Hosking Partners is a London boutique founded in 2013 by Jeremy Hosking, a portfolio manager at Marathon Asset Management for over 25 years. It runs a single global equity strategy built on the capital-cycle, supply-side approach — contrarian, long-term, and unusually diversified (350+ holdings) under a multi-counsellor model, managing around $5.5bn.
This article explains how Hosking Partners found a hidden gem in Saga Plc, a UK company serving over-50s. They're optimistic, saying the stock could rise 5x more after already jumping 8x from its 2022 low, thanks to strong brand trust and debt reduction. Key holdings: Saga Plc (up 8x, founder owns 28%) and founder Sir Roger de Haan (invested £100m of his own money).
One-sentence summary of the author's market view this period: By reverse-engineering obscure stocks with a forward P/E approaching 1x, Hosking Partners believes Saga Plc still has significant upside, with a stance of 【Bullish】.
The article proposes a simple framework for identifying ten-bagger stocks: under reasonable assumptions, if a company's future price-to-earnings (P/E) ratio can approach 1x, its equity upside is likely substantial. The author emphasizes that this screening logic is "simple," but actually investing in and holding these out-of-favor stocks is "difficult." The author's original words: "One simple heuristic we use is whether a business could, under reasonable assumptions, be valued at something approximating a P/E of 1x future earnings. If such a case can be made, equity upside is likely material."
The author notes that such investments require contrarian thinking, supportive corporate structures, and a long-term customer base. Hosking Partners' diversified, multi-advisor model provides a structural advantage, as concentrated, "high-conviction" funds cannot tolerate the drawdown risk or permanent capital loss associated with "risk stocks." Meanwhile, investors pursuing "quality compounding" (seeking stocks that steadily rise 15% annually) also miss out on uncovering such names. The author argues that this lack of competition for stocks with a P/E of 1x is a structural feature of the post-financial-crisis era and a significant tailwind for Hosking Partners.
Saga Plc is the core case study in the article. Since its 2022 low, the stock has risen 8x, and based on non-heroic earnings assumptions, it could rise another 5x from the price of £5.20 in early March 2026. The author details the position-building process: Hosking's multi-advisor model allows for gradual accumulation. Over five years, Saga grew from less than 20 basis points (<20bps) to become the fifth-largest holding, with ownership of over 8% of the outstanding shares. The author's original words: "In five years, Saga has grown from <20bps to become our fifth-largest holding, where we own over 8% of the outstanding shares. The share price is up 8x from its 2022 low and on non-heroic earning assumptions could rise a further 5x from the price of £5.20 in early March 2026."
Founded in 1951, Saga's core mission is to "take care of older people," a "deep reality" that has remained unchanged for 75 years. The author quotes Chairman Sir Roger De Haan, noting that Saga "gets things right" and executes through high-quality, long-tenured employees. Its business model has expanded from initially offering low-cost long-distance coach travel for retirees to include cruises, insurance (travel, auto, home, health), and financial services specifically designed for people aged 50 and over. The author emphasizes that Saga's brand trust is the result of 75 years of accumulation, making it one of the top 50 most recognized brands in the UK, with a vision to "become the most trusted brand for people over 50 in the UK."
The article details Saga's disastrous experience under private equity control: after the founding family exited in 2004, the company went through successive control by private equity firms such as Charterhouse, Permira, and CVC. Through high leverage, short-term profit maximization, customer neglect, and a strange merger with the AA, the business's health was severely damaged. Private equity exited via an IPO in 2014, attracting 200,000 retail investors (many of whom were Saga customers), and the stock fell over 95% within five years. The author calls this "one of the most astonishing cases of reverse wealth redistribution by private equity."
The turning point came in 2020: Facing another private equity takeover bid, the founder's son, Sir Roger de Haan, intervened, personally injecting £100 million to support a £150 million rights issue, restoring the balance sheet, and becoming Chairman. He is now Saga's largest shareholder, holding 28%. The author believes this provides a long runway for multi-fold compounding. Under Sir Roger's leadership, Saga has entered its fifth year of an impressive turnaround: Multiple siloed businesses have been integrated into a single, customer-first unified operation, with a 40% reduction in headcount, while customer experience has improved (increased cruise passengers, higher load factors, and a return to growth in the insurance business). The most critical signal is debt reduction: Net debt has fallen for five consecutive years, likely now below 4x EBITDA (down from a peak of over 10x), and the asset base includes two owned cruise ships with a replacement value of approximately £1 billion.
