HGH - Heartland Group Holdings

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:-))))))))))

DYOR ... No.. Just wind percy up and you get all the info ... :-))))))

[Snoopy]

My post #14 on 02-10-2014 on ASX thread ARI [Arrium] I did say "I would be very careful with your NTA." A warning foolishly ignored as were other posters warnings.

I hesitate to reply to this post at the risk of going too far off topic. But I do want to say something about 'asset values' which applies to banks in general and Heartland being a financial institution.

A commodity asset that has 'earning power', has its value determined by the commodity price (and that includes the iron ore price or the milk price as examples). That asset will go up and down in value depending on the open market value of that commodity. If you borrow a lot of money when commodity prices peak to buy such an asset, then you are likely in for a hiding (i.e. the bank may want to repossess your asset and sell it off as the market plunges to allow recovery of the bank loan used to buy it) should the underlying commodity price fall. This means that if you buy into a 'commodity asset', be it a herd of cows or an iron ore deposit, you need to be aware of the likely fluctuations in the future of that commodity and the flow on effect that may have for your investment. If you guess the price path of your underlying commodity wrongly, then you can get cleaned out. If you guess right , then you can make big dollars while everyone else is running around like a headless chicken screaming the sky is falling.

The failure of my investment in Arrium was not because I guessed the iron ore price path wrongly. In fact shortly after receivership (receivership occurred while all loan payments had been made up to date and on time and when the company was in full compliance with their banking covenants) , the iron ore price recovered. IMO, with the support of the banks, Arrium could (should?) have traded out of its difficulties. The problem was that Arrium was tipped into receivership because the board thought that if the iron ore price stayed low, then the company would break its banking covenants. The receivership was triggered by a scenario that might have happened but never did. It turned out that the board was unnecessarily pessimistic in their iron ore price forecasts, but by then the die was cast. The board severely pissed off all of the big four banks in their banking syndicate (Rule 1 in business: you can get away with pissing off a banker, but not every banker in town). As a result no banker was prepared to refinance the company out of its (short term?) difficulties.

In short, buying Arrium shares at a price that looked like a too good to be true discount to asset backing was not the problem. The problem was that the humans at the top of each corporate tree lost respect for each other and went down a path that saw the banks lose a lot and Arrium shareholders lose everything. Endless studying of the NTA or other financial figures could never have predicted or saved shareholders from such an outcome. Arrium was a punt I lost. But it was at no time as reckless a punt as some on this forum seem to think.

SNOOPY

[percy]

Serious investors do not bet,gamble , take punts,or go on gut feelings.
As you have proved,with ARI it does not work.
Investment rules;
No.1.Do not loose capital.........Failed.
No2.Refer No,1.......................Failed.
No.3.Refer No.2......................Failed.

[iceman]

If the sale doesn't go through I can't see ANZ giving it away mate, they're not desperate sellers and its a pretty big company for HBL to consider buying but I agree that we live in interesting times and we are of course, "well positioned"

Agree. Didn't suggest HBL would by them, just that it will be interesting to see what happens. But it is a possibility :-)

[Joshuatree]

Serious investors do not bet,gamble , take punts,or go on gut feelings.
As you have proved,with ARI it does not work.
Investment rules;
No.1.Do not loose capital.........Failed.
No2.Refer No,1.......................Failed.
No.3.Refer No.2......................Failed.

"Oh Lord its hard to be humble when your'e percy in every way"

[Snoopy]

Serious investors do not bet, gamble , take punts, or go on gut feelings.

Actually serious investors do all of the above. No doubt Heartland goes through exactly a process like this when they draw up loan agreements with customers. With the rider that 'bet' 'gamble' or 'take a punt' is not akin to spinning the roulette wheel. Taking an investment bet is all about:

1/ looking at the possible outcomes. I usually simplify it down to an 'if it goes wrong scenario'. An 'if things carry on as usual scenario' and an 'if growth plans come to fruition scenario.'
2/ looking at the payoff of those outcomes in dollars. Let's call them D1, D2 and D3
3/ looking at the likelihood of these outcomes. Let's call the probability of each event 'p1, p2 and p3.

Then you do the sum:

(p1 x D1) + (p2 x D2) + (p3 x D3) =

And if you like the result (i.e. it comes out positive enough), you invest. Sometimes the actual result can come out negative, despite your best research. You can't be sure what will happen at the time you do invest. To claim you only invest in successful investments is just disingenuous.

