HGH - Heartland Group Holdings

[BlackPeter]

Poor Leanne. Jeff never told her when she became Heartland 'Bank' Chief Executive that Heartland isn't really a bank. It is just a jumped up finance company that does *all* its banking through Westpac, and the 'bank' bit on the Heartland name was all a marketing exercise. No wonder Heartland isn't on a level playing field with the real banks.

SNOOPY

You mean this might be a case of better do your research before you sign your contract? :) ;

[ronaldson]

DRIP shares allotted today at $1.6865 compared with the current on-market price of $1.73, so a marginal benefit for those choosing that option.

[Joshuatree]

ElNino arrived here two days ago,I like👍Holding Heartland thru whatever and out the other side,income and easy to sleep at nite stock for me.

[Norwest]

Basel III capital requirements.

Common Equity Tier 1 (CET1) is core capital that a bank holds in its capital structure i.e. retained earnings. The ratio compares a bank’s capital against its risk-weighted assets to determine its ability to withstand financial distress.

The following disclosures were all reported on 30th June 2023



Bank

CET1 %
Tier1 %
Total %



CBA
12.20
14.50
20.00


ANZ
13.50
15.40
21.10


WBC
11.86
14.02
19.71


NAB
11.90
13.80
20.20


HGH
12.68
12.68
14.71



It should be noted that HGH CET1 has been decreasing compared to both 2022 (13.49%) and 2021 (13.99%).
Infact, since 2020 HGH's CET1 ratio has only increased by 0.01 compared to the big four Australian Listed Banks increasing by 0.60 - 2.40. This is, in my opinion, because they have been paying out too high dividends instead of retaining capital.

The $100 million of bonds issued earlier this year on NZDX "HBL1T2", is classified as Tier2 capital.

The only other NZDX listed bonds "HBL020" is classified as Tier1 capital, however when they mature on 12th April 2024 I believe this will further decrease HGH's Tier1 ratio by $125 million. Any subsequent bond issues will be classified as Tier2, this is because of changes of capital definitions changes defined by the RBNZ document "BPR110" in 2021.

The big four Australian banks already meet the 2028 capital requirements, where as HGH is going to have to retain more capital in the next several years to meet these requirements.

[maclir]

Dividends possibly further threatened...Jenny Ruth works through ssome of the regulatory impacts upcoming:

https://justthebusinessjennyruth.substack.com/p/more-regulation-likely-to-drive-some?utm_source=post-email-title&publication_id=1827355&post_id=137252792&utm_campaign=email-post-title&isFreemail=true&r=i1c3&utm_medium=email

[Muse]

It is good to see the new RBNZ capital requirements and the pending deposit takers act being discussed - have raised it a few times but never much interest amongst punters.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/world-s-toughest-capital-requirements-in-new-zealand-may-squeeze-credit-65720981

https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/capital-requirements-for-banks-in-new-zealand#:~:text=Transition%20path%20to%20higher%20 capital%20requirements&text=We%20will%20phase%20in%20the,1%20capital%20ra tio%20of%207%25

@Norwest - for the Aussie banks is it possible you are looking at their Australian parent capital adequacy ratios (IE the Aussie bank operating companies capital adequacy) rather than their NZ domiciled subsidiary capital adequacy for their operations in New Zealand? Your ratios do not appear to line up to the RBNZ dashboard. I only double checked that thought by looking at CBA (operating as ASB here) and CBA's Australian Cet1 ratio was 12.2% - for their Australian operations - which are irrelevant to NZ operations, as they are judged solely on their NZ subsidiary operations.

https://bankdashboard.rbnz.govt.nz/capital-adequacy

The RBNZ dashboard indicates all the banks in your table are well above the minimum levels, and all have some ways to go to meet the new higher requirements by 2028. The big4 banks are D-SIB's and require higher buffers than the other ~20banks. Heartland Bank Ltd (the NZ bank) will require a core capital ratio of 11.5% and a total capital ratio of 16% by 1 July 2028. The later is at ~14.7% so will need to increase by 1.3% over the next 5 years.

What is the various levers to achieving that?
* Retained earnings: maintaining and/or growing NPAT without distributing all in the form of dividends increases retained earnings & equity
* Flexing dividend payout ratio: paying out less increases retained earnings/equity
* Keeping the DRP or improving its economics - there has been a ~15% takeup in the DRP when offered
* Further capital raises: many options including various types of notes or common equity
* falling interest rate cycle: as a great deal of assets are held on a mark to mark basis, as we hit peak interest rates, and hopefully in a year or two see rates fall, those assets on a M2M basis should increase in value providing a tailwind to achieving those ratios

End result likely to be a combination of some of the above - particularly growing NPAT while (hopefully) keeping payout more or less the same, so note issues, and perhaps a tailwind from the interest rate cycle. But you can never rule out anything.

I note the brokers show HBL meeting its capital requirements by the end of the transionary period on a status quo basis. But brokers are brokers.

One thing that always strikes me is how the media and politicians are unable to see how raising capital requirements - making our banks much safer - also likely makes borrowing more expensive. Banks have to hold much more capital, and they attendant charge more for it to help recoup that reinvestment - and their profits go up. Their profits ought to go up, as they now hold billions and billions more assets than they needed to before.

Will leave the deposit takers point for a later post.

[Norwest]

@Norwest - for the Aussie banks is it possible you are looking at their Australian parent capital adequacy ratios (IE the Aussie bank operating companies capital adequacy) rather than their NZ domiciled subsidiary capital adequacy for their operations in New Zealand? Your ratios do not appear to line up to the RBNZ dashboard. I only double checked that thought by looking at CBA (operating as ASB here) and CBA's Australian Cet1 ratio was 12.2% - for their Australian operations - which are irrelevant to NZ operations, as they are judged solely on their NZ subsidiary operations.

You are correct and it's a good call out.

The figures I posted are the Australian parent company's Basel III disclosures. The reason I chose this is I can't invest directly into their NZ subsidaries.

[Muse]

You are correct and it's a good call out.

The figures I posted are the Australian parent company's Basel III disclosures. The reason I chose this is I can't invest directly into their NZ subsidaries.

Fair enough and thanks for raising.

The RBNZ's new capital adequacy rules are something I have pondered off and on about re my HGH shareholding. I think it's a good the RBNZ have done this, especially in the post GFC era, although we forget why its important and we got a little reminder after watching the mini US banking crisis back in March. But there are side effects.

Increasing the capital a bank is required to hold - and holding all else equal - ought to diminish a banks return on equity and theoretically ought to reduce it's P/BV and PE (and increase the divy yield demanded by investors, thus driving prices down). Banks won't just sit there and raise & retain more capital while not passing on any costs to customers, so it's inevitable that they raise their lending rates to compensate. Whether they can (or should) raise lending rates enough to maintain ROE's remains to be seen, but I would have thought as industry the new framework will hurt ROEs. ROE in my mind is one of the most important indicators for a bank so I've always been a bit cautious how it will impact my investment in HGH. I'm pleased HGH has a lot of long-term initiatives underway to improve ROEs as there needs to be to offset these new RBNZ requirements impact. Reducing HGH's cost to income, optimising Australia's borrowing programme (either thru repo's of StockCo's pre acquisition funding debt, and eventually expanding it to include deposits), and focusing on higher margin income streams all key to this. But they also all remain works in progress.

[Snow Leopard]

Basel III capital requirements.

Common Equity Tier 1 (CET1) is core capital that a bank holds in its capital structure i.e. retained earnings. The ratio compares a bank’s capital against its risk-weighted assets to determine its ability to withstand financial distress.

The following disclosures were all reported on 30th June 2023



Bank

CET1 %
Tier1 %
Total %



CBA
12.20
14.50
20.00


ANZ
13.50
15.40
21.10


WBC
11.86
14.02
19.71


NAB
11.90
13.80
20.20


HGH
12.68
12.68
14.71



It should be noted that HGH CET1 has been decreasing compared to both 2022 (13.49%) and 2021 (13.99%).
Infact, since 2020 HGH's CET1 ratio has only increased by 0.01 compared to the big four Australian Listed Banks increasing by 0.60 - 2.40. This is, in my opinion, because they have been paying out too high dividends instead of retaining capital.

The $100 million of bonds issued earlier this year on NZDX "HBL1T2", is classified as Tier2 capital.

The only other NZDX listed bonds "HBL020" is classified as Tier1 capital, however when they mature on 12th April 2024 I believe this will further decrease HGH's Tier1 ratio by $125 million. Any subsequent bond issues will be classified as Tier2, this is because of changes of capital definitions changes defined by the RBNZ document "BPR110" in 2021.

The big four Australian banks already meet the 2028 capital requirements, where as HGH is going to have to retain more capital in the next several years to meet these requirements.

Just a quick reminder that there is:
HGH: Heartland Group Holdings and
HBL: Heartland Bank.

Although the former owns the latter and it is the latter that is the Bank, they are two distinct entities.

[Muse]

Dividends possibly further threatened...Jenny Ruth works through ssome of the regulatory impacts upcoming:

https://justthebusinessjennyruth.substack.com/p/more-regulation-likely-to-drive-some?utm_source=post-email-title&publication_id=1827355&post_id=137252792&utm_campaign=email-post-title&isFreemail=true&r=i1c3&utm_medium=email

That's a great article, thanks for sharing. Ruth is an awesome journalist - not many business reporters in her league.

I don't know much about the deposit takers insurance and I think its still a WIP but it's clear somebody's gotta pay for it - banks, bank customers in the form of higher borrowings, or probably both. A good initiative I reckon for the resilience of the banking sector, but at a cost to borrowers & banks.

[Rawz]

That's a great article, thanks for sharing. Ruth is an awesome journalist - not many business reporters in her league.

I don't know much about the deposit takers insurance and I think its still a WIP but it's clear somebody's gotta pay for it - banks, bank customers in the form of higher borrowings, or probably both. A good initiative I reckon for the resilience of the banking sector, but at a cost to borrowers & banks.

No doubt a cost to depositors as well. I.e. your first $200k deposit we will pay x-1% and on anything above that we will pay x%

Can socialise the cost to everyone :t_up:

[thegreatestben]

We got a new logo on Sharesies today, exciting development haha...

[Muse]

We got a new logo on Sharesies today, exciting development haha...

yeeha

El Nino a bit of a bugger for StockCo (not my favourite subsidiary of HGH). Things getting hot already in AU w/ farmers selling off / culling livestock earlier than normal, means less funding requirements & interest income for stockco all things equal.

[X-men]

https://www.nzherald.co.nz/the-country/news/gdt-dairy-prices-rise-for-the-fourth-time-in-a-row/CJT2FGEYJ5FDTAWGZ7UKJHRJKQ/

Dairy price is going up....HGH will be doing fine

[X-men]

Sickening....it took months to go up to $1.70 range....less than 1 week ...SP drop back to $1.60....gosh.....

[bull....]

yep if you read all the asx bank type stock reports they are all saying nim 's under pressure , competition intense. cant see why NZ would be any different

[alokdhir]

Heard from senior management of Top retail NZ bank ...he was saying economy and consumers viz a viz bank business are doing much worse then expected at this moment ...was predicting we already in recession and next 6 months prospects pretty dim from bank's point of view .

[X-men]

It has been almost 2 years gloom and doom....yet heartland always delivers.

The economy is now at the button cycle.... definitely reached the button..now the world economy is starting to tick slowly

[Ggcc]

Heard from senior management of Top retail NZ bank ...he was saying economy and consumers viz a viz bank business are doing much worse then expected at this moment ...was predicting we already in recession and next 6 months prospects pretty dim from bank's point of view .

We wanted the recession to curb inflation. That is the story I remember was told to us. I just don’t remember who mentioned it. Maybe Adrian Orr from the Reserve Bank.

[percy]

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/RHZ0VXbVJ3asnAXqWWbwSA/X2892YNYsI8ngYcJnxTirgbQ

[percy]

https://www.rnz.co.nz/news/business/501041/demand-for-consumer-credit-continues-to-increase-equifax

Would guess HGH are getting their share.?

[winner69]

https://www.rnz.co.nz/news/business/501041/demand-for-consumer-credit-continues-to-increase-equifax

Would guess HGH are getting their share.?


Why the ? Percy …..of course they getting (more than) their share

[bull....]

hey if we let in another 100k immigrants next yr guess that help again with the loans

[bull....]

looks like stock wants to test those recent lows around 1.51

[850man]

Fallen almost 12% in 2 weeks, $1.51 has a fair bit of seller weight on it

[bull....]

looks like stock wants to test those recent lows around 1.51

bull the legend ... lol under 1.50 much lower to come esp if nz50 falls another 10%

[Rawz]

Could this trade under book value I wonder? As the economy deteriorates more and more.

Doesn’t the aus fringe banks like BOQ trade under book value?

[Rawz]

https://www.msn.com/en-nz/news/national/fears-more-dairy-farmers-will-default-on-loans-amid-cost-pressures-lower-commodity-prices/ar-AA1jbpQE?ocid=entnewsntp&pc=DCTS&cvid=6f5e20d1f0bd4750a327347852b30253&ei=11

Commodity prices have dipped due to an oversupply and softer demand from New Zealand's key market, China.
"Prices of dairy, meat, and forestry products have fallen by 8 to 20 percent compared to a year ago," the report said.
That drop has led Fonterra to adjust its forecast milk price to a mid-point of $7.25 a kilogram of milk solids (https://www.rnz.co.nz/news/national/499733/fonterra-s-forecast-for-milk-payouts-looks-brighter).
While higher than other payouts in recent years, this season farmers have been fighting rising costs for inputs such as labour, feed and fertiliser and rising debt servicing costs which have doubled in the last two years.
The RBNZ report said the average break-even dairy revenue per kgMS for the 2023/24 season was estimated to be around $8 so at the current forecast some farms would make a loss.
"Banks perceive most of their dairy customers to be reasonably well-placed to weather a short period of low payout. Significant deleveraging in the sector in recent years has contained debt servicing costs and has supported the option for many farmers to go interest-only to alleviate cashflow stress.

"However banks expect defaults among dairy borrowers to rise over the coming year, because there tends to be a time lag between cashflow stress and default," the report said.
It pointed out a prolonged period of low dairy prices or a further reduction in prices were more likely to exhaust the cash buffer of farmers with weaker balance sheets, leading to materially higher default rates.
Federated Farmers president Wayne Langford said the report was not surprising.
"Federated Farmers has been pointing out for a while now that farmers are under huge pressure at the moment, with rising inflation costs, double that of what we're seeing in urban centres, so it's an extremely tough time on farm with product prices coming back as well.
"What was well forecast, was the lowering of the product prices as well. A lot of our expenses come in the first half of the season so when we got early warning we were able to cut back on some of those expenses."

[Sideshow Bob]

Decent old increase in director fees proposed this year - $1.6m to $2.4m.

[winner69]

Decent old increase in director fees proposed this year - $1.6m to $2.4m.

Whose going to or joining in the hui this week

Jeez, Challenger Bank Directors going to be well paid eh

And nice the Chair of the newly formed Sustainability Committee is to get $20,000 of the huge increase in Directors Fees

I've voted NO against Directors Fees and NO to re-elect our Greg .......good guy but done his stint and Board needs less old white guys no matter how smart they are.

[percy]

Whose going to or joining in the hui this week

Jeez, Challenger Bank Directors going to be well paid eh

And nice the Chair of the newly formed Sustainability Committee is to get $20,000 of the huge increase in Directors Fees

I've voted NO against Directors Fees and NO to re-elect our Greg .......good guy but done his stint and Board needs less old white guys no matter how smart they are.

Crikey you would vote against Warren and Charlie...lol

Our Gregg is still using his brain.He has attracted the incredible CEO Simon Limmer to his Indevin bussiness.

[winner69]

Crikey you would vote against Warren and Charlie...lol

Our Gregg is still using his brain.He has attracted the incredible CEO Simon Limmer to his Indevin bussiness.

Greg good guy …and hopefully would still have ‘influence’ and a say even if not a Director …..look before he was appointed in 2018

[WayOverTheHill]

Has anyone heard any rumblings about the progress of the Australian Banking Licence?

[X-men]

Fy2024 NPAT $116-122m not included Challenger bank

The SP has no reaction....tough market to please alright!!!

