HGH - Heartland Group Holdings

[macduffy]

I wouldn't try to take my comparison of HNZ's shareprice performance with that of the other banks, too far beyond the macro issues of economic outlook and capital requirements. Remember that the Aussie banks' NZ business is only around 10% of their total business and that it is the parent company's shares that are being traded on the NZX - ANZ Group, not ANZ NZ; WBC, not Westpac NZ; NAB, not BNZ. Dairy farmers aren't a big part of the Aust economy and exposure to the industry in NZ, although significant for the local operations, aren't a major part of the Aust banks' overall lending.

[Master98]

methinks current HNZ share price is more related to FA than TA, I have three main concerns about HNZ: dairy section, harmoney lending, and reverse mortgage thats why i still sit on sideline after sold my HNZ shares at $1.4, i wait for HNZ give any clear indication.

[couta1]

Latest article in the Herald indicates there is considerable interest from overseas buyers to purchase dairy farms in NZ so HNZ are not likely to lose a lot in any fire sales, it will be the individual farmer who takes the hit after the bank has collected its share.

[Beagle]

Latest article in the Herald indicates there is considerable interest from overseas buyers to purchase dairy farms in NZ so HNZ are not likely to lose a lot in any fire sales, it will be the individual farmer who takes the hit after the bank has collected its share.

The main issue for HNZ mate is that they do a lot of lending to sharemilkers using the value of the herd as their sole security. Dairy cows liquidated at the freezing works can generate as little as $700 net return which isn't much good if HNZ have been lending based on 75% of the herd acquisition cost when it was $2,000+ a head is it ! The other issue peculiar to sharemilkers who as most of you know get 50% of the pathetic fontera pay-out is they have no ability to manage their cash flow through deferring maintenance on fencing, roads and tracks, plant and machinery acquisition deferral e.t.c. because that's not generally part of their deal, that deferral ability is something that's in the farm owners hand i.e the other side of the sharemilking partnership.

At least with normal dairy lending like BNZ, WBC and ANZ are doing they have the land as the primary security, (which at this point is holding up quite surprisingly well) and a normal dairy operation has a number of ways to massage their cash flow only some of which are mentioned above. I think its pretty clear from the relative SP graphs that HNZ are more exposed to this downturn than the other banks with proper first mortgage security over farmland.

[Hoop]

Speaking of technical analysis generally, as we all know one of the most recognised methodologies is the 200 day moving average and a clear breech of same being recognised as a change in fundamental underlying trend line for the company. I find it curious that so many who were extoling the virtues of this well recognised technical analysis tool when this decline started to take hold (for as long as HNZ's price was above that indicator), now seem so ready to abandon that methodology and revert to their own beliefs surrounding their own personal perception of fundamental value. Go figure ?

Agree...Just to add my lengthy 2c worth...

The MA200 indicator is just one tool of many for long term investors. It's a lagging indicator and triggers a sell signal often well after a downtrend pattern is already established, so many investors see this tool as irrelevant...My yesterdays chart shows the EMA200 (similar to MA200)recently being whipsawed, this is something that an less experienced TA disciplined long investors would hate and tempt that person to abandon the TA methodology...
However that person should see the MA200 for what it's purposes are and what it indicates..although the price/ma200 break is significant, its the slope of the ma200 line which matters.
A rule of thumb and one which unfortunately media thinks its Gospel is when the ma200 slope turns downwards it signals that this price weakness is not a bull market correction event but a cyclic reversal to Bear cycle.
Notice on my chart that the quicker and more sensitive EMA50 and EMA100 line slopes have developed a downtrend and for HNZ to get a downtrend ma200 slope more price decreases are needed....so HNZ not yet signaling a Bear cycle under the media's gospel.
Yes when the MA200 slopes downwards it could reflect a bear market cycle but when using any indicator there needs to be confirmations..

