Hammerson's (LON: HMSO) share price has edged up 2.6% on the back of an announcement of a share repurchase agreement. Hammerson is buying up to 7.5 million shares. This is a less important announcement than it might seem as the share repurchases are simply to fill staff share options schemes and make little to no difference to the outstanding capital base of the company itself.
However, this does show us how volatile the Hammerson share price is and thus how it offers good prospects for trading it. Even at this small price change of a couple of percent, there are opportunities. The spread is small – only 0.10, and that is one-tenth of a penny – which at a price in the low 30s pence means that a 2 percent movement can be profitable to trade.
There is a larger trade here on Hammerson as well. The share price is near entirely bombed out from the levels of two and three years ago (up in the 250ps, near 10x current levels) and the reason for that is the combination of covid and online shopping.
Hammerson is largely a retail landlord, owning shopping centres and the like. As such it was long a stalwart of the commercial property sector and regarded as safe but boring, an income stock at best. It was always clear that this retail property sector was being eaten away by Amazon and such internet retailers. The percentage of retail spending that was online was advancing by 1 and 2% a year, the number of empty retail premises going up by 1 and 2% of the total stock each year.
Then came covid and the whole process went into hyperdrive. Hammerson, like other retail property owners, was hit by internet shopping jumping 10 percentage points as a portion of total retail sales. Plus near all physical shops closed for some significant period, rents not being paid and so on. This was a near-death experience for Hammerson.
The question is what comes next? Is that leap in the portion of sales moving online going to be permanent? Most expect at least some fallback. In Hammerson’s recent results they showed that rent collections have vastly improved from the low levels in lockdown. The company has also shown – unlike some – that it did manage to survive that near-death event. Its debts did not overwhelm the reduction in cashflow.
So, can there be a recovery here? Hammerson has survived. For at least one section of the population – and not necessarily just teenage girls – shopping is a social activity, not the mere purchase of things. So, some destinations will always survive and at decent rents too. Those that own those will therefore do well. And there is always the possibility that lockdown habits over online shopping near entirely reverse.
The Hammerson share price will continue to move in this volatile fashion as more evidence emerges about which way this is all going to go.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.