HGH - Heartland Group Holdings

[percy]

http://www.independent.co.uk/news/bu...k-1478651.html

At the time Westpac shares were trading at $2.91....Last year Westpac paid out $1.85 in dividends.!!
I seem to remember Al Dunlap was feared more than his boss Kerry Packer.!!!!!!
I also remember Kerry Packer asking some accountant of a firm he was looking to/or had just taken over,what that was in the accountants.Oh that's our rainy day fund."Look son,its pissing down outside."
He had a certain way with words that focused people's attention.!!! lol.

[percy]

Not all bad mate. Many cutting back on cattle numbers and costs a bit during the dry season to relieve the cashflow, by taking advantage of high prices at the meatworks http://www.nzherald.co.nz/business/n...ectid=11461065

Thanks Iceman.Adds balance to the discussion.

[nextbigthing]

If good growth has done its thing, let's say Heartland continue to grow at a long term growth rate (g) of just 3%
Assume they move to a 100% payout ratio making them a divvy stock. Next dividend (D1) is equal to earnings per share, around 10 cents. Let's say a required return (k) of 10%. Ignore tax/imputation for simplicity.


SP = D1/(k-g)
SP = 0.1/(0.1-0.03)
SP = $1.43


This is assuming only 3% growth. Ie the market is seemingly currently factoring in either
a) lower growth than 3%
b) A higher required return than 10%
c) Or the market is discounting the stock for some other factor. Perhaps people are selling to raise some cash, anticipating a cap raising for a takeover of something like Fisher and Paykel which has been rumoured and therefore putting sell pressure on the price? Or perhaps some are anticipating a meltdown soon and are getting out early?

$1.43? Must be on sale at current.

[couta1]

NBT does there always have to be a logical reason for a share price drop in an illogical market?

[winner69]

If good growth has done its thing, let's say Heartland continue to grow at a long term growth rate (g) of just 3%
Assume they move to a 100% payout ratio making them a divvy stock. Next dividend (D1) is equal to earnings per share, around 10 cents. Let's say a required return (k) of 10%. Ignore tax/imputation for simplicity.


SP = D1/(k-g)
SP = 0.1/(0.1-0.03)
SP = $1.43


This is assuming only 3% growth. Ie the market is seemingly currently factoring in either
a) lower growth than 3%
b) A higher required return than 10%
c) Or the market is discounting the stock for some other factor. Perhaps people are selling to raise some cash, anticipating a cap raising for a takeover of something like Fisher and Paykel which has been rumoured and therefore putting sell pressure on the price? Or perhaps some are anticipating a meltdown soon and are getting out early?

$1.43? Must be on sale at current.

You greedy bugger, wanting 10% return

Its better owning the bank than putting money in the bank so 7% these days should be more than OK for a well managed BANK

Geez that's $2.50 v your $1.43

Bring it on eh

[Baa_Baa]

NBT does there always have to be a logical reason for a share price drop in an illogical market?

What is illogical about the market selling to de-risk its exposure to capital loss? It is more illogical to hold an entire portfolio in a sellers market and experience the capital loss.

If one decided for example to allocate say 33% of their holding to trading for equity growth and the balance just ride it out either way (assuming a long term confidence in the fundamentals), then selling that 33% when the chart screams .. 'sell' is not illogical, particular if that 33% is used to buy again when the chart screams .. 'buy'.

The alternative is to watch ones capital be eroded by the market sentiment and call it illogical. It is not the retail investors who drive the market, sometimes it's better just to follow the money.

[couta1]

Baa Baa the studies done on selling and buying based on market movements versus just holding for a given long term time frame show stuff all difference in end profit excepting that the buy and sell group have to work hard and suffer more stress to gain the same profit.

[nextbigthing]

You greedy bugger, wanting 10% return

Its better owning the bank than putting money in the bank so 7% these days should be more than OK for a well managed BANK

Geez that's $2.50 v your $1.43

Bring it on eh

I thought divvy stock to keep Roger happy, almost no growth to keep you happy Winner and premium to current price to keep Percy happy.

How do you arrive at $2.50 Winner?

[winner69]

I thought divvy stock to keep Roger happy, almost no growth to keep you happy Winner and premium to current price to keep Percy happy.

How do you arrive at $2.50 Winner?

Your DDM formula - your 10 cents dividend and your 3% growth but only 7% required return

[nextbigthing]

Your DDM formula - your 10 cents dividend and your 3% growth but only 7% required return

Aha quite right. Thanks. Lets then roll with $2.5, looks much better than $1.43

Can you dust off the fax machine and inform all the large brokers that that is in fact what HNZ is actually worth?