HGH - Heartland Group Holdings

[Xerof]

I am a fresh investor in the company so don't have any bad feelings of previous mischief from when they were separate instos.

you have exposed the 'problem' as to why it trades below nta. I have tried to make this point before, and it remains a key reason for my reluctance to become a shareholder

almost everybody who owns these is pissed off, under water to varying degrees, or is impatiently waiting to see some action. In addition to those who have these in their portfolio at ~88 cents, you have subunderwriters to the cap raise from 75 and 65, and (possibly/probably) the "smarts" who took PGC's holding off them cheap, looking for an exit as well.

it's no wonder it can't gain traction!

that said, percy will have his day in the sun, it's a matter of having the patience to hold them for another few years

[percy]

you have exposed the 'problem' as to why it trades below nta. I have tried to make this point before, and it remains a key reason for my reluctance to become a shareholder

almost everybody who owns these is pissed off, under water to varying degrees, or is impatiently waiting to see some action. In addition to those who have these in their portfolio at ~88 cents, you have subunderwriters to the cap raise from 75 and 65, and (possibly/probably) the "smarts" who took PGC's holding off them cheap, looking for an exit as well.

it's no wonder it can't gain traction!

that said, percy will have his day in the sun, it's a matter of having the patience to hold them for another few years

Thanks Xerof.
As I have come to expect from you an excellent post with very valid points.Heartland will not happen overnight.It is however happening,and your advice to be patient should be remembered by all Heartland investors.I well remember selling my Ryman, that I got at the float,after a couple of years as "they didn't seem to be doing much."I certainly am looking forward to my "day in the sun".!!!!

[mouse]

In the interim, people are going to sell some of the shares once the price looks acceptable, and hold the rest. So it is not just fed-up investors who are looking to sell all, it is quite a few who need to balance their share holdings and get some of the new John Key opportunities. Which will see more value? How much to have in HNZ? So the SP could well be under pressure for two years. Having said that, a price around 70 cents could well be satisfactory for a handy number of investors.

Thanks Xerof.
As I have come to expect from you an excellent post with very valid points.Heartland will not happen overnight.It is however happening,and your advice to be patient should be remembered by all Heartland investors.I well remember selling my Ryman, that I got at the float,after a couple of years as "they didn't seem to be doing much."I certainly am looking forward to my "day in the sun".!!!!

[Dej]

Hi all,

I am beginning to think there is gold in the Heartland.

If you refer to page 20 of the 2012 annual report

http://www.heartland.co.nz/_upload/r...eport-2012.pdf

You will see there is total equity of $375m, which includes $20m of goodwill (there is $22m of intangible assets, of which $2m is software)

Strip out the goodwill, and the company is worth $355m.

There is around 389m shares on offer, which suggests that $355m/389m = 91c per share.

Current price is 68c, or 33% less the net asset backing less goodwill.

What am I missing here?

Its a startup bank is what I would have said? Correct me if im wrong

[kizame]

Your missing nothing Sparky,it has been stated all along there were about 89cents of nta/share,the fact the market doesn't reflect this is a mystery,but inevitably they will claw their way back to reflect that value I guess when they prove an increasing bottom line.
However the fact the market has risen so much,and is roaring ahead whilst HNZ languishes, and is also a safer bet than most at current valuations hmmn. I can only suggest they will have their day when the rest of the market corrects,and people start looking for cheap overlooked stocks.I still think this stock will be excellent accomodation for my share investment dollars.Patience.

[kizame]

For me there are no negatives with this company,it is holding it's value at the most at the mo.
But I'm looking for the boring steady performer to eventuate,once runs start to be scored.
I guess for you,you just need to wait for the move above 70c,and don't need to do anything until that happens.

[percy]

I don't think it is a startup bank, not like Kiwibank was ten year ago. I think that misunderstands Heartland's position.

It is already one of New Zealand's bigger finance companies (that isn't hard after the GFC), but the banking license is not the start of a new business altogether, but represents an opportunity for cheaper and sustained organic growth from around $2b in lending already. They already have offices around the country that could act as branches for retail banking in provinces or various financial services for sectors like agriculture and insurance. Their agricultural finance can leverage off the retail network that PGG Wrightson has.

They don't technically need to open a branch in every suburb, and they don't appear too be going head to head for the kind of customers that Kiwibank want.

They look much more like a specialist agricultural bank, perhaps like Rabobank if you will.

With the rise of the internet, and the embracing of the internet by farmers, Heartland won't need a traditional bank structure anyway for services that are more geared around business and agricultural lending. Mobile reps with iPads and mobile printers can come to the farmer and sign the loan over a hay bale.

Great to have you on board.You have summed up HNZ exactly as I see it.Look forward to your future HNZ [and other companies] posts.

[percy]

For me there are no negatives with this company,it is holding it's value at the most at the mo.
But I'm looking for the boring steady performer to eventuate,once runs start to be scored.
I guess for you,you just need to wait for the move above 70c,and don't need to do anything until that happens.

Well Kizame,you and Sparky have made my day.Great posts.
Don't think it will be to long before we see runs scored.Every result just seems to get better.

[blobbles]

Hi all,

I am beginning to think there is gold in the Heartland.

If you refer to page 20 of the 2012 annual report

http://www.heartland.co.nz/_upload/r...eport-2012.pdf

You will see there is total equity of $375m, which includes $20m of goodwill (there is $22m of intangible assets, of which $2m is software)

Strip out the goodwill, and the company is worth $355m.

There is around 389m shares on offer, which suggests that $355m/389m = 91c per share.

Current price is 68c, or 33% less the net asset backing less goodwill.

What am I missing here?

Heartlands share price should be in the 90c to $1 mark, given both their NTA and their profits are about 6c per share plus their excellent equity position. See the previous few posts why it isn't there though, pissed off holders keeping the price down most likely.

People claim there aren't any bargains to be had on the NZX obviously aren't looking at these guys. They are my largest holding, not because I expect a capital gain but because I expect an excellent and growing rate of return. My pick is a 6-10c dividend this year, at below 70c SP, thats a damn good bargain.

Remember they are sitting on quite a bit of cash, are a fully NZ funded and new bank in a banking environment that is highly profitable and has lots of customers who will switch loyalties for a higher rate of return (and check out thei current savings account rates, 4.5% for 1 year TDs and much better saving account rates than the other banks). Their growth, should they play their cards right, which they seem to be, should be assured.

[Penfold]

I considered buying late last year. I decided not to based on the unknown costs (on-going and one-off) of bank registration, the amount of loans they must have in Canterbury that are still the subject of claims, and the cost of new branches and consolidation of others.

I like the target market they are aiming at. I don't know if they have the economies of scale to prosper in an all out mortgage war between the majors.

Will keep an eye on them, but suspect they will plod along for some time yet.