HGH - Heartland Group Holdings

[Beagle]

I think its more rewarding to invest when both the technical indicators and the fundamental analysis show concurrent buy or hold signals.
I maintain this is a fairly simple stock to run fundamental analysis on. The company is transparent and reliable with its forecasting and there are at least six other comparatives listen on the ASX to compare it with. Further, banks have traditionally traded on low PE's due to their vulnerability to bearish economic cycles and traditionally have traded in the 12-15 PE multiple range.
When they trade well outside of that range and are approaching twice NTA its clear the SP had got too far ahead of itself, (was trading at a whopping 4 PE premium to its peer group at $2.14) which I made quite clear at the time represented a timely exit point.
Good stock to date when the fundamental's and technical's line up, (which they clearly don't at present). You don't have to be married to a stock, just own it when it's cheap or cheapish. I think its approaching fair value now but the momentum is clearly to the downside and looking at the extremely bearish chart I think its quite possible this could overshoot on this correction.

I see fair value at about a 13-13.5 forward PE on about 12.4 cps = $1.64, so with this sizeable correction we are almost there but I think there's a better than 50% chance this overshoots down into the $1.50-$1.60 zone.

[Baa_Baa]

Personally I think tonight has been more enlightening than many months of discussion, one side versus the other without having really known where each side is truely coming from. Both are right, it just depends on ones circumstances which discussion groups are notoriously ignorant of. Until now.

So where to from here?

Retirees and others who bought HBL long ago are sitting on multiples of capital gains and enjoying the recurring EPS growth and sustained increasing dividends. Their advice is to be taken in context with those circumstances. It is understandable and completely relevant that they would ignore capital fluctuations while the underlying fundamentals support their investment decisions and income oriented profile.

Capital sensitive investors will be out, despite the dividends as the capital losses outweigh the income generated. They will also be looking for a re-entry at fair or under value SP, exposing themselves to capital upside and income (dividend) streams. Until that changes. Then they will forgo dividends by selling and locking in capital gains.

Traders will also be out, they will have exited months ago, but still be looking for a re-entry while the fundamentals suggest HBL has a future SP upside appreciation. They probably are astute enough to be able to pick a re-entry at some SP that is within coo-ee of a bottom. They will ride out a bottom if they enter too early and ride up an appreciation in the SP as long as it goes up, before exiting near the next top.

There are almost certainly scenarios in between these extremes.

My point is that day to day here we enjoy a diverse discussion, including advocacy for HBL, counterpoints which seem agnostic, ambivalent or even antagonistic. Overriding all of that is ones circumstances, which hopefully is the defining point in determining which path ones follows, assuming independent thought.

There is no one right path for all of us, it’s about deciding which path is right for you.

[percy]

[COLOR=#454545][FONT=&]My point is that day to day here we enjoy a diverse discussion, including advocacy for HBL, counterpoints which seem agnostic, ambivalent or even antagonistic. Overriding all of that is ones circumstances, which hopefully is the defining point in determining which path ones follows, assuming independent thought.

There is no one right path for all of us, it’s about deciding which path is right for you.

This is very true.
To find your own path takes a great deal of reading,research,successes and failures.
The better research I do,the better the results I get.

[iceman]

I think its more rewarding to invest when both the technical indicators and the fundamental analysis show concurrent buy or hold signals.
I maintain this is a fairly simple stock to run fundamental analysis on. The company is transparent and reliable with its forecasting and there are at least six other comparatives listen on the ASX to compare it with. Further, banks have traditionally traded on low PE's due to their vulnerability to bearish economic cycles and traditionally have traded in the 12-15 PE multiple range.
When they trade well outside of that range and are approaching twice NTA its clear the SP had got too far ahead of itself, (was trading at a whopping 4 PE premium to its peer group at $2.14) which I made quite clear at the time represented a timely exit point.
Good stock to date when the fundamental's and technical's line up, (which they clearly don't at present). You don't have to be married to a stock, just own it when it's cheap or cheapish. I think its approaching fair value now but the momentum is clearly to the downside and looking at the extremely bearish chart I think its quite possible this could overshoot on this correction.

I see fair value at about a 13-13.5 forward PE on about 12.4 cps = $1.64, so with this sizeable correction we are almost there but I think there's a better than 50% chance this overshoots down into the $1.50-$1.60 zone.

