HGH - Heartland Group Holdings

[iceman]

Wonder how long it is before we see a" becoming a substantial holder" from Tainui?

Washington Securities might beat them to it

[percy]

Washington Securities might beat them to it

Yeah right.!
I note on the last shareholder's list, that I have seen,loo baller Bernard Whimp has sold his 2,000,000 HNZ.
Unfortunately he would have made a huge profit.

[Snoopy]

36(a) from this years accounts gives the game away:

Attachment 4827

Fig 2 From the Heartland New Zealand 2013 Full Year Financial Statements.

So whereas in the 2012 Accounts, credit risk exposure covers only Finance receivables this has been extended to all financial assets including cash in banks, bonds etc.
The only question is why were these not included last year, after all they do have some risk attached to them?

Interesting that Heartland are now classifying credit risk of financial assets (including cash in banks and bonds etc.) on a geographical basis too.

If we look at the FY2013 results the comparative geographic credit risk for FY2012 (note 36b) is listed as follows:

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Auckland: $653.517m
Wellington: $120.469m
Rest of North Island: $482.342m
Canterbury: $584.086m
Rest of South Island: $365.112m

(Total = $2,205.116m)

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Now go back to the FY2012 Full Year report where ostensibly the same information is displayed in Note 32aiii

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Auckland: $548.451m
Wellington: $101.791m
Rest of North Island: $480.287m
Canterbury: $583.848m
Rest of South Island: $363.899m

(Total = $2,078.276m)

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That comparison highlights the following differences:

Auckland: $105.066m
Wellington: $18.678m
Rest of North Island: $2.055m
Canterbury: $0.238m
Rest of South Island: $1.213m

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As PT has highlighted in the quoted post, the difference is because the definition of "Finance receivables" from FY2013 has been extended to all financial assets including cash in banks, bonds etc.

What this actually means is that for FY2013, HNZ have distorted the actual geographic spread of their risk by including financial assets in bank accounts that could reside in any geographic centre they choose. That I think is a backward step for informing shareholders where the real geographic risks lie.

SNOOPY

[Snoopy]

SNOOPY;
Loan book balances ,funding.
First of all HNZ have no funding issues. None. Xerof explained this.
Do not look for issue here as there are none.
Changing balances in lending.This is and will continue to change as HNZ concentrate on more profitable niches.
What we will see is better ROE and EPS figures.
Property loans.Again HNZ have faced up to them.Making huge progress.Arguing over this is a waste of time. Whether they realise the $60mil at 30/6/2114 or $70mil or $50mil will alter the momentum not one bit.

The problem with you and HNZ Percy, is that you now have so much skin in the game of HNZ, that you can no longer discern that anything going on at HNZ is less than 100% perfect. You are correct that the timing and amount of repayment of bad loans will not affect the ongoing new business momentum of HNZ. But that is not the main issue of concern to me anyway. Personally I do not take the projections of HNZ management as given, until they can build a track record through a business cycle, as the likes of TUA have done with their finance division. To me the main issue with HNZ has always been capital liquidity.

If the company falls into a liquidity trap over the next six months, then earnings do not matter. HNZ will be forced to stop trading until it is recapitalised, no matter what the underlying earnings trend.

Back in 2008 there were many finance companies with positive underlying earnings trends. Those finance companies were lending into the exact same markets as Heartland does now. But many shareholders and depositors lost all their capital invested in those companies just the same. The lesson from the GFC for finance companies was that liquidity was king. It still is.

SNOOPY

[Snow Leopard]

PERCY!!!!

That d*** yapping dog is in the yard again!

[percy]

The problem with you and HNZ Percy, is that you now have so much skin in the game of HNZ, that you can no longer discern that anything going on at HNZ is less than 100% perfect. You are correct that the timing and amount of repayment of bad loans will not affect the ongoing new business momentum of HNZ. But that is not the main issue of concern to me anyway. Personally I do not take the projections of HNZ management as given, until they can build a track record through a business cycle, as the likes of TUA have done with their finance division. To me the main issue with HNZ has always been capital liquidity.

If the company falls into a liquidity trap over the next six months, then earnings do not matter. HNZ will be forced to stop trading until it is recapitalised, no matter what the underlying earnings trend.