Other methods to confirm are:
1...a drop of >20%
2...The bull/bear support line is at 1.12 not marked on my chart.
3...many others

For the Optimists
My recent chart shows HNZ a pattern resembling a long term flagpole + the flag. Believe it or not this type of pattern is a bullish chart pattern..The pattern shows the irrational greed behaviour in the stampede to the top which quickly (fundamentally) overvalues the shareprice..This orderly downtrend result is investor rational reality being slightly more powerful than the irrational investors in denial and this rationality will bring the market back to where Mr Market now thinks it should be...perhaps we are nearly there at this level with the bull/bear line in sight at 1.12 ..perhaps not....who knows??...

TAers always tell investors 2 basic things... TA can not predict the future with certainty and "DO NOT rely on one indicator, or a single rule"...TA can be complex and incorporate many investor strategies, each with a set of tools, each with different entry and exit points when buying/selling shares. Because there are many TA strategy options there is often no right or wrong answer (TAers often at odds with each other) as those seemingly simple squiggly lines could just be a few tools in the toolbox of an very experienced TA investor using a very complex investment strategy.

However there are many much simpler/basic strategies which work reasonably well..The one I post on Sharetrader is a medium term "be patient and only act on confirming signals" strategy and is easy to understand and use.

For those investors that have patience weaknesses in their mental make up..my posted TA discipline would not be suited to them...Their better TA Strategy would be "Preemptive buy action at support areas" ...word of caution for those entering into HNZ now...preempting the market's future action is very risky....if using this risky strategy you must use the the "minimising risk" tools that comes with this disciplined strategy ... the most important of these tools is applying automatic stop/loss set just below the bull/bear line or atm lines or any other method such as analysing depth tables used by nonTAers...Automatic is underlined because its a must for most people...do not rely on your own judgements unless your mental strengths include abiding to rigid disciplines and/or highly experienced very successful investor with extremely good/proven "gut feel".

[winner69]

Hoop, I gave up on this flag poke thing

Yes a pretty flag pole and flag shown recently. But to form a new pattern wouldn't the flag pole need a pretty quick spurt up to 160?

I don't think that will happen ..so gave the hope of a new flag pole away.

Reverted to the I sees nothin, nothin approach ....especially useful with rose tinted glasses

[Beagle]

Hoop, I gave up on this flag poke thing

Yes a pretty flag pole and flag shown recently. But to form a new pattern wouldn't the flag pole need a pretty quick spurt up to 160?

I don't think that will happen ..so gave the hope of a new flag pole away.

Reverted to the I sees nothin, nothin approach ....especially useful with rose tinted glasses

Those with their heads in the sand don't need those either

[winner69]

Those with their heads in the sand don't need those either

Cool, an ostrich wearing rosé tinted glasses. Really cool

Wonder if some halos are losing some of their lustre as well. Good book that Halo Effect

[winner69]

Being Head of Strategic & Product Development I think its not unreasonable to infer there is some tension around the board table with how the new loan products are performing and / or some directors wanting a more traditional approach and / or potential disagreement with further new product initiatives.

As a separate matter it is very interesting to note the SP dropped in a meaningful way and on bigger than normal volume before this announcement came out. That in itself is not a good look as it suggests insiders are very disappointed with this key intellectual loss.

I been thinking about this Roger and I think you have raised a good point.

I have a feeling that Jonas wasn't pushing some of these new 'niches'. Maybe he was unhappy with the way HNZ was heading.

The announcement from HNZ on his leaving was nice enough but not written in a 'we are really sad to see him go and he will be a huge loss' sort of way

Interesting chatter in the pubs last week

[Beagle]

I been thinking about this Roger and I think you have raised a good point.

I have a feeling that Jonas wasn't pushing some of these new 'niches'. Maybe he was unhappy with the way HNZ was heading.

The announcement from HNZ on his leaving was nice enough but not written in a 'we are really sad to see him go and he will be a huge loss' sort of way

Interesting chatter in the pubs last week

Yeah mate I definitely picked up on that and I think this is potentially an interesting lead indicator for a possible dramatic rise in loan delinquencies from recent new product initiatives. I've seen FAR more favourably written goodbye's than that. Written in a way where they said the minimum they could to show the minimum required respect. No way they parted on really happy terms, in my opinion.
The fact he left at all should be a concern for thinking investors. I'd speculate they've lent >$100m through Harmoney now and what's the bet the loan collection process and delinquency rate is anything but harmonious