I agree with Baa Baa and Beagle that this has been a most enlightening discussion. What is interesting is that I think we all agree that HBL is a well run business, we just don't know how to value it. Some (like me) go on fundamentals, others go on sentiments. Long term, who knows. Percy talks about the difference in view between older people and younger people and what we want. I'm not sure I agree. Almost exactly 7 years ago my ex wife reluctantly accepted we should sell a bach in the Coromandel and give my half to our daughters. We invested lots of it in HBL.
Since then, they've been 100% signed up to DRP. They've made 310% on HBL in that time, no selling and no buying. The bach in the Coromandel has gone up about 250% in the same time. But HBL has been ZERO hassle

I believe the next 5 years will contribute more healthy returns for my daughters who will keep their current holding in HBL. This is my story, others have different stories. Who's right ? Lets discuss it in 2023 !!

[iceman]

Personally I think tonight has been more enlightening than many months of discussion, one side versus the other without having really known where each side is truely coming from. Both are right, it just depends on ones circumstances which discussion groups are notoriously ignorant of. Until now.

So where to from here?

Retirees and others who bought HBL long ago are sitting on multiples of capital gains and enjoying the recurring EPS growth and sustained increasing dividends. Their advice is to be taken in context with those circumstances. It is understandable and completely relevant that they would ignore capital fluctuations while the underlying fundamentals support their investment decisions and income oriented profile.

Capital sensitive investors will be out, despite the dividends as the capital losses outweigh the income generated. They will also be looking for a re-entry at fair or under value SP, exposing themselves to capital upside and income (dividend) streams. Until that changes. Then they will forgo dividends by selling and locking in capital gains.

Traders will also be out, they will have exited months ago, but still be looking for a re-entry while the fundamentals suggest HBL has a future SP upside appreciation. They probably are astute enough to be able to pick a re-entry at some SP that is within coo-ee of a bottom. They will ride out a bottom if they enter too early and ride up an appreciation in the SP as long as it goes up, before exiting near the next top.

There are almost certainly scenarios in between these extremes.

My point is that day to day here we enjoy a diverse discussion, including advocacy for HBL, counterpoints which seem agnostic, ambivalent or even antagonistic. Overriding all of that is ones circumstances, which hopefully is the defining point in determining which path ones follows, assuming independent thought.

There is no one right path for all of us, it’s about deciding which path is right for you.

I think this is a great post. Makes us all think. Thanks Baa Baa

[oldtech]

I also agree, this has been a great discussion - thanks to everyone for their input.

As a very inexperienced investor I appreciate everybody's input, from all angles. "At the end of the day" HBL has been a great investment for me up to this point even though I got in relatively late, but I try to keep in my mind something I have seen repeated multiple times on this forum - don't make the mistake of falling in love with a stock, and getting blinded to the reality of what might be happening. This was one of the first stocks I bought two and a half years ago when I first started investing with a bit of seriousness and I have never sold. But maybe that time is here. Or maybe it's already passed ...

From the great philosopher Baa Baa: "There is no one right path for all of us, it’s about deciding which path is right for you."

[horus1]

I keep accumulating . Buy on the dips. I dont trade only hold for Div which I am fortunate and do not need.

[percy]

I keep accumulating . Buy on the dips. I dont trade only hold for Div which I am fortunate and do not need.

I have just reread the interim result presentation, and feel your strategy is correct.

[RTM]

From age 15 to age 65 the objective is to increase your capital/earnings to provide for lifestyle and your retirement.
When you have achieved that,and have a steady dividend income that is more than you spend ,you can enjoy your retirement.I am.!

Broadly agree Percy, however I would urge people to not be fixated on 65 as the retirement age. With a bit of planning, if one wants to, one can retire a bit earlier, there are quite a few benefits to doing so especially as our later years can be a bit unsure health wise. Personally I retired 6 years prior to 65 and have never regretted it.

Yes, great discussion, In general I am a buy and hold investor looking for security of my capital and living off the dividends. Not really worried by current Heartland price which is much more than our average buy.

[oldtech]

I have traditionally been a proponent of buy and hold, but I do remember discussions on the forum around the wisdom of buy and hold versus trading - ie buy shares when low, sell when high and they start going down, buy back in when the price is low again.

As an example, say you'd been a clever beagle and sold at $2.14, you could now buy back in at $1.73 or so and either buy more or take the profit. I'm not necessarily advocating you or anybody does this, simply putting it out there as one possibility.

I also keep remembering this KISS principle from KW on when to sell:

"If the "death cross" occurs (where the 50 day moving average crosses below the 200 day moving average), this is a signal that the downtrend is now firmly established."


Disc: Still holding ... at the moment ...