has taken hold, with mens watches now outselling their womens brand.
HWD is also looking to expand their presence, with several new stores slated for opening, planning for an additional four stores in Europe and nine in Asia. The challenge will be to keep the exclusivity and mystique of the stores, but with still exclusive numbers, that shouldn't be a challenge for this jewel.
Harry Winston shares are up 5.2% on the day.
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