[winner69]

Fy2024 NPAT $116-122m not included Challenger bank

The SP has no reaction....tough market to please alright!!!

Unchanged ..same as before

And doesn’t include how Harmoney share price goes .:);):mad ;::sleep:

[winner69]

How many times they say resilience and resilient

[nztx]

How many times they say resilience and resilient


Interest rates be resilient and resistant too


Inline with the way interest rates have moved closing in on the Div yield, many might be hoping to vote for
a large Div hike :)

[bull....]

4. Outlook

We expect FY2024 to be a more challenging year due to high interest rates impacting borrowerdemand and credit quality. We are also seeing greater competition for deposits due to major banksrefinancing the COVID-19 funding for lending programme. Initiatives to address this are underway,including Heartland Bank’s new Digital Saver on-call deposit product, targeting lower cost and lesscompetitive parts of the yield curve.The first quarter is typically slower, and this was exacerbated by election uncertainty, whichimpacted Motor Finance in particular, but there are signs of a bounce back post-election andpipelines are strong. Meanwhile, Reverse Mortgages and Asset Finance growth has continued. Astrong commitment to ensuring good customer outcomes, alongside proactive portfolio pricing andmargin management will remain a focus, especially in this challenging environment.

jus as we thought ... feeling the pressure from slowdown and competition , similar to aus company commentaries in the space

[Snoopy]

Interest rates be resilient and resistant too


Inline with the way interest rates have moved closing in on the Div yield, many might be hoping to vote for
a large Div hike :)


Not likely. Chair Greg Tomlinson waxed lyrically about Heartland's dividend record to date BUT then suggested quite a bit of dough needed to expand in Australia so dividends NOT GUARANTEED going forwards!

SNOOPY

P.S. Loved the bit where Tomlinson tried to close the meeting prematurely BEFORE the vote was held for his own re-election to the board! (LOL)

[Muse]

4. Outlook

We expect FY2024 to be a more challenging year due to high interest rates impacting borrowerdemand and credit quality. We are also seeing greater competition for deposits due to major banksrefinancing the COVID-19 funding for lending programme. Initiatives to address this are underway,including Heartland Bank’s new Digital Saver on-call deposit product, targeting lower cost and lesscompetitive parts of the yield curve.The first quarter is typically slower, and this was exacerbated by election uncertainty, whichimpacted Motor Finance in particular, but there are signs of a bounce back post-election andpipelines are strong. Meanwhile, Reverse Mortgages and Asset Finance growth has continued. Astrong commitment to ensuring good customer outcomes, alongside proactive portfolio pricing andmargin management will remain a focus, especially in this challenging environment.

jus as we thought ... feeling the pressure from slowdown and competition , similar to aus company commentaries in the space

Yes and all sensible commentary from the board - although you omitted the guided growth in NPAT part lol


Not likely. Chair Greg Tomlinson waxed lyrically about Heartland's dividend record to date BUT then suggested quite a bit of dough needed to expand in Australia so dividends NOT GUARANTEED going forwards!

SNOOPY

P.S. Loved the bit where Tomlinson tried to close the meeting prematurely BEFORE the vote was held for his own re-election to the board! (LOL)


Nothing guaranteed in life.

HGH got a bit of flack on this board when it announced its FY22 results, raised capital for stockco, but still paid a final dividend. And fair enough - paying a dividend only to request money back?

It's been my view for sometime that if Challenger was to proceed the business would undertake some form of capital raising - not just for Challenger, but capital to capitalise it to grow the AU book and all the prudential requirements an ADI brings. Clearly the shape and form of any interim dividend should form part of the sources and uses discussion at the Board table. I noticed the comment too but didn't read more into it than that.

[bull....]

Yes and all sensible commentary from the board - although you omitted the guided growth in NPAT part lol




Nothing guaranteed in life.

HGH got a bit of flack on this board when it announced its FY22 results, raised capital for stockco, but still paid a final dividend. And fair enough - paying a dividend only to request money back?

It's been my view for sometime that if Challenger was to proceed the business would undertake some form of capital raising - not just for Challenger, but capital to capitalise it to grow the AU book and all the prudential requirements an ADI brings. Clearly the shape and form of any interim dividend should form part of the sources and uses discussion at the Board table. I noticed the comment too but didn't read more into it than that.

if they can grow npat its the way they do it that is important

[percy]

Positive meeting.
Thought Greg Tomlinson was a breath of fresh air.
Challenger Bank.A bank without capital ? I think Muse is on the money with a healthy capital raise once its banking licence is approved.
Reassuring they will be concentrating on sectors they know best;Reverse mortgages,stock lending and motor vehicle finance
Guidance of $116 to $122 profit is 20.9% to 27.2% increase on their current $95.9mil.

[nztx]

if they can grow npat its the way they do it that is important


Should we take from that - that further Cap Raises might be off the table, instead internal retained growth ?

Or may be they are required to retain more with heightening interest rates at stubborn levels on top of growth demands .. every dollar retained has low if any financing cost, but at a price to the stakeholder.

Cap Raises have in past depressed the SP and held it back..

What will a Div Yield marginally above rates paid on term deposits with a lid on dividends do to
the SP ? there has to be some risk margin for buying a slab of the Bank rather than throwing
it in on deposit.. bound to inspire some thoughts by those relying on the income - on whether
they are being penalised for inflationary / higher rates times ..

[bull....]

did anyone ask them how they are going to make money with challenger bank when nobody else could ?

[thegreatestben]

I thought the whole point was it's simply cheaper to buy challenger than it is to apply for a licence?

[Muse]

Should we take from that - that further Cap Raises might be off the table, instead internal retained growth ?

Cap Raises have in past depressed the SP and held it back..

Good question & would love to be a fly on the wall

Temporarily holding back on an interim (and/or final) FY24 dividend wouldn't go down well with its retail shareholders, but would probably be looked well upon by its insto holders. Net net retail dominates the register, so I'd expect the company will be very mindful of continuing its long-term payout rate of 60%. But they'd have to at least consider what they do about the FY24 interim dividend. I certainly believe they will continue with their dividends, as they have already established and acquired their main two australian books, being reverse mortgages and stockco, and we all know building the book is the capital intensive part. I just think they need a capital raise if they are going to do AU properly - raising deposits will raise the capital required in the AU business, and they will want plenty of capital to lend as well. The economics in terms of what an ADI does to its AU NIM and NPAT are very meaningful so its worth the stretch regardless of any short/medium term volatility in SP, in my view. It'd be my preference if they did a decent raise and just got on with it and so that the Aussie business was fully capitalised and capable of self funding while the group could still pay a 60% payout.

[Muse]

I thought the whole point was it's simply cheaper to buy challenger than it is to apply for a licence?

I don't think its necessarily cheaper, but it is a whole lot faster. You can't underestimate how difficult it is to get an ADI in Australia. They do have a book so I suppose I could go and work out what the goodwill was (purchase price over and above net book value) and that is effectively the purchase price of the ADI.

But the capital requirements aren't from Challenger - its from what it uses challenger to do in order to improve the financial metrics from the rest of heartland's australian operations. Both the RV and stock businesses are wholesale funded. Moving to deposits ought to meaningfully improve their NIM and net profit. But a move from wholesale to retail deposits requires heartland to conform to the australian capital adequacy rules so it will need to hold more capital on the balance sheet as a buffer than it currently does with its warehouse and note issuance funding. That doesn't necessarily happen all at once - they aren't going to acquire Challenger and then the next day raise a billion or whatever in deposits to refinance its wholesale business - it takes time to build. But the cumulative incremental capital required to hold on balance sheet is meaningful even if it stretches out over years. Jeff strikes me as a man who just wants to get things done so that's formed part of my view.

[nztx]

If we look at Divs by year

2021 (Int + Fin) = 11.0 cps + Imp credits

2022 (Int + Fin) = 11.0 cps + Imp credits

2023 (Int + Fin) = 11.5 cps + Imp credits


Where have Deposit interest rates gone in that time ?

It stands to reason that as deposit rates start to approach Div yield, then there must be some SP downward
pressure, in absence of news to counter that..

[Muse]

If we look at Divs by year

2021 (Int + Fin) = 11.0 cps + Imp credits

2022 (Int + Fin) = 11.0 cps + Imp credits

2023 (Int + Fin) = 11.5 cps + Imp credits


Where have Deposit interest rates gone in that time ?

It stands to reason that as deposit rates start to approach Div yield, then there must be some SP downward
pressure, in absence of news to counter that..

Well its SP has certainly gone down from the lofty over the top heights of late 2021/early 2022 when interest rates were scrapping the barrel.

I have the last 3 published reports from the 4 analysts that cover HGH. The average DPS from those are 12c, 13, 14c for FY24-26 - all assume normal operating conditions and no Challenger acquisition or financial benefit from it. The gross yield based on a 162 spot price is 10.3% to 12% respectively.

One is right to look at the long term gap between prospective gross yield and matching duration term deposit/or bond, but I get the sense the gap remains healthy and in line with historical averages (or better)

[X-men]

https://businessdesk.co.nz/article/markets/heartlands-forecast-gets-the-ok

[Snoopy]

https://www.nzherald.co.nz/business/mary-holm-a-reverse-mortgage-on-your-home-nice-little-earner-or-risky-trap/3B4OCHPWANBQTPF3N6S4HRDE6M/

Fair points about reverse mortgages ...

Here is a non-paywalled link to that column
https://maryholm.com/nz-herald-27-may-2023/

It looks like Heartland may be facing some competition from a new way of equity release to fund retirement.
https://www.newsroom.co.nz/a-new-way-to-release-equity-for-retirees

SNOOPY

[thegreatestben]

I'd hardly call that competition, losing 35% of your ownership stake and the capital gain with that is a massive compromise. I did some quick math and you're missing out on a pretty significant amount of money after 10 years.

[percy]

I'd hardly call that competition, losing 35% of your ownership stake and the capital gain with that is a massive compromise. I did some quick math and you're missing out on a pretty significant amount of money after 10 years.

I did some figures a few years ago which showed the capital gain,covered the amount borrowed.

[Alekhine]

Thanks for this, Snoopy. I found equity release article very interesting. I think that there are some challenges with equity release though, as giving away part ownership in your home will create some complications, especially if you want to do renovations and need someone else's permission. Even if it does take off (which I think it won't), it is still a good few years away from being in a postion to compete with reverse mortageges (as implied in the article) and the lack of regulations around it may make some customers nervous- I would be!

I also came across the article on why big banks aren't interested in reverse mortgages, which may be interesting for others, if they haven't seen it yet:

https://www.newsroom.co.nz/big-banks-arent-interested-in-growing-reverse-mortgage-market

[Swala]

Article by Jenny Ruth today

https://open.substack.com/pub/justthebusinessjennyruth/p/heartland-and-the-proxy-company-verdict?r=zwn14&utm_campaign=post&utm_medium=web

[RTM]

Article by Jenny Ruth today

https://open.substack.com/pub/justthebusinessjennyruth/p/heartland-and-the-proxy-company-verdict?r=zwn14&utm_campaign=post&utm_medium=web

Thanks for posting the link Swala.
Great advertising for Jenny as well !

[winner69]

A few weeks ago headlines in Oz were “Australian farm incomes set to fall 41% as El Nino limits rains”

Wonder how things are turning out ….. hope Stockco are still doing OK

[Snoopy]

A few weeks ago headlines in Oz were “Australian farm incomes set to fall 41% as El Nino limits rains”

Wonder how things are turning out ….. hope Stockco are still doing OK


I don't think the big banks in Australia will be looking to boost their rural lending. But from the StcckCo website:

https://stockco.com.au/livestock-finance-solutions/stock-advance/

1a/ We work with you to assess the current market value of your livestock...
1b/ then advance an agreed amount up to that figure – letting you continue to maximise the price of your stock, rather than having to sell when you need cash.

2a/ You background, finish or feedlot your animals...
2b/ then sell when you choose, at the best possible time to maximise your profits.

This sounds similar to the PGG Wrightson Go-Livesrtock model -except- unlike PGW-, it looks like StockCo does not have direct ownership of the livestock. But both arrangements leave farmers to 'do what they do best' (raising livestock) and allow farmers to cash in their livestock at the optimal body weight and so repay the 'livestock rent' (interest) owed to the respective funding organisation, when their livestock is sold at the optimum time. If the big banks are unwilling to do this kind of lending in tough farming times, then the tougher farming conditions get, the relatively better it is for the likes of Stockco. Feel free to correct me if I have got this wrong. But the tighter the big banks squeeze farmers, the better it gets for StockCo is how I read things.

SNOOPY

[Muse]

A few weeks ago headlines in Oz were “Australian farm incomes set to fall 41% as El Nino limits rains”

Wonder how things are turning out ….. hope Stockco are still doing OK

yes I think the risk is that farmers, who had rebuilt flock numbers over the last year, cull this season short in anticipation of dry conditions, and won't require as much working capital funding from stockco. part of the reason I won't be surprised if HGH come in at the low end of guidance or below.

[iceman]

yes I think the risk is that farmers, who had rebuilt flock numbers over the last year, cull this season short in anticipation of dry conditions, and won't require as much working capital funding from stockco. part of the reason I won't be surprised if HGH come in at the low end of guidance or below.

You’re right about Aussie farmers culling their cattle in record numbers and dumping it into the market.
That creates a lot of immediate pressure on farmers in NZ that could be requiring some bridging funding.

The Aussie farmers will be requiring support from 2024 onwards.

[Bjauck]

You’re right about Aussie farmers culling their cattle in record numbers and dumping it into the market.
That creates a lot of immediate pressure on farmers in NZ that could be requiring dome bridging funding.

The Aussie farmers will be requiring support from 2024 onwards. Rural life is particularly tough in Oz. They seem to bear the brunt of the vagaries of climate. Although entertainment*, there was a great program “Rain Shadow” which gives you a glimpse of rural SA through the lens of a young vet.
https://www.youtube.com/watch?v=QR7jiYMTBaY

*The entertainment was a bit gritty as well. It only lasted for one season.

[winner69]

Only mentioned StockCo because they’ve become a decent chunk of Heartlands earnings …like in FY23 StockCo profit before tax $23m out of $134m fir the Group

[Snoopy]

You’re right about Aussie farmers culling their cattle in record numbers and dumping it into the market.
That creates a lot of immediate pressure on farmers in NZ that could be requiring dome bridging funding.


I am a bit behind on modern agricultural construction, obviously. But that 'dome bridge' does sound like it is capital intensive. I am imagining a large dome that cows and sheep can walk over the top of, while there is simultaneously a 'cool space' underneath. A modern version of a shelter belt that we used to have before all the trees were cut down. But with better utilisation of space given that you could grow grass on top of the dome as well as below. Probably more suitable for Australian conditions where they have less shelter belt trees to start with and more money.

After reading the counterpoints to my last post (16808) I am trying to construct a more 'zoom out' view of the situation. Ultimately it is the weather that provides the growing conditions, favourable or not, for stock feed. For an individual farmer, it is best if they have lots of rain and warmth, while all the neighbouring farms are dry and dusty. Thus the farmer over the fence has to sell off their stock cheaply at low body weights, because they are unable to feed them. Meanwhile our 'green paddock' farmer is fattening up her animals, ready for the end of the season when there is less stock left to process. That means she will be offered top dollar per kilo, but also benefit from having more kilos to sell. A double win on both price and quantity. The question is can financing via Stockco, or their ilk, change this picture for those less lucky farmers?

The first point to realise is that during a drought there is less feed available in total, something that can only be fixed by importing more supplementary feed from outside the province or country. A shortage of supplementary feed for sale will mean that the price of that will go up. So our dry farmer is being squeezed from both sides with higher feed costs and lower prices for animals. Whether they can overcome this depends on how good a farmer they are, with the phrase 'good' also encompassing how 'well capitalised' they are. The problem with NZ farmers is that when they become well capitalised, they tend to look over the fence and eye up buying the neighbours farm. That little exercise, debt funded, allows them to slip back into the less well capitalised farming community company. Maybe this is less so in Australia where some farms in the outback are the size of small countries? I don't know.

Step 1 for StockCo would be to identify those 'good farmers'. But how would they do that (and I am not talking about just looking at a balance sheet here)? This is where a rural supplies company doing finance has a huge advantage as they know their customers well. But how does a pure finance company like StockCo know their farmers? I know that in New Zealand the Heartland owned rural finance company took so long to approve livestock loans, they could not compete. Is a similar thing likely to happen in Australia with StockCo as farming conditions deteriorate?