Through the Saga case study, the article demonstrates Hosking Partners' practice of contrarian investing, distressed turnaround plays at low valuations, and the aging population consumption theme. Readers should note that this is a perspective from a position holder—Hosking is Saga's fifth-largest shareholder with over 8% ownership, and its narrative carries a clear tone of defending its position. The article's emphasis on "lack of competition" and "structural tailwinds" is a self-reinforcing narrative for Hosking's own strategy and requires independent assessment of risks (e.g., leverage levels, uncertainty in earnings recovery).
The report argues that Saga's profit potential goes well beyond management's medium-term target of £100 million in operating profit, with an extreme scenario reaching £220 million, corresponding to a value of approximately £25 per share. The author notes that in 2004, Saga's last full financial year under founder Sir Roger, the company had already achieved £95 million in operating profit. Since then, the population aged over 55 has grown by a third, and with the trend of multiple holidays per year, the addressable market has expanded significantly. Looking ahead to the 2030s, under a "full-steam-ahead" scenario, Saga could generate approximately £220 million in operating profit—the author's original phrasing states, "a full-steam-ahead scenario would see Saga generate c£220m of operating profit," meaning "a full-steam-ahead scenario would see Saga generate approximately £220 million in operating profit." As a validation, this is "merely" a return to the profit levels of 2018-19, and excludes the capital-intensive insurance underwriting business. If this profit is achieved, Saga would deliver a return on invested capital of over 20%, combined with the "grey pound" demographic tailwind. Its asset-light, high-cash-flow business model could support a high-teens EV/EBIT multiple, corresponding to an enterprise value of approximately £4 billion and a per-share value of around £25. For context, at the September 2022 low of 71 pence, the market capitalisation was just £100 million, with a price-to-earnings ratio of less than 0.5 times the restored profit.
The report emphasises that Saga's investment case is extremely straightforward: valuation is low relative to its asset base, historical record, and profit outlook. Customers love the product, which has sustained three generations of repeat buyers; the company has a credible plan to restore its original asset-light "broker" model, and this plan is being overseen by the model's original creator. The author highlights a key endorsement: "With £100m of his own money invested – together with a huge amount of personal and family pride – Saga is unlikely to fail from lack of trying," meaning "he has invested £100 million of his own money—along with a huge amount of personal and family pride—Saga is unlikely to fail from lack of effort." The report argues that even though the share price has risen eightfold from its trough, the prospect of achieving multiple returns from here is realistic, given the profit potential and demographic tailwinds.
The report points out that Hosking's diversified, contrarian, and unconstrained investment approach enables it to participate in Saga's long-term upside, while other investors (constrained by marketing needs?) would not. The author compares Saga to its own customer base—"this idiosyncratic and contrarian investment will continue to mature well in old age," meaning "this unique and contrarian investment will continue to age gracefully like fine wine." The implicit institutional perspective bias is that Hosking, as a contrarian investor, tends to emphasise that other institutions avoid such opportunities due to style constraints or marketing pressures. This is both a strategic advantage and a point where readers should note that the position holder may amplify narrative optimism.
The report points to a clear contrarian value investment opportunity: Saga still has significant upside potential after an eightfold rally, driven by structural demand from an ageing population, the restoration of an asset-light model, and a heavy management stake. However, readers should note that the £220 million profit figure is a "full-steam-ahead" scenario assumption, and the author acknowledges that this valuation may understate the cruise business (referencing listed peer Viking Holdings, valued at 24 times operating profit, with ultimate upside approaching £30 per share). As Saga's fifth-largest shareholder (holding over 8%), Hosking's optimistic assessment should be viewed cautiously, taking into account the position holder's perspective.
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Saga Plc | Increased Position | Increased from less than 20 basis points to the fifth-largest holding, owning over 8% of outstanding shares, with an estimated 5x upside remaining | Share price up 8x from 2022 lows; price of 5.20 GBP in early March 2026; extreme scenario per-share value around 25 GBP; net debt likely below 4x EBITDA |