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  1. #12791
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    Quote Originally Posted by blockhead View Post
    Blocky has $150k in the bank, have been saying to myself for 6 months I should have it owning the bank, perhaps I change today. Then have to provide the same explanation as Fish, he survived so I guess I might too
    Thanks to all for the considered discussion re Heartland, Doesn't hurt to have a refresher course from time to time. There are risks of one sort or another with all the shares "we" own. Accordingly...and yes, very boringly....IMO its good to have a well diversified portfolio so that in the event of something tragic happening, one's income is not suddenly compromised. Especially if stocks form a significant portion of your income stream, as they do with ours. I guess this strategy is a bit different if you are a lot younger and trying to grow your capital.

    HGH is ~10% of our portfolio, a little higher than I would like.
    Should they reach $2.10 or greater again, I am going to seriously look at reducing our exposure a little.

  2. #12792
    percy
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    Quote Originally Posted by RTM View Post
    Thanks to all for the considered discussion re Heartland, Doesn't hurt to have a refresher course from time to time. There are risks of one sort or another with all the shares "we" own. Accordingly...and yes, very boringly....IMO its good to have a well diversified portfolio so that in the event of something tragic happening, one's income is not suddenly compromised. Especially if stocks form a significant portion of your income stream, as they do with ours. I guess this strategy is a bit different if you are a lot younger and trying to grow your capital.

    HGH is ~10% of our portfolio, a little higher than I would like.
    Should they reach $2.10 or greater again, I am going to seriously look at reducing our exposure a little.
    Add to your winners,sell your losers.

  3. #12793
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    Quote Originally Posted by Snoopy View Post
    Iceman, I think I need to explain my post a little more. You are quite right to point out the difference between the property realisation risk of asset lending up to 90% on an uncompleted property development in the late noughties, verses lending 40% maximum (mostly much less) to a retired pensioner. However, I am talking about 'borrowing risk' of the financial institution, not the 'asset realisation risk' should the loans fall over.

    I contend that the borrowing risk for Heartland funding these reverse mortgages today is very similar to that faced by South Canterbury Finance funding those late 2000s property developments. The main difference is that HGH is using wholesale funding. Wholesale funders -hopefully- are not as fickle as private investors in that they would not suddenly pull all their financial backing out on the whim of an internet rumour and cause a run on funds queuing out of the door to withdraw their money. But make no mistake, wholesale funders do not take their risks for granted. This is why Heartland have diversified their Australian funding away from just CBA bank, to now include Westpac and ME bank and their own wholesale fixed interest funding too. But although this wholesale provider diversification is good, it has not addressed the mismatch in borrowing and lending loan timing. Jeff is not a fool and I would be very surprised if there is not further work going on 'behind the scenes' to address exactly the issue I am talking about. However, exactly to what extent Jeff will be able to offset this timing risk is unknown. And while it remains unknown, this 'funding timing risk' creates an 'investment risk' for HGH shareholders.

    The next question to ask is, what happens if this 'funding timing risk' becomes an issue? Unlike with South Canterbury Finance, it is likely that HGH will eventually get all their capital back. But the cost will fall not on Heartland directly but on those taking out the reverse mortgage who are forced to repay early. They will not have alternative funding available (because that is why they took out a reverse mortgage in the first place). They will be forced to sell their homes and forced to live out their days in some grotty rented bedsit. It would be a PR disaster for Heartland, and no doubt Australian politicians would be quick to put the boot into that 'greedy NZ institution Heartland' squeezing 'our elderly' out of their last coin and forcing their to sell their 'life savings within four walls'. It would make no difference whether reverse mortgage holders lost 90% of their capital or 20% of their capital. With no alternative funding available, they would be 'out on their ear'. That means that even if Heartland get all their money back, they would be finished in Australia. Now ask yourself what multiple would 'the market' pay for a business with no clients and no prospect of ever getting any clients? Heartland in Australia would most likely eventually get their capital back. But as a business they would be destroyed and be forced to retreat to NZ. With the Australian growth engine gone, how would investors value what would be left in NZ? Perhaps a 50% dive in the HGH share price would set things back on an even keel?



    You would expect Heartland to say all of the above wouldn't you? It still doesn't address the potential issue I have raised though. Historical access to funds does not guarantee future access to funds. And yes a large discounted share recapitalisation would get Heartland out of any potential funding hole. But at what cost to existing shareholders? And if those Australian 'shorters' got into Heartland while it was in trouble, a recapitalisation might not be possible!



    You are sounding a bit like Alan Hubbard. Heartland like SCF have many years serving a market they know well. No reason to believe anything will be different in the future. All deals 'kosher'. But will Jeff Greenslade be putting in his own capital to prop up a potentially faltering Heartland , like Hubbard did with SCF (until the funding mismatch got too big for even a very wealthy Hubbard to deal with?)

    SNOOPY
    Snoopy I think more posts will not really bring us any closer to agreeing about HGH. When I first bought the now named HGH back when it was Building Society Holdings, you were warning against it and you have ever since. I've held it (mostly) all that time and it has been a great investment. But of course it has risks, like all other shares on any bourse.