The Aussie farmers will be requiring support from 2024 onwards.


But StockCo will be unable to provide it? Why all this negative thinking on StockCo? Are you all saying that StockCo is doomed? Why wasn't I paying attention when HGH acquired StockCo!?!

SNOOPY

discl: Worried shareholder now!

[iceman]

I am a bit behind on modern agricultural construction, obviously. But that 'dome bridge' does sound like it is capital intensive.


But StockCo will be unable to provide it? Why all this negative thinking on StockCo? Are you all saying that StockCo is doomed? Why wasn't I paying attention when HGH acquired StockCo!?!

SNOOPY

discl: Worried shareholder now!

I'm sorry my spelling mistake (dome instead of some) has confused you that much. I hope you recover quickly.
Nothing in my comment about Aussie farmers dumping beef into the markets this year was "negative thinking on Stock Co". Not sure where you get that from !

[Rawz]

Haha I thought the dome bridge with grass on top and shade on the bottom was real!! I’m disappointed now

[Snoopy]

Haha I thought the dome bridge with grass on top and shade on the bottom was real!! I’m disappointed now


Well it could be real. It certainly sounded like a good idea when iceman mentioned it. Actually it would be extra useful in Iceland as the cattle could get under that dome in times of volcanic fall out. But since iceman has seemingly distanced himself and gone cold on the idea, perhaps you and I should go into business Rawz? Do I admit to a bit of Chindogu influence at the concept design stage? Well maybe just a little......:)

SNOOPY

[winner69]

Big Deloittes Top 200 Awards dinner tonight ……everybody dressed up in their best gear etc etc

Finalists in the 2degrees Best Growth Strategy section are

Heartland
Comvita
Scales Corp

Jeez, tough call …who’ll get the bragging rights

[Sideshow Bob]

https://www.nzx.com/announcements/423497

Heartland FY2024 performance update (based on unaudited results to 30 November 2023)

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has achieved YTD Receivables growth of 4.7% , with Australian and New Zealand Reverse Mortgages notably achieving YTD growth of 20.4% and 17.8%, respectively. Despite this, Heartland has experienced a slower than expected start to the financial year ending 30 June 2024 (FY2024). This is due to:

• a decrease in the purchase of new cars, with motor consumers expected to defer purchases until the 2024 calendar year due to expected policy changes
• adverse Australian climactic conditions continuing to impact livestock purchases and
• later than expected repayments of lower yielding loans and a tighter deposit market delaying net interest margin (NIM) recovery.

A stronger second half of FY2024 (2H2024) is expected, particularly as the anticipated backlog of stalled car purchases clears, and through the impact of now more favourable climactic conditions in Australia. Heartland continues to expect NIM to improve in calendar year 2025 as the deposit market eases and lower yielding loans are repaid.

Heartland has gone through a process of revising its FY2024 net profit after tax (NPAT) guidance to reflect the following:

• short-term operational performance challenges – which have an impact of $8 million to $10 million
• Heartland Bank Limited’s (Heartland Bank) proactive response to issues affecting a subset of legacy lending via a post-COVID-19 overlay, a non-cash item – which has an impact of $11.5 million, and
• the expected FY2024 impact on underlying NPAT related to the acquisition of Challenger Bank Limited (Challenger Bank) , positioning Heartland for its next stage of growth (Challenger Bank NPAT) – which has an impact of A$3.5 million.

Heartland now expects NPAT to be in the range of $93 million to $97 million, excluding any impacts of fair value changes on equity investments held and the impact of the de-designation of derivatives. Excluding the impact of the (non-cash) post-COVID-19 overlay and Challenger Bank NPAT, the range is $108 million to $112 million, reflecting Heartland’s underlying operational performance. The guidance range was previously $116 million to $122 million, excluding any impacts of fair value changes on equity investments held, the impact of the de-designation of derivatives, and any costs related to the acquisition of Challenger Bank.
 
Operational performance

Motor Finance

Pre-election announcements to repeal the clean car discount scheme, and the consequent removal of internal combustion engine taxes on new vehicles from 31 December 2023, is believed to have caused consumers to delay new vehicle buying decisions until the 2024 calendar year. Despite this, Motor Finance Receivables increased 8.1% and stronger Motor Finance performance is expected in 2H2024 as vehicle purchases increase.

Australian Livestock Finance

Livestock prices continued to fall in the first five months of FY2024 due to adverse weather conditions and drought concerns. Many producers destocked or consolidated debt from selling livestock at lower rates, while others retained livestock for longer periods to gain weight and recoup value. The resulting impact has seen growth challenges and compressed NIM for Heartland’s Australian Livestock Finance portfolio.

Heartland expects these issues to dissipate in 2H2024, with good recent rain fall across the eastern states and the chance of prolonged drought now reduced. Livestock prices are up 35% in recent weeks and, given grass growth, a strong start in calendar year 2024 is expected.

Net interest margin

Heartland Bank’s lower NIM Motor Finance and Asset Finance loans are rolling off, but these are taking longer to repay than anticipated as borrowers hold assets for longer in the current economic environment.

Rising interest rates in New Zealand and Australia have created a more challenging environment in which to manage margins. Heartland intentionally delayed passing the full impact of these increases onto some borrower customers, specifically in the case of New Zealand Reverse Mortgages and Australian Livestock Finance. While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach.

In addition, heightened competition is being seen in the deposit market, impacting Heartland Bank’s cost of funds. Heartland Bank expects this to continue through calendar year 2024 as participants in the Funding for Lending Programme replace this funding with deposit funding.

NIM improvement is anticipated in calendar year 2025 as the deposit market eases and low yielding Motor Finance and Asset Finance loans are repaid.
Post-COVID-19 overlay
Overall, Heartland Bank’s asset quality, credit origination standards and capital and liquidity positions remain strong. There is a good pipeline across its four core lending portfolios (Reverse Mortgages, Motor Finance, Asset Finance and Livestock Finance) and portfolio composition continues to shift towards lower risk exposures.
However, Heartland Bank has determined it appropriate to proactively respond to issues affecting a subset of legacy lending described below via a post-COVID-19 overlay of $16 million (pre-tax) which, whilst required out of prudence, may not be utilised in full.

• Legacy Business and Relationship lending – Economic conditions have impacted on these older Legacy Business and Relationship loans in segments of the market to which Heartland Bank no longer lends, decreasing confidence in their collectability. In response to this, Heartland Bank has conservatively taken a $5.5 million overlay.
• Longer standing Motor Finance loans – As post-COVID-19 economic conditions have become more challenging for borrowers, a subset of arrears has emerged in longer standing Motor Finance loans, which pre-date Heartland Bank’s shift to higher quality assets. Post-COVID-19 staff turnover, illness and a focus on the core system upgrade (which is now complete) in Heartland Bank’s Collections & Recoveries area have resulted in collection efforts being constrained. These challenges are being actively resolved, but coupled with the passage of time, confidence in the collectability of these arrears has been eroded and Heartland Bank considers it appropriate to take a $10.5 million overlay.

Overall, impairments continue to perform within expectations with a YTD impairment expense ratio (annualised impairment expense as a percentage of average Receivables) of 0.35% (1H2023: 0.29%). In respect of the Motor Finance portfolio, loans originated in the 2023 calendar year are performing better than prior years.
Strategic update – Challenger Bank acquisition

Over the last decade, Heartland has built a significant Australian business lending to parts of the market which are traditionally underserved. In Australia, Heartland is the leading provider of reverse mortgages and, through its 2022 acquisition of StockCo, is a leading specialist provider of livestock finance.

To support continued growth in Australia, Heartland Bank is seeking to acquire Challenger Bank, an Australian Deposit Taking Institution (ADI). The acquisition, which remains subject to regulatory approval, will be a significant milestone for Heartland, making Heartland Bank the first New Zealand registered bank to acquire an ADI.

When FY2024 guidance was provided, it excluded any costs related to the acquisition of Challenger Bank. As the acquisition nears completion, it is appropriate that guidance is updated to reflect the impact of Challenger Bank becoming part of Heartland. The impact to underlying NPAT for FY2024 is expected to be a net loss of A$3.5 million, reflecting underlying NPAT of Challenger Bank. This is expected to transition quickly to a profit-making position as material deposit raising occurs.
An additional A$3 million (pre-tax) of transaction related costs are expected to be expensed in FY2024 which are one-off, non-recurring in nature and do not impact underlying performance.

Looking forward

A stronger 2H2024 than the first half of FY2024 is expected as overall performance continues to demonstrate the resilience of Heartland’s portfolios and ‘best or only’ product strategy.

While the regulatory approval process continues, Heartland is hopeful that the Challenger Bank acquisition will be completed by 31 March 2024 – positioning Heartland well for its next stage of growth. Heartland will provide a further update to the market in due course.
– ENDS –

[Rawz]

wow.. im a bit shocked

[bull....]

no surprise to me. been warning for a while nim declining going forward , economic conditions would hurt them as well. same happening in aus with smaller outfits like hgh.

still think there being optimistic looking ahead to next yr when rate increases are still tightening conditions more in nz.

[Muse]

wow.. im a bit shocked

Yeah its no good.

Some aspects should be of no surprise, like stockco getting whacked around by El Nino in Australia. In the full year result I was pretty scathing of them using some of their economic overlay provision and not topping it up, which looks like has come home to roost (but in a different name now, a "post covid recovery" provision), but has written back higher than I would have expected. I also do not consider it appropriate to remove the movement in the provision from underlying earnings.

"Short term operational performance challenges" - pretty vague for a big number!

The messiness of the numbers and its presentation leaves a lot to be desired.

I didn't expect them to meet guidance for this year but likewise did not expect this announcement or result. To have issued guidance that high only to backtrack reasonably quickly doesn't sit particularly well with me.

[Perky]

Yep. Muse called this earlier on the stocko and Aussie drought

Just as well Comvita won this award eh…otherwise W69 be demanding a recount

Finalists in the 2degrees Best Growth Strategy section are

Heartland
Comvita
Scales Corp


sold my small holding at $1.80 but still planning to buy back again in next year. Just some headwinds for banks at present but fundamentally still a good share I think…still use them for some banking gave them some money the other day and they gave me 6.4%..soon I’ll buy the share and get the capital gain plus the divie …maybe reduced?

[ronaldson]

Definitely hit a pothole in the road.

Best to wait out FY24 and the completion of the Challenger acquisition.

[Muse]

Definitely hit a pothole in the road.

Best to wait out FY24 and the completion of the Challenger acquisition.

yes but I'm not thrilled to see Challengers estimated q4 contribution to the group result lol

[Rawz]

Could head down to 1x book value per share? $1.45

[percy]

Yep. Muse called this earlier on the stocko and Aussie drought

Just as well Comvita won this award eh…otherwise W69 be demanding a recount

Finalists in the 2degrees Best Growth Strategy section are

Heartland
Comvita
Scales Corp


sold my small holding at $1.80 but still planning to buy back again in next year. Just some headwinds for banks at present but fundamentally still a good share I think…still use them for some banking gave them some money the other day and they gave me 6.4%..soon I’ll buy the share and get the capital gain plus the divie …maybe reduced?

So the winner should have been Scales....lol.

[winner69]

Jeff’s halo losing its glow …the Midas touch gone etc etc

Just another banker

Oh well, he had a good run ….maybe time to move on before the the third downgrade is needed

[Perky]

So the winner should have been Scales....lol.

Good one Percy.

The committee should have made no award…just say no one came up to standard this year.
Thats what they do at the wine awards..no gold medals this year…only silvers…must try harder

A little disappointed your off your form today and didn’t suggest 2cc as the rightful winner of best growth category

[percy]

Good one Percy.

The committee should have made no award…just say no one came up to standard this year.
Thats what they do at the wine awards..no gold medals this year…only silvers…must try harder

A little disappointed your off your form today and didn’t suggest 2cc as the rightful winner of best growth category

Good one Perky...
I have a large holding in Silver Fern Farms CoOp on Unlisted.The big worry is The Chairman, Rob Hewett won The Chairman's award.!!!!!..lol
Thank goodness I sold a few HGH and recycled the funds into 2CC my portfolio big winner this year.
I usually have one good idea a year...Had two this year with ATP in Oz also flying high.

[beetills]

An original shareholder thru having shares in CBS and picked up a few more when the big sell off was on at 45c.I gotta say i am a happy holder and my grandkids sharesies accounts are dominated by HGH CDI and AFI.

[Sideshow Bob]

Good one Perky...
I have a large holding in Silver Fern Farms CoOp on Unlisted.The big worry is The Chairman, Rob Hewett won The Chairman's award.!!!!!..lol
Thank goodness I sold a few HGH and recycled the funds into 2CC my portfolio big winner this year.
I usually have one good idea a year...Had two this year with ATP in Oz also flying high.

Not to forget Simon Limmer finalist in CEO of the year.........

[LaserEyeKiwi]

Wouldn’t be surprised if their expectations around vehicle financing are also flawed. People aren’t buying less cars on finance due to “expected policy changes” (talking about the end of the feebate scheme). The reason people aren’t buying cars is due to their mortgage costs being dramatically higher, while at the same time motor vehicle finance interest rates are also higher - It’s a huge double whammy.

It simply mirrors the slowdown in other large ticket items (large household items, overseas travel) that are experiencing slowdowns currently, and those items dont have any sort of feebate scheme holding consumers back.

[Ggcc]

Wouldn’t be surprised if their expectations around vehicle financing are also flawed. People aren’t buying less cars on finance due to “expected policy changes” (talking about the end of the feebate scheme). The reason people aren’t buying cars is due to their mortgage costs being dramatically higher, while at the same time motor vehicle finance interest rates are also higher - It’s a huge double whammy.

It simply mirrors the slowdown in other large ticket items (large household items, overseas travel) that are experiencing slowdowns currently, and those items dont have any sort of feebate scheme holding consumers back.
People should consider to refinance and add their car loans and other debts to their mortgage and pay the lower rate.

[Muse]

Wouldn’t be surprised if their expectations around vehicle financing are also flawed. People aren’t buying less cars on finance due to “expected policy changes” (talking about the end of the feebate scheme). The reason people aren’t buying cars is due to their mortgage costs being dramatically higher, while at the same time motor vehicle finance interest rates are also higher - It’s a huge double whammy.

It simply mirrors the slowdown in other large ticket items (large household items, overseas travel) that are experiencing slowdowns currently, and those items dont have any sort of feebate scheme holding consumers back.

True but YTD motor receivables are up 8% YTD, yet I get the sense that earnings from the motor book are down. Not a new phenomenon its occurred the last year or two as well. Either heartland chasing marketshare too hard or other competitive/pricing dynamics at play - or some combination of both.

[winner69]

Proactive provisioning / financial engineering (or whatever yoy want to call it) to smooth out earnings over time always comes back to bite the perpetrators on the bum ...... Jack Welch from GE was a master of it but it all turned to custard in the end

There's only one NPAT number to look at now for Hesrtland ...the real one

Trend is
F21. 87.0m
F22. 95.2m
F23. 95.5m
F24. 95.0m say

Good trend eh ....and of course heaps more shares on issue now

So expected F24 EPS (real) is 13.2 cents ....was 14.9 cents in F21 and 16.1 cents in F22

All I can sai hmmmm

[Snoopy]

Jeff’s halo losing its glow …the Midas touch gone etc etc

Just another banker

Oh well, he had a good run ….maybe time to move on before the the third downgrade is needed

You have underestimated 'our Jeff' Winner. He is the Chief Executive of Heartland GROUP Holdings. The problems are with motor loans are at Heartland Bank, and that woman who runs it Leanne Lazarus. Didn't she make a hash of things at 'TSB Bank Bank' where she was previously CEO? Maybe raising her from the dead executive pool was not such a good idea? She hasn't had her legs under the CEO desk long enough to make a difference at Heartland Bank yet, but Jeff should probably sack her anyway, just in case she turns out to be no good.