As you have proved,with ARI it does not work.
Investment rules;
No.1.Do not lose capital.........Failed.
No2.Refer No,1.......................Failed.
No.3.Refer No.2......................Failed.

Investment results are not predetermined, and in general the result are not of binary importance (i.e whether you have 'a win' or 'a loss' is not important in itself). What matters is if the overall strategy works. While I am in broad agreement with your point Percy, I always manage my investments at a portfolio level. I have already recovered all of my Arrium losses on other investments. So overall I haven't lost any capital as you claim.

SNOOPY

[themadhatter]

Actually serious investors do all of the above. No doubt Heartland goes through exactly a process like this when they draw up loan agreements with customers. With the rider that 'bet' 'gamble' or 'take a punt' is not akin to spinning the roulette wheel. Taking an investment bet is all about:

1/ looking at the possible outcomes. I usually simplify it down to an 'if it goes wrong scenario'. An 'if things carry on as usual scenario' and an 'if growth plans come to fruition scenario.'
2/ looking at the payoff of those outcomes in dollars. Let's call them D1, D2 and D3
3/ looking at the likelihood of these outcomes. Let's call the probability of each event 'p1, p2 and p3.

Then you do the sum:

(p1 x D1) + (p2 x D2) + (p3 x D3) =

And if you like the result (i.e. it comes out positive enough), you invest. Sometimes the actual result can come out negative, despite your best research. You can't be sure what will happen at the time you do invest. To claim you only invest in successful investments is just disingenuous.

SNOOPY

Spot on. Thats 200-level finance learnings right there.

[percy]

Actually serious investors do all of the above. No doubt Heartland goes through exactly a process like this when they draw up loan agreements with customers. With the rider that 'bet' 'gamble' or 'take a punt' is not akin to spinning the roulette wheel. Taking an investment bet is all about:

1/ looking at the possible outcomes. I usually simplify it down to an 'if it goes wrong scenario'. An 'if things carry on as usual scenario' and an 'if growth plans come to fruition scenario.'
2/ looking at the payoff of those outcomes in dollars. Let's call them D1, D2 and D3
3/ looking at the likelihood of these outcomes. Let's call the probability of each event 'p1, p2 and p3.

Then you do the sum:

(p1 x D1) + (p2 x D2) + (p3 x D3) =

And if you like the result (i.e. it comes out positive enough), you invest. Sometimes the actual result can come out negative, despite your best research. You can't be sure what will happen at the time you do invest. To claim you only invest in successful investments is just disingenuous.



Investment results are not predetermined, and in general the result are not of binary importance (i.e whether you have 'a win' or 'a loss' is not important in itself). What matters is if the overall strategy works. While I am in broad agreement with your point Percy, I always manage my investments at a portfolio level. I have already recovered all of my Arrium losses on other investments. So overall I haven't lost any capital as you claim.

SNOOPY

Sounds a great theory.?
However my usual solid research meant the following.
1] Made heaps investing in HBL, and kept increasing my investment each time they added more runs to the board,
2] Did not loose any capital in ARI,because I did not buy any,as its chances of survival were slim.Left them to the punters.
So $10,000 punted in ARI is $10,000 of capital lost.Gone.!
The same $10,000 invested in HBL is worth well over $30,000 today.ie $30,000 difference.
So "solid: research has again beaten "theory."
No surprises there.!
NB. I did share my research with everyone here on Sharetrader.All the meetings I went to,all the presentations I attended,all the phone calls I made to HBL directors and management.
Did any of the percy HBL knockers do the same.? No, they relied on theory?.Tough.!
Did I get lucky? Funny, the more reasearch I do the luckier I get.

[Felonius]

You are wonderful Snoopy. I admire the way you respond to ongoing rudeness & put-downs by Percy and others without responding in kind.
Sharetrader provides the opportunity for followers to hear different points of view, and surely that is the nature of share-trading - one person makes a decision to sell whilst another is buying !

Your contributions to Sharetrader are appreciated by many.
Thank you.

[percy]

You are wonderful Snoopy. I admire the way you respond to ongoing rudeness & put-downs by Percy and others without responding in kind.
Sharetrader provides the opportunity for followers to hear different points of view, and surely that is the nature of share-trading - one person makes a decision to sell whilst another is buying !

Your contributions to Sharetrader are appreciated by many.
Thank you.

I am sure everone here on Sharetrader, who prefers fiction to non-fiction reading, would agree with you...lol.

l