Nice summary.
Some of the left leaning socialist views expressed on this page are quite surprising from one that clearly knows the basics of capitalism 101 extremely well, not you mate this is directed at someone else.
Some could be forgiven for thinking a certain poster sold down their position and is trying to jawbone the SP down.
Hopefully this post turns the page...as much of this one simply isn't worth reading, opps did I really say that out loud lol
Damm it didn't. Okay... best I post some more content then.
I watched HNZ's elongated new reverse equity mortgage television advertisement this morning.
Leaving aside the issue of whether this makes a quick and punchy / cost effective campaign or not...
It certainly makes an emotional argument about helping older folks stay where they belong in their own homes where they feel most comfortable.
A left leaning anti capitalist would of course try and make the argument that such loans to old folks are a scandal seeing they're at greater margins that for regular bank loans and seeing as potentially they could make quite a significant impact on the next generations inheritance.
On the other hand a right thinking capitalist would make the case that they're providing a profoundly valuable service helping our seniors stay in their homes and enjoy a quality lifestyle or much needed medical services or whatever other thing an older client might like.
Remind me again who's equity in who's home is it and who's right is it to make their own decisions about spending some of it ?
Its all about one's perspective...
I think with all due respect to our friends apparently new found social conscience, references to shylock type lending rates are best directed at the pay day lenders charging exorbitant interest rates.
I wouldn't invest in one of those payday lending operations as a matter of principle and I would venture to suggest many shareholders in HNZ would find the suggestion that their bank is a shylock operation quite offensive.
Have we turned the page yet ?
No Okay...what else.
Well many will be somewhat perplexed by this weeks turn of events with Quadrant private equity's apparent placement of the stake it already had from its ownership of Seniors limited when their stake of 43m shares vested, came out of escrow.
A certain experienced accountant should have been alerted by the term "in specie" but bought anyway thinking the overhang had gone.
Lesson for the week, carefully read and digest the full content and meaning of company notifications.
So what to make of this peculiar arrangement ?
We see its been placed in two of quadrants funds which possibly suggests either:-
1. Its been placed there to stay more permanently than would have been suggested by the previous press release saying they were going to sell their stake
2. Quadrant don't think this is the opportune time to sell.
3. Both of the above.
It seems to me that the market was extremely well informed of their intention to sell down as expressed many months ago
To my mind its extremely rare for a major shareholder to signal their intent so many months in advance and the market very clearly anticipated a placement of some sort with most major institutions withdrawing their bids in recent weeks.
The subsequent effect on the SP was plain for all to see.
Seeing as the market was so primed for a placement and one didn't occur what do we make of this ?
Its appears to me Quadrant simply aren't prepared to sell into a placement that would probably have had to be made in the low $1.20 range to get the volume away and done and dusted.
At the minimum we can draw the conclusion reading between the lines, (those of us interested in such capitalist ramblings and theories that is), that Quadrant as an activist private equity fund with a long and well established and reputation, see value in HNZ at the current level..so maybe the silly old accountant who thought the overhang had gone and bought anyway, wasn't so silly after all
Surely this elongated post turns the page of some strange previous left wing ramblings.
No okay its time for an update and some fundamental analysis then.
Consensus broker estimates for the year to 30 June 2015 are 10.2 cents per share. This puts them on a 2015 PE at $1.29 of 12.64 which in my view is very cheap for a bank growing EPS at a very healthy rate.
Consensus broker estimates for the year to 30 June 2016 are 11.0 cents per share.
Prospective Dividend Yield 2015.
We have 3.0 cents fully imputed in the bank as we know. I'm expecting 4.5 cents fully imputed for the final divvy so that's 7.5 cents fully imputed for the year. 7.5 / 0.72 = 10.417 cents gross or a gross divvy yield of 8.07%.
Prospective Dividend Yield 2016
The company has a good record of growing dividends so for those that think a minimum of one year ahead, (the writer included), we could estimate dividends next year at 8.5 cps fully imputed or 11.81 cents gross. This puts HNZ on a prospective 2016 gross dividend yield of 9.16%.
Obviously this is vastly higher than what you'll get out of any of the Australian owned banks, one or two of which only offer partial imputation with their more meagre dividends.
9.16% divvy yield and with the prospect of growing steadily in subsequent years is enough to get any dividend hound with any kind of vague idea of sniffing for a big steady feed absolutely salivating with delight.
It seems I need some help to turn the page so would some else please chime in with some worthy insights.
More content on how banks actually help their clients grow their business and help our older folks enjoy staying in their homes would be most welcome
Crikey this turned into a very long page, probably not helped by this post lol
Still we have yet to turn the page so its time for more debate...Are Banks Evil ?
Well that depends, banks are a necessary Evil but they don't have to be EVIL.
So what makes a bank Evil ?
Some perspective. Do we see HNZ leveraging themselves by a factor of 800 in the derivative markets and making what amounted to a one-way bet on the derivative market such that if the bet failed there was no choice but to socialise the losses like a certain American bank did ?
Do we see HNZ packing up bunches of extremely dodgy loans and securitising them and encouraging Standard and Poors to rate there CDO's as AAA and sell them to an unsuspecting public that didn't understand those investments like another American Bank did and Forsyth Barr did with their Credit Sails CDO's they sold to unsuspecting elderly clients as a safe and sound fixed interest product !!
No we see fair and reasonable interest rates for the risks involved.
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Originally Posted by Roger
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