Aussie Doug Snell at 'StockCo Australia' is the guy who changed the weather to El Niño and caused the great 'cattle rattle' shaking up those Aussie farmers need for financing. That wouldn't have happened if Jeff had appointed a woman with the associated La Niña weather. So Doug can go as well. I can't find any smut on Doug. But I am sure he nicked a peanut butter and jelly sandwich from a fellow student at Toowoomba Primary back in the day. So probably rotten to the core anyway.

So a couple of decisive management realignment decisions, and Jeff's star will shine even brighter, trimming away the rotten fruit. The halo is intact!

SNOOPY

[Rawz]

Proactive provisioning / financial engineering (or whatever yoy want to call it) to smooth out earnings over time always comes back to bite the perpetrators on the bum ...... Jack Welch from GE was a master of it but it all turned to custard in the end

There's only one NPAT number to look at now for Hesrtland ...the real one

Trend is
F21. 87.0m
F22. 95.2m
F23. 95.5m
F24. 95.0m say

Good trend eh ....and of course heaps more shares on issue now

So expected F24 EPS (real) is 13.2 cents ....was 14.9 cents in F21 and 16.1 cents in F22

All I can sai hmmmm

If FY24 EPS only 13.2 how will they pay a 16 cent dividend?

[Rawz]

If FY24 EPS only 13.2 how will they pay a 16 cent dividend?

Suppose they could do a cap raise to pay the div? :eek2:

[percy]

If FY24 EPS only 13.2 how will they pay a 16 cent dividend?

Dividend per share projected by Craigs.
2023........11.5 cps
2024........12.2 cps.
2025.........13cps.


2030.........16cps projected by Rawz..

[Rawz]

Dividend per share projected by Craigs.
2023........11.5 cps
2024........12.2 cps.
2025.........13cps.


2030.........16cps projected by Rawz..

Jarden says 16cents?

[percy]

Jarden says 16cents?

I hope they are right....lol.
Not like them to be so wrong.

[Muse]

Jarden says 16cents?

last one i saw from them was ~12cent something

the brokers all do their forecasts on the business as it is, not with the acquisition (as not information available to have a sensible crack at it). If they get the license and can acquire challenger, the question becomes how do the fund the acquisition & any growth capital required. That'll probably require a capital raise and I'd imagine canning the interim dividend is a discussion point at the board meeting

[Rawz]

Sorry I should clarify. The jarden dash board says historic dividend is 16 cents.

Anyways, canning the interim dividend.. mum and dad won’t like that

[percy]

Sorry I should clarify. The jarden dash board says historic dividend is 16 cents.

Anyways, canning the interim dividend.. mum and dad won’t like that

Off course they will not as they only received 11.5 cents...lol
FY2023 final dividend of 6.0 cents per share (cps), resulting in a FY2023 total dividend of 11.5 cps, up 0.5 cps on the FY2022 total dividend.

[clearasmud]

If FY24 EPS only 13.2 how will they pay a 16 cent dividend?

10c if we're lucky.

[Greekwatchdog]

For Bar Review

Heartland Group (HGH) downgraded its FY24 underlying NPAT guidance -20% at the midpoint, a mix of short-term operational headwinds, costs relating to the purchase of Challenger Bank and additional provisioning. The negative 2023 September quarter New Zealand GDP print, released the same day as the guidance downgrade, underscores the risks for HGH in the face of a weakening consumer environment. Material potential upside remains in the form of lowering Australian borrowing costs when HGH completes its acquisition of Challenger Bank, though the uncertain path for the NZ consumer over the coming months leads us to maintain our NEUTRAL rating with a target price of NZ$1.70.

What's changed?


Earnings: FY24 lowered to within new guidance range, later years decreased due to lower forecast receivable growth
Target price: Lowered -15cps (-8%) to NZ$1.70.


NPAT downgrade a mixture of one-offs and ongoing challenges
New FY24 guidance is for underlying NPAT of between NZ$93m to NZ$97m compared to prior guidance of NZ$116m to NZ$122m. The key changes are: 1) the introduction of a NZ$11.5m provision linked to low quality legacy loans in the Motor and Asset Finance divisions, 2) a NZ$8m to NZ$10m negative impact from NIM compression and lower than expected receivable growth, and 3) -NZ$3.5m of expected operational losses from three months owning Challenger Bank. There is an additional -NZ$2.1m (after-tax) of one-off transaction costs relating to the Challenger Bank acquisition.

Modest lending rate increases and competitive deposit market squeezing NIM
HGH's conservative policy on hiking lending rates and increased competition in the deposit market, with competitors no longer having access to the RBNZ's Funding for Lending programme, is hurting its NIM. HGH has limited increases in its lending rates, particularly in its Reserve Mortgage and Livestock divisions, despite upwards pressure from rising deposit rates. NIM is also being suppressed by a decrease in churn in lower rate Motor loans. We forecast NIM to bottom in FY25 before rising as rates moderate.

Completion of Challenger Bank the key focus, timeline pushed back to March 2024
HGH's near-term priority remains the completion of the acquisition of Challenger Bank Australia. HGH had been hoping to receive regulatory approval before the end of 2023. It is taking longer than anticipated and the company is now targeting the end of 1Q CY24. The purchase would grant HGH a deposit takers license in Australia, enabling it to replace higher cost wholesale financing. How quickly HGH is able to lower its cost of funding then depends on the pace it can build its deposit book. HGH expects Challenger Bank to contribute a net NPAT loss of -NZ$3.5m in FY24 but breakeven in FY25.


Downgrade summary


Operational challenges (-NZ$8m–$10m NPAT impact): HGH has experienced a slowdown in receivable growth, particularly in the Motor and Australian Livestock divisions. The slowdown in Motor is linked to generally lower levels of consumer demand for vehicles and a delay in the purchase of vehicles due to the imminent reversal of the Clean Car Feebate scheme by the new coalition government in NZ. The low level of growth in Australian Livestock is due to adverse weather impacts. HGH has also experienced pressure on its NIM from a combination of higher deposit costs and its cautious approach when raising lending rates.
Legacy loan provisioning (-NZ$11.5m): The NZ$11.5m provision is split between Motor (NZ$7.5m) and Asset Finance (NZ$4.0m). HGH has a lower level of confidence in the collectability of legacy loans in this division. These loans pre-date HGH’s shift to improve the quality of its loan book. Overall HGH’s FY24 YTD annualised impairment expense is 0.35%, consistent with our forecast.
Challenger Bank acquisition (-NZ$3.5m): HGH expects to complete its acquisition of Challenger Bank by 31 March 2024. Challenger Bank is currently loss making and forecast to decrease HGH’s NPAT by -NZ$3.5m in FY24, though it is expected to move to breakeven in FY25. In addition, one-off transaction costs incurred in FY24 are expected to amount to -NZ$2.1m.


Earnings revisions
Changes to FY24 earnings are material, though the one-off impacts of the economic provision and Challenger Bank acquisition costs do not flow through to future periods. We modestly reduce earnings expectations in future years due to the softer than expected receivable growth in the Motor and Australian Livestock books, as well as a lower NIM expectation.



inancials: Jun/
23A
24E
25E
26E


Rev (NZ$m)
n/a
n/a
n/a
n/a


NPAT* (NZ$m)
95.9
95.1
124.9
143.0


EPS* (NZc)
13.5
13.2
17.2
19.4


DPS (NZc)
11.5
11.5
12.0
12.5


Imputation (%)
100
100
100
100





*Based on normalised profits

[Rawz]

the above is why I will never ever bother with a DCF model. Big fat waste of time. Always need 'adjusting' even by the paid professionals that spend all day pouring over data to come up with the future numbers. The reality is nobody really knows. Not even management who provide guidance based on what they see happening in the business to the second...

[winner69]

Jeff often reminds us that Heartlands fortunes to a large extent depends on how the economy is going and employment

Nicola Willis painted a gloomy economic picture today …….but worse they don’t seem to have any real plans as how to fix it.

Treasury forecasts Re employment are pretty dire ..and they were prepared before last weeks poor GDP print They say -

- Unemployment has increased and expected to now hit 5.2%
- Wage growth is slowing

That's not good news for Heartland

Share price sliding once Willis started talking …..and closed at 148 ….ouch

[alokdhir]

Simple question for our experts ....Is HGH now a SELL ? If not then whats its fair value at present ? still $ 2.10 or below ?

Next year EPS as per guidance and new equity is 16.3 Cents ...so basically flat !!

Thats when it was very clear to all ...get out ...many like me did 23rd August 2022 ...its SP still struggling and its becoming so clear that its in trouble that previous hardened supporters have become foes ...lol W69 :p

[Valuegrowth]

Once this was a hot thread. I was thinking about buying some stocks of this NZ bank. Fortunately, I didn’t buy after reading 6 books on few value investors. I learnt one important thing from them. “Buy stocks when they are out of favour”. In the current environment I would like to buy hidden gems, strong balance sheet firms and future turnaround opportunities if they come under my criteria. I think HGH can have some kind of turnaround in 2026. I’m going to keep it under my radar.


Jeff often reminds us that Heartlands fortunes to a large extent depends on how the economy is going and employment

Nicola Willis painted a gloomy economic picture today …….but worse they don’t seem to have any real plans as how to fix it.

Treasury forecasts Re employment are pretty dire ..and they were prepared before last weeks poor GDP print They say -

- Unemployment has increased and expected to now hit 5.2%
- Wage growth is slowing

That's not good news for Heartland

Share price sliding once Willis started talking …..and closed at 148 ….ouch

[Rawz]

100dma just went below the 200day so the chart is looking weak coming into what many gurus think will be poor earnings updates and maybe even a cap raise or cancelled dividend

[Baa_Baa]

100dma just went below the 200day so the chart is looking weak

Not sure what chart you're looking at but the 100DMA went below the 200DMA mid-June 2022.

[Rawz]

Not sure what chart you're looking at but the 100DMA went below the 200DMA mid-June 2022.

Oh yes it did too. Sorry was looking on the yahoo app on my phone and it looks like it popped over the 200 briefly last month now back below. Only that point was showing on the screen lol

[Baa_Baa]

Oh yes it did too. Sorry was looking on the yahoo app on my phone and it looks like it popped over the 200 briefly last month now back below. Only that point was showing on the screen lol

Ok, no worries, but the 100 hasn't popped over the 200 at all since mid-June 2022, maybe on a phone it looked pretty close, but it didn't. The 50 almost did around Sept this year, but not quite. This has been in a severe TA downtrend since Dec 2021 and is looking like it wants new lows. Albeit three converging trend lines indicate support around $1.44, with f'all support below that until $1.30.

The falling knife, as they say.

[SailorRob]

Ok, no worries, but the 100 hasn't popped over the 200 at all since mid-June 2022, maybe on a phone it looked pretty close, but it didn't. The 50 almost did around Sept this year, but not quite. This has been in a severe TA downtrend since Dec 2021 and is looking like it wants new lows. Albeit three converging trend lines indicate support around $1.44, with f'all support below that until $1.30.

The falling knife, as they say.

I assume this is parody taking the mic out of Bull?

[SailorRob]

Once this was a hot thread. I was thinking about buying some stocks of this NZ bank. Fortunately, I didn’t buy after reading 6 books on few value investors. I learnt one important thing from them. “Buy stocks when they are out of favour”. In the current environment I would like to buy hidden gems, strong balance sheet firms and future turnaround opportunities if they come under my criteria. I think HGH can have some kind of turnaround in 2026. I’m going to keep it under my radar.



Bot, under your radar means you'd be keeping it invisible.

What you meant was ON your radar

Get reprogrammed.

[alokdhir]

At what point HGH will become value BUY ?? Thoughts please as it seems in a free fall ...very surprising for a Yield stock !!

[Rawz]

At what point HGH will become value BUY ?? Thoughts please as it seems in a free fall ...very surprising for a Yield stock !!

Its pretty cheap now based on a price/book ratio. Can trade up to 1.5x but now about 1x.

But talk about catching a falling knife.... Guru Muse reckons the div could be cut or a cap raise so i can't see any reason to rush in and buy if those bombshells drop.

I think ROE needs to stay double digits for 1x book value to be cheap... cant remember how it all works TBH

[alokdhir]

Its pretty cheap now based on a price/book ratio. Can trade up to 1.5x but now about 1x.

But talk about catching a falling knife.... Guru Muse reckons the div could be cut or a cap raise so i can't see any reason to rush in and buy if those bombshells drop.

I think ROE needs to stay double digits for 1x book value to be cheap... cant remember how it all works TBH

Remember catching falling knife worked very well for MFT ...then can work for HGH also ...though not similar pedigree stock and business ...normally Banks do well when rates fall ...also its darkest before dawn ...maybe listen to Baa and start nibbling from $ 1.44 onwards till $ 1.30 he says ...may work out well eventually!!!

[winner69]

Was about $2.50 2 years ago

So a BARGAIN at current price …..BUY BUY BUY ………A BARGAIN ……CHEAP AS as they say

[Ggcc]

Was about $2.50 2 years ago

So a BARGAIN at current price …..BUY BUY BUY ………A BARGAIN ……CHEAP AS as they say
Mmmmm. I am sure you would be wonderful in the northern hemisphere stoking that fire lol. We all realise they have to capital raise, but how much do you anticipate they need to raise?

[bull....]

broke the big 1.51 support which bounced of a couple times recently .... timber

[ronaldson]

broke the big 1.51 support which bounced of a couple times recently .... timber

Yes, sellers out in force now. Christmas close on good volume at $1.41 and falling!

If the Challenger acquisition is approved ( decision due Q1 calandar 2024 ) will that be positive or negative now for the share price?

[winner69]

Yes, sellers out in force now. Christmas close on good volume at $1.41 and falling!

If the Challenger acquisition is approved ( decision due Q1 calandar 2024 ) will that be positive or negative now for the share price?

At least didn’t close in 130’s

[Perky]

I think short term negative impact…especially if they cap raise for purchase or for banking regulation compliance. Pretty sure the smart operators have probably already trimmed holdings in anticipation of this being a high possibility

Long term the purchase could be positive. Like always comes down to execution and timing….currently just about all markets hland service have headwinds, but soon the weather will change, hland will round the top mark and hoist its spinnaker and surge down the course with good tailwinds.


Im not holding…last sold out at $1.80 but I would buy back in at some stage…I’m just not sure at what price do you get back in….I think everyone is probably thinking similar so that why share price drifting. I think I would buy again if it got to $1.30 or lower.

Hamilton Hilton Greene have picked it as a stock to watch for 2024…didn’t say if they be watching the share price going up or down though so they should be right.
These stock picks would be much more interesting if they put their balls in the vice and picked the stock price end of 2024 and gave a couple of basic reasons they think it will perform.

[alokdhir]

When last time they did CR and I wrote here that they being too aggressive at wrong time ...also I thought Jeff was being too bold and in a hurry to prove a point ...but not many agreed and they still thought he will do well for a change in Aussy land etc etc ...Jeff says and deliver and what not ...now all are realising that he has chewed off bigger then he can bite ...al least at the moment and his ambition is not being nice to shareholders ...at least from last 2 years and for another plus on horizon ...but he still have some fans left ...not many . HGH will eventually digest whats in the process and it will work out fine ...and we small shareholders who were treated shabbily last time and was told as not needed also etc ...will again flock to HGH when the tide turns ... SP over 30DSMA and then 30DSMA over 60DSMA ...will be first signs ...till then watch the knife fall ...

[SailorRob]

I think ROE needs to stay double digits for 1x book value to be cheap... cant remember how it all works TBH

No offence but you cannot be investing in equities if you're not taking the piss here. Not unless it's a index fund.

Book value is equity...

[Baa_Baa]

No offence but you cannot be investing in equities if you're not taking the piss here. Not unless it's a index fund.

Book value is equity...

Go easy, he did say "cant remember how it all works TBH"

[SailorRob]

Go easy, he did say "cant remember how it all works TBH"

Yeah but it shouldn't be a memory function, it should be a very good understanding of the basics.

Like I don't just remember hot air rises, I understand why. Remembering that it does isn't enough.

Yes I know it is buoyancy from cooler air falling but it still rises.

[SailorRob]

I not sure anyone is remotely interested but Equity and Book Value are the same thing. Assets less liabilities.

So your Return on Equity is your return on book value. If you pay one times book value then you are paying the exact price of the equity, $1 cash exchanged for $1 of equity.

Therefore if you have a 10% ROE and you pay 1 x book, you will get a 10% return in earnings on the $1 you exchanged for equity.