Back in 2008 there were many finance companies with positive underlying earnings trends. Those finance companies were lending into the exact same markets as Heartland does now. But many shareholders and depositors lost all their capital invested in those companies just the same. The lesson from the GFC for finance companies was that liquidity was king. It still is.

SNOOPY

Yes I agree with you Heartland's track record is 100% perfect.
Yes I have overweighted our portfolios because I see them being undervalued.
Yes I see them achieving over 15% growth rate per annum for the next few years.
Yes I see them increasing their dividends.
Yes I see them expanding their motor vehicle loan book.
Yes I am pleased with the make up of their loan book and think the areas they are expanding into will be worth while.
Yes I am pleased with their sources and spread of funding.There are no liquidity issues.
Yes I am pleased with the extra security and safety supplied to shareholders that HNZ having a banking licence means HNZ has to answer to the Reserve Bank banking requirements.
Yes I expect our HNZ investment to out perform our TUA investment.
No I do not take your concerns seriously.Unfortunately your record on this thread is hopeless.,Time and again you have woken up to this yourself,or else other posters have had to correct you.

[percy]

PERCY!!!!

That d*** yapping dog is in the yard again!

Thinking of putting the hose on him.!!!
Yet we must remember his posts allways have a positive affect on the HNZ share price.!!! lol.

[RTM]

Well....I have a few Heartland as well. I can swing from either very happy on reading Percy's posts...to being quite concerned after reading Snoopy's ones . Must admit, pleased overall to have both perspectives argued. There are risks in everything, I wonder who is more correct, Percy or Snoopy ? Time will tell I guess. I'm not inclined to sell what I have, neither am I inclined to add. I do feel there must be a place in the NZ market for a glorified finance company doing the kind of lending that Heartland does. Right ?
Cheers for the mood swings Snoopy and Percy, might watch a replay of last race to cheers me up. Go TNZ

[percy]

Well....I have a few Heartland as well. I can swing from either very happy on reading Percy's posts...to being quite concerned after reading Snoopy's ones . Must admit, pleased overall to have both perspectives argued. There are risks in everything, I wonder who is more correct, Percy or Snoopy ? Time will tell I guess. I'm not inclined to sell what I have, neither am I inclined to add. I do feel there must be a place in the NZ market for a glorified finance company doing the kind of lending that Heartland does. Right ?
Cheers for the mood swings Snoopy and Percy, might watch a replay of last race to cheers me up. Go TNZ

Being a shareholder in Heartland I think you would be best to rely on your own judgement,dyor.Should cure any mood swings.
Why you should be concerned after reading Snoopy's posts beats me.His record is 100% wrong.
Too much wind on the water too.!!!

[Snoopy]

Well....I have a few Heartland as well. I can swing from either very happy on reading Percy's posts...to being quite concerned after reading Snoopy's ones . Must admit, pleased overall to have both perspectives argued. There are risks in everything, I wonder who is more correct, Percy or Snoopy ? Time will tell I guess. I'm not inclined to sell what I have, neither am I inclined to add. I do feel there must be a place in the NZ market for a glorified finance company doing the kind of lending that Heartland does. Right ?

Yes there is definitely a place for a finance company called Heartland, RTM. The learners banking mask that the Reserve bank has loaned to Heartland should help bring in the much needed new supply of customer deposits. Whether Heartland succeed over the next five years, well let's just say that the next six months will be the most difficult time from a cashflow perspective.

Heartland look to be ahead of their own game plan selling down their troubled non-core profit portfolio. But are they just selling off the easy stuff first? There is no way to know.

Meanwhile governor Wheeler is saying interest rate rises are on the way. That means that Heartland will have to start paying more for new deposits while they are unable to pass on those higher costs into their existing longer term loans. That squeeze effect has to hurt Heartland shareholders in the short term. And we have to remember that Heartland are only just holding onto an investment grade credit rating, and the rating agencies have given them a negative outlook. If Heartland slip just one notch to C+, will they still be able to call themselves a bank?

The question is not who will be 'right' about the fate of Heartland because the fate of Heartland is not predetermined. The question is who is better at assessing the potential risks and rewards and making an informed investment decision based on all possible future outcomes right now. Since Percy doesn't believe there are any risks he has already lost that battle by default. Of course that doesn't mean that Percy won't win the war and sail off into the distance on his Heartland retirement yacht. But just because Captain Percy in his bliss doesn't see any icebergs, that doesn't mean they aren't there.

SNOOPY