HGH - Heartland Group Holdings

[RTM]

At $1.33 the metrics look almost too compelling that I am concerned and I think the market is pricing in at least a 50/50 chance of a recession in 2020 and /or we've got a leaky ship and insiders are aware of a dramatic increase in bad and doubtful debt provisioning in the announcement next week.
I would like to buy more but my nose is telling me something funny is up.

A couple of comments....
1) They have not been shown to be a leaky ship in previous years.
2) A recession will affect far more stocks than Heartland. In fact one could argue that their Seniors Loans might do even better in a recession.

[RTM]

Here are your PE"s (at SP = $1.33):

Forward PE (based on average of next 3 years forecasted earnings) is 9.8;
forward earnings CAGR is 7.4

backward PE (based on the last 6 years earnings) is 14;
backwards earnings CAGR is 13.

So - earnings growth expected to drop, but 7% pa is still no reason to hide under a rock, particularly in combination with a forward PE of under 10.

Couldn't resist and bought back in ... lets hope KW's famous words won't haunt me.

Thanks for that BlackPeter.
Its not always bad to buy in a down trend, but you need to be very confident in the company, and not bet the house with the first purchase. . I have done so several times and not regretted it. Of course....I have also regretted it sometimes as well !

[winner69]

A couple of comments....
1) They have not been shown to be a leaky ship in previous years.
2) A recession will affect far more stocks than Heartland. In fact one could argue that their Seniors Loans might do even better in a recession.

Jeff has often said that Heartland’s fortunes are tied to economic growth (GDP) and employment.

That implies recession will slow Heartland growth somewhat

[Beagle]

Well, here we have the first and long expected reversal signal: BBB! Lets hope other indicators will follow and confirm ...

A credit rating upgrade this year would be nice

[Baa_Baa]

Jeff has often said that Heartland’s fortunes are tied to economic growth (GDP) and employment.

That implies recession will slow Heartland growth somewhat

Recession is no good for business, especially banks. But history would show it's a great time buy income generating assets if you got the readies. Anyway, why you talking about recession?

[winner69]

Recession is no good for business, especially banks. But history would show it's a great time buy income generating assets if you got the readies. Anyway, why you talking about recession?

RTM and others talking recession, not me


No recession for a year or two in NZ, at least not until Orr wakes up and realises his dangerous gamble has failed.

[RTM]

RTM and others talking recession, not me


No recession for a year or two in NZ, at least not until Orr wakes up and realises his dangerous gamble has failed.

Nah...I’m not talking about recession. It was Beagle who suggested “I think the market is pricing in at least a 50/50 chance of a recession in 2020.......” But I do think if/when there is one, it will affect most stocks, not just a few. Won’t be singling just one out.

[Beagle]

Last year HBL paid 9.0 cps in dividends. If HGH can pay 9.5 cps fully imputed this year (9.5 / 0.72), heck that's 13.19 cps gross and as near as damm it a gross return of 10% at $1.33 AND the interim dividend is just around the corner. Hmmm I think one can afford to be quite patient seeking a recovery in the SP when they're getting a 10% gross divvy yield.

[percy]

Some of us old timer Heartlanders are enjoying a much higher [on average holding cost] divie yield..... lol.

[Baa_Baa]

Last year HBL paid 9.0 cps in dividends. If HGH can pay 9.5 cps fully imputed this year (9.5 / 0.72), heck that's 13.19 cps gross and as near as damm it a gross return of 10% at $1.33 AND the interim dividend is just around the corner. Hmmm I think one can afford to be quite patient seeking a recovery in the SP when they're getting a 10% gross divvy yield.

Then you'd we wise to wait until a bottom SP was confirmed, possibly locking in an even better yield, especially if one thinks a recession is around corner. No point imho in rushing into these things until there's an obvious SP up trend delivering tasty yields and capital gains. Then again maybe you picked the bottom, there's a recent $1.32 price support precedent that suggests you might have. Not infallible, but worth keeping an eye on. Personally I'd rather leave a decision until the last minute.