If you have a 10% ROE and you pay 05. x book then you'll get a 20% return and if you pay 2 x Book you'll get a 5% return.

This is in accounting terms, in real terms the equity value of a company will often far exceed book.

[SailorRob]

Also worth noting that nobody understands the assets of this bank well enough to be invested, including the CFO.

Unless you are absolutely sure of what those assets are worth both now and in the future under a wide range of very unlikely scenarios - don't touch it.

This is because a pretty small change in the value of the assets will completely wipe out all the equity and you will have a big fat Goose egg.

[Rawz]

Oh dear Sailor on the rums again and grumping. Chill out bro it’s a happy time of year

The below formula to value HGH was what I was referring to. Sorry I haven’t committed it to memory like hot air rising lol

(ROE-G)/(R-G)xBV= MV

ROE= return on equity
G= growth rate
R= cost of equity
BV= Book value
MV= Market value

Anyways, I’m going out to breakfast with the family then we are going to see Santa. So won’t be around to see your grumpy condescending reply as to why it’s wrong lol

[winner69]

Oh dear Sailor on the rums again and grumping. Chill out bro it’s a happy time of year

The below formula to value HGH was what I was referring to. Sorry I haven’t committed it to memory like hot air rising lol

(ROE-G)/(R-G)xBV= MV

ROE= return on equity
G= growth rate
R= cost of equity
BV= Book value
MV= Market value

Anyways, I’m going out to breakfast with the family then we are going to see Santa. So won’t be around to see your grumpy condescending reply as to why it’s wrong lol

Rawz me old mate …should have clarified (for Rob’s sake) that MV = Market Value = Number of Shares X Share Price (also known as Market Capitalisation)

But then if working on per share basis that doesn’t matter

Have a Merry Christmas ….what you asking Santa for?

[alokdhir]

Rawz me old mate …should have clarified (for Rob’s sake) that MV = Market Value = Number of Shares X Share Price (also known as Market Capitalisation)

But then if working on per share basis that doesn’t matter

Have a Merry Christmas ….what you asking Santa for?

His wishes are simple like him ...simple and innocent and gentle ...:t_up:

He wants 2CC = $2 ...TRA = $ 6 ....nothing more ...he is already above me in 2023 stock picking competition ...his wish coming true :p

[SailorRob]

Oh dear Sailor on the rums again and grumping. Chill out bro it’s a happy time of year

The below formula to value HGH was what I was referring to. Sorry I haven’t committed it to memory like hot air rising lol

(ROE-G)/(R-G)xBV= MV

ROE= return on equity
G= growth rate
R= cost of equity
BV= Book value
MV= Market value

Anyways, I’m going out to breakfast with the family then we are going to see Santa. So won’t be around to see your grumpy condescending reply as to why it’s wrong lol



Far more concerned that you're going to see 'Santa' than anything else.

Again, valuation cannot be broken down into a formula.

Any bank can create earnings right now, whether they are real or not can take years and even decades to find out.

[SailorRob]

His wishes are simple like him ...simple and innocent and gentle ...:t_up:
He wants 2CC = $2 ...TRA = $ 6 ....nothing more ...he is already above me in 2023 stock picking competition ...his wish coming true :p


Probably wants his supermarket shop to double in price as well.

Meanwhile what the Sailor wants for Christmas if for his biggest position to drop by 50% or more.

[percy]

Probably wants his supermarket shop to double in price as well.

Meanwhile what the Sailor wants for Christmas if for his biggest position to drop by 50% or more.

I hope you get what you wish for.
I am looking forward to my largest holding increasing 50%...

[SailorRob]

I hope you get what you wish for.
I am looking forward to my largest holding increasing 50%...

Thanks, for me that would be extremely short sighted and cost me a huge amount of money, millions.

But for you if you are selling equity to fund consumption then that makes sense.

[iceman]

Thanks, for me that would be extremely short sighted and cost me a huge amount of money, millions.

But for you if you are selling equity to fund consumption then that makes sense.

That would have to be comment of the year to describe Percy. You've obviously never met him and don't know anything about him. Merry Christmas all.

[SailorRob]

That would have to be comment of the year to describe Percy. You've obviously never met him and don't know anything about him. Merry Christmas all.

I have analysed his comments going back over a decade, know his exact age and profession and know two people who know him personally.

Haven't met him but know a lot about him.

He's certainly not planning on 'spending it all' so perhaps the ability to reinvest at a far higher rate of return rather than far lower might be better.

[SailorRob]

That would have to be comment of the year to describe Percy. You've obviously never met him and don't know anything about him. Merry Christmas all.

Like with his fixed income, would he not rather reinvest it in his best equity pick at 30% pa vs 5%?

[SailorRob]

That would have to be comment of the year to describe Percy. You've obviously never met him and don't know anything about him. Merry Christmas all.

This is probably super difficult for you to understand so I've thought of a, way that might make sense to you.

Percy owns a business with a friend and that business makes 100k a year cash.

He has the choice of his friend buying him out at 50% higher price than what he's currently offering or Percy has the choice of buying his friend out for 50% less.

Thus getting his hands on the 100k income each year for a vastly lower price and thus his return on swapping his 5% term deposit is massive.

He's turned a 5% return into 25 maybe 35%.

[mike2020]

What if he then onsells his friends share at 100% gain and reinvests the cash into oca which sadly gets a buyout at 100% above current market and then he, as I would actually expect, picks the bottom of hgh with perfect timing setting himself up for 16% returns in perpetuity?

Here's for a better 2024 everyone.

[SailorRob]

What if he then onsells his friends share at 100% gain and reinvests the cash into oca which sadly gets a buyout at 100% above current market and then he, as I would actually expect, picks the bottom of hgh with perfect timing setting himself up for 16% returns in perpetuity?

Here's for a better 2024 everyone.

Yes agreed this would be better, but very difficult to do.

I don't agree with the HGH part as could lose the lot or get extremely low returns.

Banks are notorious.

What was wrong with 2023 that we need to hope for a better 2024?

[davflaws]

What was wrong with 2023 that we need to hope for a better 2024?

I am 78 and well retired. My wife is still working and wil probably continue to do so for perhps another three to five years. Because we decided to set ourselves up with a decent workshop/shed and an ensuite, we got caught by rapidly rising building costs and had no chance of meeting them out of income. So we needed to sell shares. Our portfolio is in the toilet, and so we have sold some shares that I would have liked to hold for significantly less than I paid for them.

I know **** happens, but in 2023, it happened in much larger quantities than I had expected. I am not expecting to buy any more shares on my own account, but we may need to fund trips to LA and Perth for family responsibilities. I understand SR's position in relation to the share price, but it doesn't apply to me. I am at the stage where I sell to maintain our lifestyle, ergo I want a high price.

[SailorRob]

I am 78 and well retired. My wife is still working and wil probably continue to do so for perhps another three to five years. Because we decided to set ourselves up with a decent workshop/shed and an ensuite, we got caught by rapidly rising building costs and had no chance of meeting them out of income. So we needed to sell shares. Our portfolio is in the toilet, and so we have sold some shares that I would have liked to hold for significantly less than I paid for them.

I know **** happens, but in 2023, it happened in much larger quantities than I had expected. I am not expecting to buy any more shares on my own account, but we may need to fund trips to LA and Perth for family responsibilities. I understand SR's position in relation to the share price, but it doesn't apply to me. I am at the stage where I sell to maintain mour lifestyle, ergo I want a high price.

Yeah great post and I totally understand. You just want at a minimum, the ability to sell them for intrinsic value, preferably more!

And this is the reason for not owning equities or private businesses at all if you need the liquidity within 5 or even more years. As you can never be guaranteed you will get a fair price. One day you will, but the timing may not suit.

I'm also viewing 2023 from a US and index centric perspective, where it truly has been gangbusters.

I do hope you get the chance to sell for a fair price as you need to.

[percy]

Probably wants his supermarket shop to double in price as well.

Meanwhile what the Sailor wants for Christmas if for his biggest position to drop by 50% or more.
I put $100 into my largest holding and it goes up the 50% that expect.......................$150.
You hope your $100 of stock drops 50%............................................... ......$50.
To catch up to me your stock will need to rise 300%..
Year two your stock makes you very happy dropping another 50%...........$25.
My stock remains on its upward way rising 20%............................................... ..........$180.

You keep doing what works for you,while I will continue doing what works for me.

[SailorRob]

I put $100 into my largest holding and it goes up the 50% that expect.......................$150.
You hope your $100 of stock drops 50%............................................... ......$50.
To catch up to me your stock will need to rise 300%..
Year two your stock makes you very happy dropping another 50%...........$25.
My stock remains on its upward way rising 20%............................................... ..........$180.

You keep doing what works for you,while I will continue doing what works for me.

You'll never understand what I'm saying, you won't put the effort in, you have a typical very shallow comprehension of numbers.

Hell if we follow your example much further I would own the entire corporation for free. But I don't expect you to get that either.

I'm not a teenager looking for quick gains bro.

Why don't you at least put a tiny bit of effort in to understand what happenes if the earnings of my company stay the same.

[percy]

You'll never understand what I'm saying, you won't put the effort in, you have a typical very shallow comprehension of numbers.

Hell if we follow your example much further I would own the entire corporation for free. But I don't expect you to get that either.

I'm not a teenager looking for quick gains bro.

Why don't you at least put a tiny bit of effort in to understand what happenes if the earnings of my company stay the same.

As I have already said I prefer my way.
It has and continues to work well for me.
You keep doing what suits you.

[SailorRob]

As I have already said I prefer my way.
It has and continues to work well for me.
You keep doing what suits you.

Working well means that it must have produced higher returns than investing the equivalent equivalent amount at the same time into a SP500 index fund.

I find it exceptionally difficult to believe you have outperformed the market over 50 years.

The time you want a stock price up is when you are not confident in your estimate of the amount of cash it will produce in future. Which is the case for some of my holdings.

If you know there is a 100 note in 2 years time you by definition want to be able to purchase that $100 for as cheap as you can get it for now.

[percy]

Working well means that it must have produced higher returns than investing the equivalent equivalent amount at the same time into a SP500 index fund.

I find it exceptionally difficult to believe you have outperformed the market over 50 years.

The time you want a stock price up is when you are not confident in your estimate of the amount of cash it will produce in future. Which is the case for some of my holdings.

If you know there is a 100 note in 2 years time you by definition want to be able to purchase that $100 for as cheap as you can get it for now.

Please do not offer me any more of your advice.
Others may find it of interest,I certainly do not.

[SailorRob]

Please do not offer me any more of your advice.
Others may find it of interest,I certainly do not.

It's not advice. It's called maths and common sense.

All a waste of time if a cheap index fund produces higher returns, you are literally expending time and effort to lose money (the difference between index returns and yours) over 50 years it will be tens of millions.

[SailorRob]

Please do not offer me any more of your advice.
Others may find it of interest,I certainly do not.

A point very worthy of noting, and sorry to use you as an example Percy, but you will be enjoying a great retirement with plenty of money there is no question about that.

If however you had invested in the sp500 for 56 years instead of doing what you have done, you would have had a 30,000% return on your original money.

If you had added to your investment over those 56 years even just a little, you would have well north of 50 million now.

And could easily be over 100 million.

So the difference is what it's cost you to do your thing.

Any young people reading this please take note.

[mike2020]

SR my 2023 was rubbish. My nz div stocks dived and my growth stocks didn't grow. My small cap aussie stocks which have served me well previously, didn't. Im no trader, ive made a few long term choices and I take a good look at them all regularly. 2020 2021 was just too easy.

[SailorRob]

SR my 2023 was rubbish. My nz div stocks dived and my growth stocks didn't grow. My small cap aussie stocks which have served me well previously, didn't. Im no trader, ive made a few long term choices and I take a good look at them all regularly. 2020 2021 was just too easy.


Mike, you have nothing to worry about - I posted this Buffett quote on Black Monday. 'For some reason, people take their cues from price action, rather than from value'


I would not think about worry about or even look at your share prices, instead focus on the earnings and dividends. I would imagine that over your whole portfolio the aggregate earnings increased in 2023 and you would have had a pretty good year.

What I would do is add up all the earnings from all your holdings and compare them to last year or an average of the last 3 years. If the earnings have held up and the share prices are down then this is good news, you can buy more earnings for less. Assuming you are not using your entire portfolio to live off you can reinvest your dividends at higher rates.

The quoted stock prices you are thinking are rubbish simply don't matter to investors like us, it's just a snapshot in time of what other people will offer you, not the actual value of your holdings.

Add up all the total earnings of all your companies and as long as they dont reinvest them at low rates of return then that is the minimum you will earn this year from your portfolio, doesn't matter what the share price has done. Leave that to the Percy's of the world. We are playing a different game.

I had a bad year because my stocks went up.

Berkshire, my biggest holding is up 15 odd Percent which is a nightmare for me. I want it down.

Focus on your earnings and what your companies are doing with them and how you can buy more of them for less.

So instead of your first line - my div stocks dived and growth didnt grow etc... How about 'my business partners lost their minds and decided to offer me their share of the business at ridiculous prices' This is a great thing.

[percy]

Yes Mike2020 Aussie has been difficult, but CNW provided a good profit,but the stand out performer was my largest Aussie holding, ATP finishing up a massive 436% for the year.
NZ was mixed too,but loading up with 2CC in May [my largest NZ holding] saw a 150% increase on my average cost,plus I received a fully imputed divie.
My hobbie has been the share market for 57 years.A good number of those years I had no funds to invest,but still followed the market.
Having such an interesting hobbie has been both a lot of fun and financially very rewarding.
If you can not devote the time to do good research, you are best to find a good fund manager.
The more research I do the better the results I get.

[Muse]

Yes Mike2020 Aussie has been difficult, but CNW provided a good profit,but the stand out performer was my largest Aussie holding, ATP finishing up a massive 436% for the year.
NZ was mixed too,but loading up with 2CC in May [my largest NZ holding] saw a 150% increase on my average cost,plus I received a fully imputed divie.
My hobbie has been the share market for 57 years.A good number of those years I had no funds to invest,but still followed the market.
Having such an interesting hobbie has been both a lot of fun and financially very rewarding.
If you can not devote the time to do good research, you are best to find a good fund manager.
The more research I do the better the results I get.

Sounds like a much better return than the index too…obliterated comes to mind.

[Baa_Baa]

While we are all way off topic, let me ask you "what is success, from your investing"?

Is it dying, with a perfect investment success of a few millions, or tens or hundreds of millions, maybe a billion or more? Have you lived a life that enjoyed your success, or just plowed it all back into making a poultice and your and your loved ones life never really changed that much, while you did it?

... they'll cash out your legacy and enjoy the riches you left them. Most of them will squander it.

Is it living a life, yours and your family's, drawing down on your investing success, making all of your and their lives more successful and enjoyable from your investing prowess?

... you'll all never suffer from not having money, they'll all do very well, but probably some, maybe most of them will squander it.

[Baa_Baa]

A point very worthy of noting, and sorry to use you as an example Percy, but you will be enjoying a great retirement with plenty of money there is no question about that.

If however you had invested in the sp500 for 56 years instead of doing what you have done, you would have had a 30,000% return on your original money.

If you had added to your investment over those 56 years even just a little, you would have well north of 50 million now.

And could easily be over 100 million.

So the difference is what it's cost you to do your thing.

Any young people reading this please take note.

The only thing we don't know, it's what your definition of investing success is, and whether that applies to us.

Not all of us have a 50 year horizon, the maths doesn't work so well if we're working to a shorter term horizon, in fact it invalidates us and refutes our investment goals.

What's your solution for this?

[percy]

While we are all way off topic, let me ask you "what is success, from your investing"?

Is it dying, with a perfect investment success of a few millions, or tens or hundreds of millions, maybe a billion or more? Have you lived a life that enjoyed your success, or just plowed it all back into making a poultice and your and your loved ones life never really changed that much, while you did it?

... they'll cash out your legacy and enjoy the riches you left them. Most of them will squander it.

Is it living a life, yours and your family's, drawing down on your investing success, making all of your and their lives more successful and enjoyable from your investing prowess?

