REVELATOR ALF

When we think of big corporations such as Harley-Davidson we usually look towards a prominent figure head as the person who is ultimately in charge, such as the CEO; Jochen Zeitz.

However, with a company head who answers to the board of directors and mostly to the shareholders…it could be argued that whilst the day to day running and operating strategy is with the board and the CEO, ultimately the power is with the shareholders who need to be pleased with the return on their investment either with dividends or with a rising stock price.

Now let’s do a deep dive of who actually owns the shares of the ‘American’ brand? As we know whilst a company may be associated with a region or a particular country, if it is operating on a global level and has investment from overseas, then the patriotic shine begins to be rubbed off.

However let’s assume that the investors are all from within the same country, in the case of Harley-Davidson that would be the USA of course. (It really is a false assumption here)

Who owns the stock and what influence do they have on the company?

You might think that Harley Davidson fans or owner riders would own a fair percentage of stock, however they account for less than 13% ownership and less stock is owned by the government or regional authorities or employees which is in the region of 1%.

Active investment comes from Hedge Fund management which is approximately just shy of 9% with the bulk coming from ‘old money stalwart’ investors referred to as ‘Institutional Investors’ which comes in a approx 78%

In a recent analysis, it was found that 51% of the stock was owned by only 9 shareholders and some such as Vanguard Group own 9.3% with similar percentages by other large investors. So what does this all mean?

This means that just over 86% of the company’s stock is owned by a small amount of investors who yield a lot of influence in how the company operates but also how it functions both on the stock market and in year on year operations.

Let’s take the new direction the company took when CEO Jochen Zeitz took over from Matt Levatich. The ‘More Roads to Harley Davidson’ was replaced with ‘Rewire’ and then the ‘Hardwire’ five year strategy. The approval of this would have been felt by the response of the shareholders and certainly the main shareholders who are either active in trading or who are more concerned with their overall investment portfolio rather than being loyal to a particular brand.

The ‘approval & support’ a CEO gains is based upon what investors want to hear and what returns they can get. They really don’t care about the customer experience or the quality of product. For they see rewards where others see failures and betrayals.

So what influence do the public investors have? Those 13% who own one or two shares here and there? Well…not a lot actually. And the reality is that the company and the other shareholders do not place any value on those either. The problem here is that there are too many disconnected and rather small investors and their voices are not loud enough. They do not trade collectively in huge numbers, such as with Hedge Funds, so their short term influence is very limited.

Of course, there could be call to gather everyone of the public investors together and form some kind of consortium, but that would be like herding cats…it’s never going to work.

So let’s get back to the original point of American ownership. Well that cannot be guaranteed with a publicly owned company. However when the major investors may also have foreign investment and their influence reaches far and wide beyond borders and intertwines with government policy and international banking, then it would be true to assume that we are dealing with a different kind of investing animal here and one that wields enormous power to influence how a company operates and what direction they should head towards.

When CEO Jochen Zeitz predicts or even pledges that Harley Davidson will be 100% electric in the future, even though the current customer base is less than sympathetic and even less enthusiastic, then you might ask what is the reasoning here?

LiveWire, the spin off company was publicly launched in autumn last year and immediately began to falter with investors pulling out, leaving H-D to bail them out but LiveWire is still losing money…millions of dollars in fact and has not been anywhere near a success. Why? Well, because it is trying to sell higher price EV bikes that nobody wants to buy.

Now CEO Zeitz has stated that H-D will be selling the LiveWire and other EV products in Japan as it sees it as an electric bike emerging market. But there is a reason that Japan’s four major manufacturers have delayed their EV involvement…and it’s because their isn’t the interest for high priced and high performing EV bikes there, only low priced, urban commuters or scooters. None of which H-D or LiveWire make or intend to make!

So what is this fascination with EV when there are emerging fuel alternatives from other manufacturers that would keep the internal combustion engines alive for a lot longer? Well it might be because of highly influential investors who also have major investment in future technologies and future energy provision such as ‘Green Electric’

So if your major investors have a ‘vested interest’ in your products becoming electric, then it is not beyond the realms of possibility that the company direction might become influenced or biased.

This is how major investment or large shareholders effectively guide the future of the company. They are not hands on – day to day influencers but they have a mighty hammer to fall on the economic environment in which a company like Harley Davidson operates…and this means that the average customer or individual shareholder is given little consideration in any of the decisions being made.

You would hope that equal representation would be made or similar credence given to all arguments but that would appear not to be the case. For the rest of the Harley Davidson fan world might consider themselves a part of a greater being or community but the reality is the true spirit of Harley-Davidson lies within the owner-rider community itself and not from the company and even less from the major investors who are ultimately in charge of their next steps.