HGH - Heartland Group Holdings

[dingoNZ]

This is a really interesting question Roger that I suspect has no "correct" answer. My HNZ holding is now 25.6% of my NZX holdings. It will get higher as I am in the DRP and am investing my spare cash overseas at present rather than the NZX. But I am very comfortable with it so will not sell. I agree with Percy above that we have to trust our own judgement with this !

I was always told minimum to hold 13 different stocks in different industries to maintain diversification. Currently I am am about 20 in AIR and pretty happy with that. I think it depends on the investor and their personal views on the market/economy/company and their own comfort.

[kizame]

There have been a few occasions when HNZ was 100% of my holdings,and am planning that scenario again,trading the trend.
You have to have faith that the stock is reasonably cheaply priced,very good quality,and of course trending upwards.
I am very comfortable with taking a more aggressive approach,so long as you watch the markets,the charts,and have a stop loss.
the beauty of Heartland is I can have a tight stop loss as it isn't that volatile.

[SCOTTY]

Thanks. It does beg the question of how much is too much ?

I am curious as to what others consider as the maximum sensible limit of one's portfolio to have in any one stock ?

20% as an absolute maximum ?

I am definitely overweight with HNZ at around 40% of my portfolio. Frankly I just can not see any other stocks which are showing a gross 10% yield with good growth potential in a relatively stable investment sector that temp me to look elsewhere at present.

I would be most interested to hear of better alternatives to HNZ as other high yielding stocks such as the power companies and some retailers in particular tend to have either limited/riskier growth potential or in the case of PGW fluctuating seasonal earnings?

Please tell me. What are the better long term buys than HNZ at present?

[Snoopy]

Thank you. I needed reassurance on my largest portfolio investment. You deserve others paying a fee for your personal research.

I always advocate a policy of DYOR Tevita. Never get too comfotable with what I or others write here.

I have slightly back-tracked on my diagram in post 3843 Tevita. The basic message is unchanged. But after doing some benchmarking, I have decided to remove the intangible assets from the equity column. This has the effect of making HNZs position under debt shock a little more risky.

I had a psychological tug or war with myself while doing this. On one hand, Heartland have only just bought their HER portfolio. So it seems inappropriate to argue just months later the $25m of goodwill they saw fit to buy is worthless. OTOH, if the company was in troublein the future, one might argue the overall banking environment had changed so that historical goodwill could not be relied upon as having value. In the end, this latter view won out.

In doing this I have also valued the goodwill associated with software used in the company as zero as well. Perhaps that is harsh. But I am not sure that in a difficult situation, legacy software platforms have much value. I will be pleased to hear counter arguments if others fell I have done the wrong thing.

SNOOPY

PS I have also changed the minimum equity requirement in 2014 to 12% of the loan book as pointed out by PT

[couta1]

I'm leaning toward the 10% rule these days bar retirement stock and both Sum and Ryman have made up as much as 50% of my portfolio total at one stage or another(Sum currently at 30% and Rym 15%) with such a strong tailwind and ever increasing need I'm happy to hold higher percentages in this sector.I got burnt badly with CNU last year and had 30% of my portfolio in there at the time OUCH so any stock that has too much possibility of political interference and or regulation I won't break the 10% rule going forward. Regarding Tech stocks I would not have any more than 5% max of total portfolio in any one stock going forward but currently have higher percentages in Xro/Peb and Dil all running good sized paper losses, these are some of the rules I have set myself from the lessons I've learnt. Disc- Very happy with the HNZ portion of my portfolio

[percy]

When I first look at a company I find I get a clearer picture of their financial position if I take out intangibles and goodwill.

[Tevita]

Do we have access to the categories of those borrowing from HNZ? Percentages of the total would be an indicator to risk factors as we read volatilities in different sectors of the economy. Exchange rate movements hitting/aiding farmers. Reciprocal trade sanctions re the Ukraine debacle . The long term reliability of farmers depending on China as a market. When China sneezes who catches a cold? Australia has already.

I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?

In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.

With it`s entry to reverse mortgage lending by HNZ we are talking primarily about the elderly as borrowers . They are easy to categorize though with a broad brush.

If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.

[percy]

All this information is given in HNZ's annual report and company presentations.

[winner69]

Do we have access to the categories of those borrowing from HNZ? Percentages of the total would be an indicator to risk factors as we read volatilities in different sectors of the economy. Exchange rate movements hitting/aiding farmers. Reciprocal trade sanctions re the Ukraine debacle . The long term reliability of farmers depending on China as a market. When China sneezes who catches a cold? Australia has already.

I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?

In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.

With it`s entry to reverse mortgage lending by HNZ we are talking primarily about the elderly as borrowers . They are easy to categorize though with a broad brush.

If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.

There is summary data in the pretty pictures in te presentations

The Annual Accounts has heaps of detal, in particular Note 37

Does $77m lending to Manufacturers worry you, or is the $469m to the Agriculture sector

[Tevita]

Pretty pictures ! Beauty is in the eyes of the beholder. Statistics are more telling . 36" x 24" x 36".