... you'll all never suffer from not having money, they'll all do very well, but probably some, maybe most of them will squander it.
For me it has been "independance.,and freedom of choice."
I achieved that by being very happy in my business of selling books to schools.
Another book rep once said to me why don't you buy a Merc instead of your Toyota.
I replied once you can afford to buy a Merc there is no desire to do so.
Wealth from Investing.One daughter through University.One granddaughter through university.
One daughter in a mortgage free house,after paying out her ex,other in a mortgage free flat.Some time in the next few years will get the granddaughter housed.
Wife needed a stent earlier this year.No waiting, in and had it done.
Wife saw a holiday home raffle.Clarks Beach.Had never heard of it.Booked for 3 days early April.
I see a lot of guys older than me still working on the roads.I think how lucky I am to be able to enjoy my favourite past times of reading books and following the markets.
When my achilles tendons come right wife and I will be back enjoying our walks.
I went out for lunch with my oldest friend and former business partner awhile ago.He has been very successful in real estate.Told me there was nothing he wanted,or needed.Funny enough I feel the same.
I think you know you are well off when you do not faint when you get your dentist's bill.

[Muse]

Sounds like success to me.

[iceman]

While we are all way off topic, let me ask you "what is success, from your investing"?

Is it dying, with a perfect investment success of a few millions, or tens or hundreds of millions, maybe a billion or more? Have you lived a life that enjoyed your success, or just plowed it all back into making a poultice and your and your loved ones life never really changed that much, while you did it?

... they'll cash out your legacy and enjoy the riches you left them. Most of them will squander it.

Is it living a life, yours and your family's, drawing down on your investing success, making all of your and their lives more successful and enjoyable from your investing prowess?

... you'll all never suffer from not having money, they'll all do very well, but probably some, maybe most of them will squander it.

Well said. “Success” means a different thing to all of us. You can not put it into a spreadsheet. Only ourselves can be the judges of whether we achieved our goals or not

[SailorRob]

Yes Mike2020 Aussie has been difficult, but CNW provided a good profit,but the stand out performer was my largest Aussie holding, ATP finishing up a massive 436% for the year.
NZ was mixed too,but loading up with 2CC in May [my largest NZ holding] saw a 150% increase on my average cost,plus I received a fully imputed divie.
My hobbie has been the share market for 57 years.A good number of those years I had no funds to invest,but still followed the market.
Having such an interesting hobbie has been both a lot of fun and financially very rewarding.
If you can not devote the time to do good research, you are best to find a good fund manager.
The more research I do the better the results I get.


It's very difficult to find a good fund manager, the better advice would be to buy a low cost index fund. That way you'll beat almost all fund managers.

Also, if you find a 'good' fund manager, likely they wont be good in the future. Often the best returns over the last 10 years mean the next 10 are poor.

Well done on the Pearl company, but is this investing or speculation? This is the reason for the difference in outlook. They are two very different things.

This is not just speculation, it's speculation in Australian microcaps. A notorious place where few emerge intact.

[SailorRob]

The only thing we don't know, it's what your definition of investing success is, and whether that applies to us.

Not all of us have a 50 year horizon, the maths doesn't work so well if we're working to a shorter term horizon, in fact it invalidates us and refutes our investment goals.

What's your solution for this?


I understand what you're saying but the math still works.

My first purchase of Occidental Petroleum was in 2019 at $42. Second purchase was $46. But I made my money buying at $8-$12. Same with lots of other stuff, I made my money when after initial purchase the stock dropped 50% and more.

You shouldn't own equities unless you can react with total equanimity to a 50% fall in your total portfolio value. And unless you are selling when something races above intrinsic then it's just a feel good number in your account that can disappear at any time.

With Berkshire, if the stock drops 50% next week, then I will be far better off within 5 years - doesn't take a long time horizon.

[SailorRob]

For me it has been "independance.,and freedom of choice."
I achieved that by being very happy in my business of selling books to schools.
Another book rep once said to me why don't you buy a Merc instead of your Toyota.
I replied once you can afford to buy a Merc there is no desire to do so.
Wealth from Investing.One daughter through University.One granddaughter through university.
One daughter in a mortgage free house,after paying out her ex,other in a mortgage free flat.Some time in the next few years will get the granddaughter housed.
Wife needed a stent earlier this year.No waiting, in and had it done.
Wife saw a holiday home raffle.Clarks Beach.Had never heard of it.Booked for 3 days early April.
I see a lot of guys older than me still working on the roads.I think how lucky I am to be able to enjoy my favourite past times of reading books and following the markets.
When my achilles tendons come right wife and I will be back enjoying our walks.
I went out for lunch with my oldest friend and former business partner awhile ago.He has been very successful in real estate.Told me there was nothing he wanted,or needed.Funny enough I feel the same.
I think you know you are well off when you do not faint why you get your dentist's bill.


Well said Percy, one question though.

With Dads investing prowess why is the Daughter in a mortgage free house when the capital could be being used (at least some of it) to grow her wealth massively?

[SailorRob]

While we are all way off topic, let me ask you "what is success, from your investing"?

Is it dying, with a perfect investment success of a few millions, or tens or hundreds of millions, maybe a billion or more? Have you lived a life that enjoyed your success, or just plowed it all back into making a poultice and your and your loved ones life never really changed that much, while you did it?

... they'll cash out your legacy and enjoy the riches you left them. Most of them will squander it.

Is it living a life, yours and your family's, drawing down on your investing success, making all of your and their lives more successful and enjoyable from your investing prowess?

... you'll all never suffer from not having money, they'll all do very well, but probably some, maybe most of them will squander it.


For me it's along the lines of Percy, just freedom.

[Ggcc]

Well said Percy, one question though.

With Dads investing prowess why is the Daughter in a mortgage free house when the capital could be being used (at least some of it) to grow her wealth massively?

I think you answered it yourself. Freedom.

[percy]

Well said Percy, one question though.

With Dads investing prowess why is the Daughter in a mortgage free house when the capital could be being used (at least some of it) to grow her wealth massively?

I think if you can give your children a full education and set them up in a mortgage free house you have achieved a lot.
If they want more they can earn it.
In some ways I look at it as though they are having their inheritance when they need it most.

[SailorRob]

I think if you can give your children a full education and set them up in a mortgage free house you have achieved a lot.
If they want more they can earn it.
In some ways I look at it as though they are having their inheritance when they need it most.


Yes that is true.

Perhaps it is even too much, anyone I worked with or know that's say in their 30's 40's if it was known they had been provided a mortgage free home, everyone would lose respect for them massively. So in a way it doesn't give them a chance to stand on their own two feet.

Probably different in Auckland and for a chick it's maybe different but any dude would need to take a long hard look at himself before getting a house from Daddy if he wants to be able to stomach what he sees in the mirror.

[thegreatestben]

I wouldn’t worry about telling people you were given a mortgage free home. They think the same if you’re mortgage free whether you earned it yourself or not in my experience.

[SailorRob]

I wouldn’t worry about telling people you were given a mortgage free home. They think the same if you’re mortgage free whether you earned it yourself or not in my experience.


Yeah but them thinking the same vs you telling them is pretty different.

I would worry about it massively.

Standing on my own two feet is at the core of my being.

People who know you should be able to figure out if you are a gun that earned it yourself vs given it. Super obvious.

[alokdhir]

I will reluctantly agree with SR ...making children capable of building their own world has much greater meaning then being provided the most important dream of anyone on earth ...own home ....the joy and the confidence which comes from achieving it yourself far exceeds the security and happiness of getting it on a platter . But then when parents look after children in fact they are actually looking after themselves in a way ...it makes them feel more satisfied and accomplished then maybe the other way round . But agree with Percy's thoughts about getting inheritance at the right time ...so whats more important ...I think children's sense of accomplishment and self achievement thus confidence in themselves will do them more good in times to come when we are long gone ...it will prepare them better to be in a world on their own ...which eventually happens for all .

I do have a story to tell and have tried to follow what I wrote above ...luckily it has worked out very well ...so far but hopefully for ever ...though I did change the canvas for them by immigrating to a more easier society with much better reward to hard work/ focus ratio .

But I am only sure of one thing ...love and caring flows naturally from parents to children ...thats nature !

[SailorRob]

the most important dream of anyone on earth ...own home ....the joy and the confidence which comes from achieving it

Not anyone on Earth... Not me. Almost as bad as owning a Yacht just a bloody nightmare.

I'll take the money.

But yes as for the rest, it's obvious.

Handing to them on platter could totally destroy them, hard to have self respect when Daddy handed it to you and once you have been given it there is no going back. You will never know if you could have made it on your own.

[winner69]

One thing with Percy’s kids when they get old like him they’ll be able to take out a reverse mortgage with Heartland to say buy a new car and travel around the world …… Percy looking after them forever

[percy]

It's very difficult to find a good fund manager, the better advice would be to buy a low cost index fund. That way you'll beat almost all fund managers.

Also, if you find a 'good' fund manager, likely they wont be good in the future. Often the best returns over the last 10 years mean the next 10 are poor.

Well done on the Pearl company, but is this investing or speculation? This is the reason for the difference in outlook. They are two very different things.

This is not just speculation, it's speculation in Australian microcaps. A notorious place where few emerge intact.

Atlas Pearls has its own thread on ASX here on Sharetrader.
I think the thread is easy to follow.
Research is the difference between speculation and sound investing.

[SailorRob]

Atlas Pearls has its own thread on ASX here on Sharetrader.
I think the thread is easy to follow.
Research is the difference between speculation and sound investing.


Percy, you are old enough and wise enough to know the difference.

A microcap ASX company that goes up 500% in a year is clearly a speculation and well done to you.

Ben Graham clearly defined the difference and it has stood the test of time.

[percy]

Percy, you are old enough and wise enough to know the difference.

A microcap ASX company that goes up 500% in a year is clearly a speculation and well done to you.

Ben Graham clearly defined the difference and it has stood the test of time.

ATP and 2CC had a number of things in common.
Strong balance sheets with no debt,but most importantly massive cash flows from operations.
Both were in the right sectors at the right time,yet the market had over looked them.

[ValueNZ]

Atlas Pearls has its own thread on ASX here on Sharetrader.
I think the thread is easy to follow.
Research is the difference between speculation and sound investing.

You could research bitcoin and other cryptocurrencies for thousands of hours and the purchase of it will always be speculation. Research is not the difference between speculation and sound investing.

[SailorRob]

ATP and 2CC had a number of things in common.
Strong balance sheets with no debt,but most importantly massive cash flows from operations.
Both were in the right sectors at the right time,yet the market had over looked them.

Fair enough yep, similar to what I'm looking for, cash flow from operations as you know are very different to earnings however. Capex and IFRS lease rules can cloud the waters.

I will have a look, sounds interesting. Thanks for the information.

[percy]

You could research bitcoin and other cryptocurrencies for thousands of hours and the purchase of it will always be speculation. Research is not the difference between speculation and sound investing.

It is for me.
The more research I do the better the results I achieve.
I do not invest outside the share market.
My investment principles are based on the book by Jim Slater "The Zulu Principle".
Simply put, earning per share growing at a higher rate than their current PE ratio. PEG ratio.
Smaller NZ and Aussie companies are where you find the gems.

[percy]

Fair enough yep, similar to what I'm looking for, cash flow from operations as you know are very different to earnings however. Capex and IFRS lease rules can cloud the waters.

I will have a look, sounds interesting. Thanks for the information.

The one thing that really puts me off a company is intangibles.Often I find intangibles far exceed shareholders' equity.
I take them out of the balance sheet before I start looking at ratios.
MFB in NZ is a classic "Red Flag" to me.High intangibles and lots of debt.
Share opportunities are like buses.You miss one, you know there will be another coming along shortly.
But when you see the right one it pays to get onboard.
This coming year I may not get another ATP or 2CC,but you never know.?.l

ps.If I catch the wrong bus,I get off at the next stop.lol

[winner69]

You could research bitcoin and other cryptocurrencies for thousands of hours and the purchase of it will always be speculation. Research is not the difference between speculation and sound investing.

I’ve done the research and it’s Race 3 Number 12 Sugar Tine today

A sound investment …no speculation here …and a value one at that

[alokdhir]

The one thing that really puts me off a company is intangibles.Often I find intangibles far exceed shareholders' equity.
I take them out of the balance sheet before I start looking at ratios.
MFB in NZ is a classic "Red Flag" to me.High intangibles and lots of debt.
Share opportunities are like buses.You miss one, you know there will be another coming along shortly.
But when you see the right one it pays to get onboard.
This coming year I may not get another ATP or 2CC,but you never know.?..lol

Just on friendly note now that. we discussing research based investing on HGH thread ...so bringing both together ...What did your research said when u made major investments in HGH CR last August @ $ 1.80 or so ? When it was looking like going the way its gone after that ...

If it was good at 1.80 it must be great at 1.30 too ...balance sheet of HGH is not easy to understand even for an accountant like Mr B that he seeks help from FM to understand their treatment of some derivatives ...etc . U are a founder investor and supporter so u must have great understanding or its more faith here then anything else ...I am just trying to understand how and why ...as I am not an accountant nor I profess I can understand reading between the lines of balance sheets ....so just trying to update my knowledge mate

[percy]

Just on friendly note now that. we discussing research based investing on HGH thread ...so bringing both together ...What did your research said when u made major investments in HGH CR last August @ $ 1.80 or so ? When it was looking like going the way its gone after that ...

If it was good at 1.80 it must be great at 1.30 too ...balance sheet of HGH is not easy to understand even for an accountant like Mr B that he seeks help from FM to understand their treatment of some derivatives ...etc . U are a founder investor and supporter so u must have great understanding or its more faith here then anything else ...I am just trying to understand how and why ...as I am not an accountant nor I profess I can understand reading between the lines of balance sheets ....so just trying to update my knowledge mate

When I had spare cash I invested in HGH.
When I wanted some cash for something I sell enough HGH to pay for my purchase.
I sold HGH shares on 28th September,10th and 11th October,at $1.72 and $1.73.
I retain a good holding in HGH.
At present time I am neither a buyer nor seller of HGH.
Short term outlook is poor.Long term the outlook is good in my opinion.
If or when they do a capital raise,at that time I will decide whether to support it or not.
[most probably depend on funds I have available]

[SailorRob]

The one thing that really puts me off a company is intangibles.Often I find intangibles far exceed shareholders' equity.
I take them out of the balance sheet before I start looking at ratios.
MFB in NZ is a classic "Red Flag" to me.High intangibles and lots of debt.
Share opportunities are like buses.You miss one, you know there will be another coming along shortly.
But when you see the right one it pays to get onboard.
This coming year I may not get another ATP or 2CC,but you never know.?.l

ps.If I catch the wrong bus,I get off at the next stop.lol

For me, as with Warren Buffett, intangibles are everything.

If they are internally generated then mostly they're invisible, but assets over and above tangibles are the only thing that gives any company value.

Anyone can replicate tangible assets, intangibles are all that matter.

If however you've paid too much for them then yes it's a problem.

All of the best companies in the world have intangibles far exceeding tangible assets, when internally generated thus is seen as a high price to book.

[SailorRob]

Just on friendly note now that. we discussing research based investing on HGH thread ...so bringing both together ...What did your research said when u made major investments in HGH CR last August @ $ 1.80 or so ? When it was looking like going the way its gone after that ...

If it was good at 1.80 it must be great at 1.30 too ...balance sheet of HGH is not easy to understand even for an accountant like Mr B that he seeks help from FM to understand their treatment of some derivatives ...etc . U are a founder investor and supporter so u must have great understanding or its more faith here then anything else ...I am just trying to understand how and why ...as I am not an accountant nor I profess I can understand reading between the lines of balance sheets ....so just trying to update my knowledge mate

With due respect.

57 years of investment experience and the ability to choose from 50 odd thousand companies, and then buying General finance and HGH...

Well something is wrong with this picture.

The PEG idea is sound however, but obviously a lot more to it. Any company can create earnings.

[Valuegrowth]

It is for me.
The more research I do the better the results I achieve.
I do not invest outside the share market.
My investment principles are based on the book by Jim Slater "The Zulu Principle".
Simply put, earning per share growing at a higher rate than their current PE ratio. PEG ratio.
Smaller NZ and Aussie companies are where you find the gems.

