I chose not to answer it because I won't lock myself into a predetermined course of action on here but for what its worth if you are interested the general investment principle I follow is that if any share is ~ 110 - 115% or more of my own fair value assessment I will consider allocating capital elsewhere depending upon what other opportunities exist at the time.
Analyst average fair value assessment is $1.86
http://www.4-traders.com/HEARTLAND-B...518/consensus/
I see it at about $1.90.
2018 PE's of comparative banks I follow, (assuming 12.5 cps earnings for HBL this year due to dilution effects of new capital raise)
HBL 15.6 at $1.95
BOQ 13.2
ANZ 12.7
NAB 14
WBC 13.4
CBA 13.8
All figure off 4 traders to eliminate any of my inherent confirmation bias, (with the exception of EPS for HBL which I have adjusted down slightly (12.9 cps to 12.5 cps) to account for increased number of shares on issue).
Another, (very important in my opinion) issue to consider is that HBL is the only investment in this sector which will give you full imputation credits. You also need to consider the relative EPS growth rates of the various banks. As I suggested yesterday, due to the strong appetite of HBL for new capital I have reservations now that their EPS growth will be much if any greater than their peers.
Much will depend upon their use of the extra capital to drive extra growth. Those that love this share and have a very long association with it will tell you that there's an acquisition around the corner, (but we've heard Jeff cry wolf so many times you can put me in the sceptic camp on that one) and how they drive their organic growth, (I am a believer and believe their reverse equity mortgage book is going to grow very, very strongly in the years ahead). Is their organic growth sufficient to justify the PE premium to their peers...that as they say... is the $64,000 question !