Percy I am doing the same thing now. Sold one growth trap and one value trap recently. One has dropped almost 50% within three months. Concentrated on few debts free and low debts firms. Very happily staying with a strong balance sheet, cash rich, debt free and high dividend champion which I bought 10 years back. I think Sulu principle is suits me as well. I heard this Sulu Principle and didn’t follow much like other popular books on investment. We are going behind popular and promoted books and stocks while missing hidden gems (both hidden stocks and hidden books).

My congratulations for your investment success and other things that you achieve in your life!

[percy]

Percy I am doing the same thing now. Sold one growth trap and one value trap recently. One has dropped almost 50% within three months. Concentrated on few debts free and low debts firms. Very happily staying with a strong balance sheet, cash rich, debt free and high dividend champion which I bought 10 years back. I think Sulu principle is suits me as well. I heard this Sulu Principle and didn’t follow much like other popular books on investment. We are going behind popular and promoted books and stocks while missing hidden gems (both hidden stocks and hidden books).

My congratulations for your investment success and other things that you achieve in your life!

Thank you.
I find it embarrassing talking about what I have or have not achieved on this forum.So many people are so worse off than me,while others are so much better off.
Here is a link to Jim Slater's The Zulu Principle.
https://www.ftadviser.com/adviser-library/2020/07/17/what-i-m-reading-the-zulu-principle-by-jim-slater/

[Valuegrowth]

Thanks Percy.
Thank you.
I find it embarrassing talking about what I have or have not achieved on this forum.So many people are so worse off than me,while others are so much better off.
Here is a link to Jim Slater's The Zulu Principle.
https://www.ftadviser.com/adviser-library/2020/07/17/what-i-m-reading-the-zulu-principle-by-jim-slater/

[SailorRob]

The one thing that really puts me off a company is intangibles.Often I find intangibles far exceed shareholders' equity.
I take them out of the balance sheet before I start looking at ratios.
MFB in NZ is a classic "Red Flag" to me.High intangibles and lots of debt.
Share opportunities are like buses.You miss one, you know there will be another coming along shortly.
But when you see the right one it pays to get onboard.
This coming year I may not get another ATP or 2CC,but you never know.?.l

ps.If I catch the wrong bus,I get off at the next stop.lol


Buffett considers intangibles to be of the utmost importance. However, it may surprise you to learn that Buffett did not always believe in the power of intangibles.

In his 1983 annual letter, Warren Buffett writes, “I was taught to favor tangible assets and to shun businesses whose value depended largely upon economic goodwill. This bias caused me to make many important business mistakes of omission, although relatively few of commission.”

[SailorRob]

Thank you.
I find it embarrassing talking about what I have or have not achieved on this forum.So many people are so worse off than me,while others are so much better off.
Here is a link to Jim Slater's The Zulu Principle.
https://www.ftadviser.com/adviser-library/2020/07/17/what-i-m-reading-the-zulu-principle-by-jim-slater/

Thanks, will read it.

[percy]

Thanks, will read it.

You will love this.
Being in the book trade the rep selling in The Zulu Principle gave me a pre publication copy of the book.
I was too busy to read it at the time.
I finally got around to read it,and then I got a copy of the Financial Times,and noted the stocks Slater had mentioned had rising substantially...
I really did miss the bus there....lol

[Valuegrowth]

Thank you.
I find it embarrassing talking about what I have or have not achieved on this forum.So many people are so worse off than me,while others are so much better off.
Here is a link to Jim Slater's The Zulu Principle.

https://www.ftadviser.com/adviser-library/2020/07/17/what-i-m-reading-the-zulu-principle-by-jim-slater/ (https://www.ftadviser.com/adviser-library/2020/07/17/what-i-m-reading-the-zulu-principle-by-jim-slater/)

Basically, Mr Slater is looking for competitive advantage, strong cash flow with net cash or modest earnings, a share price below the business’ long-term intrinsic value before investing in companies.

He has always suggested concentrated portfolio, not to do over-trading and the important of selling stocks if fundamentals are going to get worse.

Even though he was a supporter of growth stocks, he has looked at great value as well. That’s where he excelled against all other growth writers and investors. His value principle is very useful for value investors.

[alokdhir]

"The book also introduces the concept of running profits and cutting losses which, once one can come to terms with admitting an error, is almost always the best course of action."

If one followed Zulu principles in letter and spirit and not as per one's own interpretations or whims then HGH should have been sold in full back in August 2022 ??

[winner69]

"The book also introduces the concept of running profits and cutting losses which, once one can come to terms with admitting an error, is almost always the best course of action."

If one followed Zulu principles in letter and spirit and not as per one's own interpretations or whims then HGH should have been sold in full back in August 2022 ??


Jeez, August 2022 was ages ago …has HGH share price been a dud for that long?

[alokdhir]

the 100MA still trending up ..... so chart still looking good

9th sept 22 W69 posted while Baa Baa TA expert says it was trending down since June 22 ...TA experts dont agree !!!

PS : Xmas fun for W69 ...TBF at that time W69 said he was not mentioning time frame ...so his was 100 MA weekly ...cheeky boy

[Baa_Baa]

Jeez, August 2022 was ages ago …has HGH share price been a dud for that long?

Longer, since Jan 2022, death cross June 2022, now 45% off the high. https://invst.ly/12s76e

[alokdhir]

Plenty of Golden Crosses coming up then ……that’s good I’m led to believe

10th Sept 22 his prophecy ....lol :p

[winner69]

9th sept 22 W69 posted while Baa Baa TA expert says it was trending down since June 22 ...TA experts dont agree !!!

PS : Xmas fun for W69 ...TBF at that time W69 said he was not mentioning time frame ...so his was 100 MA weekly ...cheeky boy

Your TA was spot on back then

Don’t need gurus like Slater to tell you what to do…just listen to alokdhir and BaaBaa

[alokdhir]

Your TA was spot on back then

Don’t need gurus like Lynch to tell you what to do…just listen to alokdhir and BaaBaa

Dont go after me mate ...I am no body ...me just got out as I didnt like your Jeff's attitude towards small investors and how he bullied us during CR ...that was my decision to exit fully at some loss but it was surely not based on TA or balance sheets analysis ...

Me was just having fun as I remember u being vociferous supporter of Jeff and HGH even when it was looking tough times ahead ...U kept your faith till very long ...dont know whats your current status ...but u surely lost lot of love for Jeff now I reckon ...

[winner69]

Dont go after me mate ...I am no body ...me just got out as I didnt like your Jeff's attitude towards small investors and how he bullied us during CR ...that was my decision to exit fully at some loss but it was surely not based on TA or balance sheets analysis ...

Me was just having fun as I remember u being vociferous supporter of Jeff and HGH even when it was looking tough times ahead ...U kept your faith till very long ...dont know whats your current status ...but u surely lost lot of love for Jeff now I reckon ...

Jeff’s Midas touch gone …his halo dont shine much these days

And you now can’t trust Jeff to do what he says he will do

Jeff just an ordinary CEO at best these days … and his love affair with Australia will become his nemesis

[alokdhir]

Jeff’s Midas touch gone …his halo dont shine much these days

And you now can’t trust Jeff to do what he says he will do

Jeff just an ordinary CEO at best these days … and his love affair with Australia will become his nemesis

He can be another Nick punishing his shareholders with his stubborn beliefs ....Our love affair with Australia causing more trouble !!

Movie Fatal Attraction comes to mind :eek2:

[RTM]

He can be another Nick punishing his shareholders with his stubborn beliefs ....Our love affair with Australia causing more trouble !!

Movie Fatal Attraction comes to mind :eek2:

The thought of Jeff crossing his legs like that does nothing for me.
Each to their own I guess.

[ziggy415]

He can be another Nick punishing his shareholders with his stubborn beliefs ....Our love affair with Australia causing more trouble !!

Movie Fatal Attraction comes to mind :eek2:
Sorry but I think you guys a little harsh on Jeff
Who could have foreseen that China would suddenly buy a lot of beef from Brazil instead of Australia...who could foresee el nino weather pattern that got farmers unloading stock in case of low stock feed also the fall in house prices and interest rate rises effected the reverse mortgage side of the business and throw in challenger bank hold ups ( that's paper hold ups not ram raids ) oh wait that would be nz..then change of govt. In nz and the ute tax making people hold off purchases till new year.....A perfect storm...that will all work it's way thru eventually.....what's the other option..invest in a banana republic on this side of the ditch

[winner69]

Sorry but I think you guys a little harsh on Jeff
Who could have foreseen that China would suddenly buy a lot of beef from Brazil instead of Australia...who could foresee el nino weather pattern that got farmers unloading stock in case of low stock feed also the fall in house prices and interest rate rises effected the reverse mortgage side of the business and throw in challenger bank hold ups ( that's paper hold ups not ram raids ) oh wait that would be nz..then change of govt. In nz and the ute tax making people hold off purchases till new year.....A perfect storm...that will all work it's way thru eventually.....what's the other option..invest in a banana republic on this side of the ditch


Yep all that happened Ziggy ….and Jeff and his team no doubt foresaw some of those ‘risks’

But they proudly announced a few months ago Heartland’s FY2023 result demonstrates resilience

Obviously not resilient enough

[alokdhir]

Sorry but I think you guys a little harsh on Jeff
Who could have foreseen that China would suddenly buy a lot of beef from Brazil instead of Australia...who could foresee el nino weather pattern that got farmers unloading stock in case of low stock feed also the fall in house prices and interest rate rises effected the reverse mortgage side of the business and throw in challenger bank hold ups ( that's paper hold ups not ram raids ) oh wait that would be nz..then change of govt. In nz and the ute tax making people hold off purchases till new year.....A perfect storm...that will all work it's way thru eventually.....what's the other option..invest in a banana republic on this side of the ditch

No one is trying to fault his growth plans or intentions ...only problem or shortcoming maybe its timing ...all commoners like US cud foresee tough times ahead then why he could not ...after all he is a BANKER with better foresight of economic times ahead ....Doing the right things at RIGHT time matters a lot ...imho

[percy]

No one is trying to fault his growth plans or intentions ...only problem or shortcoming maybe its timing ...all commoners like US cud foresee tough times ahead then why he could not ...after all he is a BANKER with better foresight of economic times ahead ....Doing the right things at RIGHT time matters a lot ...imho

"Perhaps the most pertinent piece of advice in the current market is not to allow a bear market to frighten you into taking patient money out of good long-term growth shares.
Well HGH certainly have a well thought out growth strategy.

[SCOTTY]

Thanks Percy. At last the sensible voice of reason :)

[SCOTTY]

Thanks Percy. At last the sensible voice of reason :)

[ziggy415]

No one is trying to fault his growth plans or intentions ...only problem or shortcoming maybe its timing ...all commoners like US cud foresee tough times ahead then why he could not ...after all he is a BANKER with better foresight of economic times ahead ....Doing the right things at RIGHT time matters a lot ...imho
I guess there in lies the problem...a banker trying to understand beef farming or China politics or the weather...he knows how to fund these enterprises but day to day farming nuances not so much...time will tell if he can come back.....I think so

[alokdhir]

I guess there in lies the problem...a banker trying to understand beef farming or China politics or the weather...he knows how to fund these enterprises but day to day farming nuances not so much...time will tell if he can come back.....I think so

I have heard it or shall I say read it many many times ...the most common advise experts give ...never fall in love with any stock ...get out as soon as u realise its going downhill for a while ...never catch a falling knife ...etc etc ...only expert who practices that with great results to his portfolio is Mr B ...adds to his winning picks and gets out even at a loss out of downtrending / tough outlook ones ...he did participate in HGH CR last August but then realised its longer term problems and got out ...now he is wondering even $ 1.30 will be bottom this time ....just giving his example for learning from it ...rather then keep on finding reasons for holding on ....but maybe now its in no man's land .... Book Jim Slater wrote has an excuse for everyone there ...excuse to hold ...excuse to sell ...excuse to buy ...what works becomes right ...lol ...Nothing succeeds like success :cool:

[ziggy415]

I have heard it or shall I say read it many many times ...the most common advise experts give ...never fall in love with any stock ...get out as soon as u realise its going downhill for a while ...never catch a falling knife ...etc etc ...only expert who practices that with great results to his portfolio is Mr B ...adds to his winning picks and gets out even at a loss out of downtrending / tough outlook ones ...he did participate in HGH CR last August but then realised its longer term problems and got out ...now he is wondering even $ 1.30 will be bottom this time ....just giving his example for learning from it ...rather then keep on finding reasons for holding on ....but maybe now its in no man's land .... Book Jim Slater wrote has an excuse for everyone there ...excuse to hold ...excuse to sell ...excuse to buy ...what works becomes right ...lol ...Nothing succeeds like success :cool:
I like your look... listen... learn..style and must say it's quite refreshing compared to some others that use this forum lately

[tim23]

"Perhaps the most pertinent piece of advice in the current market is not to allow a bear market to frighten you into taking patient money out of good long-term growth shares.
Well HGH certainly have a well thought out growth strategy.
We are not in a bear market so don’t quite follow your rationale?

[Baa_Baa]

We are not in a bear market so don’t quite follow your rationale?

How do you figure that out, both NZX50 gross and capital are still beneath a downtrend going back to January 2021. How is that not a bear market?

[SailorRob]

How do you figure that out, both NZX50 gross and capital are still beneath a downtrend going back to January 2021. How is that not a bear market?


NZ50 Gross is all that counts and we are in a massive bear market...

Don't get too caught up in funny measurements (not you BaaBaa)... The market hasn't moved a cent in 1690 days or nearly 5 years.

[tim23]

How do you figure that out, both NZX50 gross and capital are still beneath a downtrend going back to January 2021. How is that not a bear market?
You are supposed to be ignoring me? The market has bounced back quite nicely recently and world markets too.

[SailorRob]

ATP and 2CC had a number of things in common.
Strong balance sheets with no debt,but most importantly massive cash flows from operations.
Both were in the right sectors at the right time,yet the market had over looked them.


Had a Quick Look at ATP, absolutely phenomenal buying for 10 million (beginning of the year). Was one of the cheapest companies in the world if they can keep earning anything close to what they are currently.

Well done, you effectively earned back your entire outlay in cash in 12 Months (I know you did 5 x on the share price but the company actually earned its entire year beginning market value).

[SailorRob]

You are supposed to be ignoring me? The market has bounced back quite nicely recently and world markets too.


Umm dude, we're 7% off the low and 22% down from the high. You been on it today? I've been on all kinds of things and can still clearly see we're in a massive Bear market as well as able to explain why.

[Baa_Baa]

You are supposed to be ignoring me? The market has bounced back quite nicely recently and world markets too.

But it's still a bear market locally. Fine if you're index the SP5 or DOW, even NAZ, but NZX is a dog, locked in a three year SP downtrend since it's highs Jan 2021. Maybe your, or some of your stocks are SP bullish, but the NZX remains a backwater den of iniquity. Until it isn't.

So saying it's "not a bear market" is ... complete the sentence.

It's Christmas Tim, I remove everyone from my ignore list and reevaluate from there. So far we're not doing too well. You reckon we're in a "not a bear market". Explain that to everyone who has 3 years of SP suffering and are still in a deep downtrend.

[SailorRob]

But it's still a bear market locally. Fine if you're index the SP5 or DOW, even NAZ, but NZX is a dog, locked in a three year SP downtrend since it's highs Jan 2021. Maybe your, or some of your stocks are SP bullish, but the NZX remains a backwater den of iniquity. Until it isn't.

So saying it's "not a bear market" is ... complete the sentence.

It's Christmas Tim, I remove everyone from my ignore list and reevaluate from there. So far we're not doing too well. You reckon we're in a "not a bear market". Explain that to everyone who has 3 years of SP suffering and are still in a deep downtrend.

Just under 5 years... 1690 days ago the market was where it stands today.

Adjusted for inflation and this is a once in a generation bear market.

[Valuegrowth]

The one thing that really puts me off a company is intangibles.Often I find intangibles far exceed shareholders' equity.
I take them out of the balance sheet before I start looking at ratios.
MFB in NZ is a classic "Red Flag" to me.High intangibles and lots of debt.
Share opportunities are like buses.You miss one, you know there will be another coming along shortly.
But when you see the right one it pays to get onboard.
This coming year I may not get another ATP or 2CC,but you never know.?.l

ps.If I catch the wrong bus,I get off at the next stop.lol I got into two wrong buses recently and I got off from them.

I also like real assets in balance sheets. Yes I agree we miss good buses but we find new good buses. During covid-19 I found a very good bus after missing few good buses.

[tim23]

NZ50 Gross is all that counts and we are in a massive bear market...

Don't get too caught up in funny measurements (not you BaaBaa)... The market hasn't moved a cent in 1690 days or nearly 5 years.
If you say so but how do you explain that at 11634 on Friday the market is off 15% off the all time high of 13644 reached on 8.1.21 and 9% above the 52 week low of 10695?

[SailorRob]

If you say so but how do you explain that at 11634 on Friday the market is off 15% off the all time high of 13644 reached on 8.1.21 and 9% above the 52 week low of 10695?

Because you're looking at the con man index, gross with dividends reinvested no fees no tax no actual transactions...

It's virtually impossible that it doesn't go up over time.

Have written extensively about this over the years.

https://milfordasset.com/insights/gross-index-will-beat-capital-one

Most all other real indexes in the world are capital.

It's not if I say so... It's fact that anyone can check.

The real index isn't far off 1987 levels.

[tim23]

Because you're looking at the con man index, gross with dividends reinvested no fees no tax no actual transactions...

It's virtually impossible that it doesn't go up over time.

Have written extensively about this over the years.

https://milfordasset.com/insights/gross-index-will-beat-capital-one

Most all other real indexes in the world are capital.

It's not if I say so... It's fact that anyone can check.

The real index isn't far off 1987 levels.
It’s not virtually impossible we are still down 15%

[SailorRob]

It’s not virtually impossible we are still down 15%

As I said...

We're down over 21%. Not 15%.

You're using the BS index designed to make everything look better.

[SailorRob]

It’s not virtually impossible we are still down 15%

Have BaaBaa and myself got through to you? Do you understand now that we're in a bear market and why?

Do you understand the difference between a gross index and a capital one?

[alokdhir]

It’s not virtually impossible we are still down 15%

Dont get too bogged down by this talk that NZX50G is fool's paradise ...its not ...If u want to track investor returns who invested in NZX50G index via a ETF ie NZG ...traded on NZX ...it is real index fund and follows Gross index and its returns are real ...

https://www.nzx.com/instruments/ (https://www.nzx.com/instruments/NZG)

https://smartshares.co.nz/types-of-funds/new-zealand-shares/nzg

Study and U will know better ...There is another index called Portfolio Index ...its called NZX50P ...which FNZ follows ...its a capped index ie max weightage is not as per market cap as in NZX50G but capped at 5% which is more suitable for layman or index investments in NZ

Why Gross index was specially formed for NZ as its a defensive market with very high dividend yield unlike USA or other markets ...thus they wanted to incorporate dividend returns also into the index to truly reflect returns from equity investments in NZ

[SailorRob]

Dont get too bogged down by this talk that NZX50G is fool's paradise ...its not ...If u want to track investor returns who invested in NZX50G index via a ETF ie NZG ...traded on NZX ...it is real index fund and follows Gross index and its returns are real ...

https://www.nzx.com/instruments/ (https://www.nzx.com/instruments/NZG)

https://smartshares.co.nz/types-of-funds/new-zealand-shares/nzg

Study and U will know better ...There is another index called Portfolio Index ...its called NZX50P ...which FNZ follows ...its a capped index ie max weightage is not as per market cap as in NZX50G but capped at 5% which is more suitable for layman or index investments in NZ

Why Gross index was specially formed for NZ as its a defensive market with very high dividend yield unlike USA or other markets ...thus they wanted to incorporate dividend returns also into the index to truly reflect returns from equity investments in NZ



It is impossible to achieve the return of the NZ50G for obvious reasons.

I understand the products you are talking about obviously.

Study why the index was formed and you'll know better.

Spend a good few hours on it. Study the man that created it, get your hands on documentation from the process at the time... Takes a lot of effort.

What you say is true but there is more to it.

[mike2020]

Well, where is the $1.35 people talked about?

[Ggcc]

Well, where is the $1.35 people talked about?
You might see price rises happen usually before a capital raise announcement. We may just get one early next year.

[winner69]

Well, where is the $1.35 people talked about?

Market didn’t factor in alokdhir buying

[mike2020]

You might see price rises happen usually before a capital raise announcement. We may just get one early next year.
I did wonder about that. What chance is there they back out of the bank acquisition?

[ronaldson]

I took a small holding at $1.80 via Jarden when they last raised capital, and have in the past few days now averaged down to just under $1.48 with a more substantial holding.

The market will reassess once/if the Challenger acquisition has concluded. A good share to have included in your 2024 competition picks in my view given the potential for upside, thou I confess I didn't do that myself which is a contradiction.

Anyway, a happy new year to everyone and my best wishes for good investing/trading in 2024.

[alokdhir]

Market didn’t factor in alokdhir buying

I will not try to catch a falling knife of HGH quality ...MFT types are different ballgame ....learnt that from Gurus here ...good advise to adhere to !!

[Bjauck]

...

Why Gross index was specially formed for NZ as its a defensive market with very high dividend yield unlike USA or other markets ...thus they wanted to incorporate dividend returns also into the index to truly reflect returns from equity investments in NZ
The NZ investment/pension/tax environment has meant households favour real estate investment. So, many growth companies end up being bought out by foreign companies or listing on foreign stock exchanges to access capital. So that leaves a small stock exchange with a high proportion of defensive capitalisation.

[SailorRob]

From an article on interest.co.nz on bank deposits https://www.interest.co.nz/personal-finance/125824/new-reserve-bank-data-adds-extended-transparency-deposits-held-banks

'And we should all understand, this is not real insurance. No private insurer anywhere in the world will provide this coverage. This is a taxpayer benefit for savers. And savers tend to be well healed and politically connected. It is a middle-class welfare benefit'.

Why will no insurer in the world provide this coverage?

Don't worry though, Percy has done lots of research as he did on Channel Infrastructure. Haven't seen him on the 2023 returns thread though??

[Bjauck]

From an article on interest.co.nz on bank deposits https://www.interest.co.nz/personal-finance/125824/new-reserve-bank-data-adds-extended-transparency-deposits-held-banks

'And we should all understand, this is not real insurance. No private insurer anywhere in the world will provide this coverage. This is a taxpayer benefit for savers. And savers tend to be well healed and politically connected. It is a middle-class welfare benefit'.

Why will no insurer in the world provide this coverage?

Don't worry though, Percy has done lots of research as he did on Channel Infrastructure. Haven't seen him on the 2023 returns thread though?? Actually this scheme would benefit a broader range of savers, than just being another subsidy benefit for the wealthy.

The major rich family benefits come in the form of a lack of a general CGT, and home owner tax exemptions. Those who do not get capital gains, or for whom real estate ownership is inappropriate or too expensive, will often have bank accounts and term deposits.

[Mr Slothbear]

Don't worry though, Percy has done lots of research as he did on Channel Infrastructure. Haven't seen him on the 2023 returns thread though??


genuine question, why does this bother you?

his quality posts speak for themselves.

[Greekwatchdog]

Well, where is the $1.35 people talked about?

Well its getting there and not far from here..Hang tight it might go lower

[bull....]

looking like it wants to go lower. probably nim's getting crushed

[iceman]

looking like it wants to go lower. probably nim's getting crushed

Tony Alexander in an article yesterday said banks 2 years fixed rate wholesale borrowing costs had dropped from 5.65% to 4.70% in recent weeks. We have not seen that reduction in banks lending rates so the NIM should be on the rise for the last few weeks.

[Rawz]

Tony Alexander in an article yesterday said banks 2 years fixed rate wholesale borrowing costs had dropped from 5.65% to 4.70% in recent weeks. We have not seen that reduction in banks lending rates so the NIM should be on the rise for the last few weeks.

Yes agree. NIM will be strong right now for all new business. But not past 12 months.

[percy]

HGH's StockCo Aussie should be seeing demand as the wet weather has seen stock prices increasing as farmers have more grass for animals to feed on.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/6sArcFLd5cE6GlHAfMsJnA/l1TnleZxKrWb5OI3T2fQRw

[Valuegrowth]

HGH's StockCo Aussie should be seeing demand as the wet weather has seen stock prices increasing as farmers have more grass for animals to feed on.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/6sArcFLd5cE6GlHAfMsJnA/l1TnleZxKrWb5OI3T2fQRw Lately, there had been good demand for stocks of animal producers.

[winner69]

Won’t worry Heartland

Lifetime Asset Management has hit $1 billion in assets under management and will launch a product with a European twist on the reverse mortgage.

https://tmmonline.nz/article/976522681/lifetime-springboards-off-1b-aum

[bull....]

Won’t worry Heartland

Lifetime Asset Management has hit $1 billion in assets under management and will launch a product with a European twist on the reverse mortgage.

https://tmmonline.nz/article/976522681/lifetime-springboards-off-1b-aum

westpac backing it

[Snoopy]

Won’t worry Heartland

Lifetime Asset Management has hit $1 billion in assets under management and will launch a product with a European twist on the reverse mortgage.

https://tmmonline.nz/article/976522681/lifetime-springboards-off-1b-aum


Sounds similar to competition that Heartland face in the Australian market. However, 'over there' the drip feed income from your house is government run, and there is no capacity for 'lump sum' release. In Australia, you still have to go to Heartland for that overseas holiday or to jump the hip replacement queue.

The presumption of 'Lifetime Asset Management' (LAM) is that with a product like Heartland offer, homeowners don't know exactly the percentage of their house that they still own until the reverse mortgage is cashed in - that is true. But if LAM provide 'certainty' of that, by paying a small regular percentage of the value of the house to the homeowner annually, then surely the income received by the homeowner goes up and down as the house value fluctuates?

In a period of rising interest rates, such as we have just had, -to try and tame inflation- house values have fallen as income streams are put under pressure. So under a scheme such as LAM are proposing, the LAM income would fall, just as the homeowner needed the extra cash most. That doesn't seem a very sensible scheme to sign up to.
"Stewart says when he began the firm in 2013, research found that people wanted a guaranteed income."

That isn't what this scheme does.

"The Covid pandemic in March stretched the product to its limit and revealed a technical error in the calculation of capital required to support the guarantee."
How can you release a product to market without stress testing it? LAM CEO Ralph Stewart comes across as a bit of a cowboy. It doesn't sound like he knows what he is doing. Third party comments at the end of the article questioned how the rates bill would be divided up as ownership transferred, and whether new legal contracts would have to be drawn up each year to legitimize the current percentage of the house that each co-owner owned. Lot's of uncertainty and maybe hidden cost here, which is ostensibly what LAM is trying to avoid.

Heartland's Jeff looking very solid and trustworthy eyeballing that Ralph!

SNOOPY

[bull....]

the fact asx financials have rallied 10% since nov and hgh has not participated paints a very negative opinion on me. suggests some people know something we dont possibly.

[Snoopy]

the fact asx financials have rallied 10% since nov and hgh has not participated paints a very negative opinion on me. suggests some people know something we don't possibly.

Nicely covered the contingencies there Bull. You have worded your comments in a way that is impossible to disagree with. I think there is plenty in the public domain that can explain the share price performance though, including the possibility of the divie morphing into a dividEND. But maybe those that did not attend the AGM, er, to get a first hand run down of the hurdles, er, do not understand the Challenge, er, full situation?

SNOOPY

discl: a shareholder and a 'some person' (possibly)

[bull....]

Nicely covered the contingencies there Bull. You have worded your comments in a way that is impossible to disagree with. I think there is plenty in the public domain that can explain the share price performance though, including the possibility of the divie morphing into a dividEND. But maybe those that did not attend the AGM, er, to get a first hand run down of the hurdles, er, do not understand the Challenge, er, full situation?

SNOOPY

discl: a shareholder and a 'some person' (possibly)

no one ever made challenger work. they have to do a big cap raise at some stage to further capitalise the bank when all the reg hurdles are completed. i think

[winner69]

the fact asx financials have rallied 10% since nov and hgh has not participated paints a very negative opinion on me. suggests some people know something we dont possibly.

Did somewhere here say they waiting for 135?

Heading that way

[Snoopy]

no one ever made challenger work.


....which is why Heartland got Challenger cheaply. And Heartland only need to make the deposit side work - which they have already calculated will be a better option than the wholesale funding lines they have already. The loan side of what will be the new Challenger bank is already working. I am surprised how little faith the forum contributors, the ones who presumably are non HGH shareholders, have in 'our Jeff''. They are trialng him via the court of opinion as though he was Amazon founder Jeff Bezos's miscreant cousin, 'Jeff Bozos'.



they have to do a big cap raise at some stage to further capitalise the bank when all the reg hurdles are completed. i think


Looks like around $NZ500m of Australian securitised borrowing is maturing mid 2024. New Australian equity needed to back new depositors funds to replace that amount of borrowing about $NZ50m-$NZ75m? Market cap of HGH currently $NZ1.05b. So new capital needed soon not really 'big bucks' in the grand Heartland scheme of things.

You worry too much bull.

SNOOPY

[mshierlaw]

Nicely covered the contingencies there Bull. You have worded your comments in a way that is impossible to disagree with. I think there is plenty in the public domain that can explain the share price performance though, including the possibility of the divie morphing into a dividEND. But maybe those that did not attend the AGM, er, to get a first hand run down of the hurdles, er, do not understand the Challenge, er, full situation?

SNOOPY

discl: a shareholder and a 'some person' (possibly)

dividEND ..... now that's something we have seen quite a few times in this market recently.

In HGH case there are no defined parameters in the current dividend policy to any give confidence dividends will continue at current level or indeed at all. Generally when we see dividend yields approach or exceed 10% this is normally due to a substantial reduction in the share price & yes thats the case here. Generally refered to as a "dividend trap".

With a downtrend still in play & an elevated divend at risk of significant cut back I will be keeping my hands in my pockets for now.

[bull....]

Did somewhere here say they waiting for 135?

Heading that way

im waiting for lower , looks like might get to 1.35 today

[Traderx]

Made a small initial long term investment in HGH today, albeit a bit nervous about current selling pressure/downtrend but didn't want to miss the opprtunity

- I like the strategy (digital first, best or only product particpation, then leverage those products into new geography)
- I like the long term CEO with reasonably significant shareholding
- I like the long term business performance history, and am hopeful that it is stronger evidence of worth of company than recent hiccups

Simplistically from these levels at ~$1.40/sh I see medium term 8% gross dividend and 5-10%pa EPS growth delivering say ~15%pa total returns plus potentially a 50% re-rate back up to 1.5x NTA (correction - not NTA but net assets) once outlook improves.

[thegreatestben]

I continue to hold my HGH which I've had since April 2020, I'm still above water on current SP and the gross divi yield is 11.50%pa and total return of 16.25% according to sharesight. HGH are taking some risks but there's plenty of skin in the game from management.

Not adding currently but would be hard to say no if we get closer to $1.30

[winner69]

Made a small initial long term investment in HGH today, albeit a bit nervous about current selling pressure/downtrend but didn't want to miss the opprtunity

- I like the strategy (digital first, best or only product particpation, then leverage those products into new geography)
- I like the long term CEO with reasonably significant shareholding
- I like the long term business performance history, and am hopeful that it is stronger evidence of worth of company than recent hiccups

Simplistically from these levels at ~$1.40/sh I see medium term 8% gross dividend and 5-10%pa EPS growth delivering say ~15%pa total returns plus potentially a 50% re-rate back up to 1.5x NTA once outlook improves.


Good plan traderx but I’d live up to your name and sell when it gets back to 1.5x Book Value …….then watch it fall back to 1x and repeat …… more profitable that way as Hgh has become a traders share ….but if you do it often enough still could claim to be a ‘long term investor’

[Rawz]

See UDC has bought BOQs NZ book for 0.9x book value. A fair valuation for this part of the business cycle..?

https://www.nzherald.co.nz/business/udc-finance-to-buy-bank-of-queenslands-nz-assets-worth-238m/LQ34C7FS6FHF5IOSYIB23O6VTE/

UDC have been busy buying up small NZ finance books of late. Purchased an in house new car franchise finance book, then AA money, now BOQs NZ operations. Compare to HGH who have decided to go the Aussie route.

[850man]

Annual low today of $1.34

[bull....]

Annual low today of $1.34

should head lower after half yr im picking
should lower the div to pay for aus expansion