    But I have to make 3 comments on your post that I can not let go unanswered.
    Firstly, I contend it is madness to compare the funding of HGH to SCF. HGH/HBL is highly regulated and transparent through being listed on the NZX and ASX and owning a bank overseen by the RBNZ.
    SCF was run as a small private company with some large funding from private investors being personally received in the form of a cheque by Alan Hubbard and put into whatever account and entity he pleased. Other "Directors" had no idea what he was doing and should have been held responsible for it. Furthermore, there was no proper book keeping.


    Secondly, you are totally wrong saying HGH can demand early repayments of borrowers of the reverse mortgages and indicates you have not studied them in any detail.
    They all have 3 promises:
    #Lifetime Occupancy Guarantee
    # No Negative Equity Guarantee
    # Loan Repayment Guarantee (no repayments required until end of loan)

    Finally you say I sound like Alan Hubbard because I have confidence in the Management and Board of HGH and HBL. Apparently this relates to your concern about what you call the "funding mismatch"
    HGH in the FY19 presentation back in August had this to say about it and I particularly point you to the last bullet point which I have highlighted:
    " Continued diversification of funding with a focus on matching asset duration, increasing leverage and improving capital efficiency:
    • Established A$ medium-term note programme, A$50m issued.
    • New A$250m committed reverse mortgage funding facility.
    • Additional funding in progress with a potential new funder.
    Long term reverse mortgage-backed structure being developed. "

    So lets agree to disagree.

  4. #12794
    ShareTrader Legend Beagle's Avatar
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    Fresh 12 month high in HGH today. No surprises to this dog.
    Snoops me ol Beagle mate, I recommend Blackmores Executive B stress formula supplements. https://www.healthpost.co.nz/blackmo...ormula-bmexb-p You'll feel great and highly rated by others as you'll see from the review score. !
    If you follow me closely you'll see which days I forget to take one

    Fresh 12 month high's in MET and KFL today too. I may not need one tomorrow
    Last edited by Beagle; 03-01-2020 at 05:24 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  5. #12795
    percy
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    Quote Originally Posted by Beagle View Post
    Fresh 12 month high in HGH today. No surprises to this dog.
    Snoops me ol Beagle mate, I recommend Blackmores Executive B stress formula supplements. https://www.healthpost.co.nz/blackmo...ormula-bmexb-p You'll feel great and highly rated by others as you'll see from the review score. !
    If you follow me closely you'll see which days I forget to take one

    Fresh 12 month high's in MET and KFL today too. I may not need one tomorrow
    HGH share price.
    3/1/2019........................$1.32
    3/1/2020........................$1.87................. increase of 41.67%
    3/1/2021........................$2.50................a increase of 33.7%.???????????????????......................lol .

  6. #12796
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    Quote Originally Posted by iceman View Post
    Snoopy I think more posts will not really bring us any closer to agreeing about HGH.
    This is a forum. It woudl be fairly dull if we all agreed about everything wouldn't it?

    Quote Originally Posted by iceman View Post
    When I first bought the now named HGH back when it was Building Society Holdings, you were warning against it and you have ever since. I've held it (mostly) all that time and it has been a great investment. But of course it has risks, like all other shares on any bourse.
    I don't withdraw any of my previous warnings. They were all 'of their time'. Just because events post my warnings turned out in a certain way that allowed HGH to prosper, doesn't mean those alternative future scenarios I highlighted should not have been considered as 'reasonable alternative scenarios' by potential investors. Had they panned out, Heartland.may have been nobbled.

    Most obviously where I 'got it wrong' was the recovery in the Lakes District property market that allowed Heartland to trade out of what seemed at the time to be extremely marginal property developments. Without the benefit of hindsight I don't think this property market recovery was in any way a sure thing and I certainly have no regrets about not investing in Heartland at that time.

    While I have had more than my fair share of posts aimed at 'bringing shareholders back to reality', I reject the suggestion that I have only issued warnings. In January of 2019, I posted that I had entered the share register and was now a shareholder. I had to wait until the HGH share price moved into my 'approved value range' before making that purchase, and my forum announcement. My approved value range was determined by the risk/reward ratio I was prepared to take. You can take my statement of buying in as an endorsement - it certainly wasn't a warning! Other people have different risk/reward flashpoints, So this is not a criticism of others buying in at different price points.

    Quote Originally Posted by iceman View Post
    But I have to make 3 comments on your post that I can not let go unanswered.

    Firstly, I contend it is madness to compare the funding of HGH to SCF. HGH/HBL is highly regulated and transparent through being listed on the NZX and ASX and owning a bank overseen by the RBNZ.
    SCF was run as a small private company with some large funding from private investors being personally received in the form of a cheque by Alan Hubbard and put into whatever account and entity he pleased. Other "Directors" had no idea what he was doing and should have been held responsible for it. Furthermore, there was no proper book keeping.
    As made clear in Chis Lee's book, SCF did have debt instruments listed on the NZX debt markets. So SCF was required to keep the market informed, and accounts were audited and presented and available to investors.

    Yes Heartland Bank has RBNZ oversight. But the Australian Reverse Mortagge business was demerged from Heartland Bank because the Reserve Bank would not sanction the way Heartland wanted to develop. The Reserve Bank have indirectly said they do not approve of the risks that Heartland are taking in Australia in the context of operating as an NZ Bank. This is the equivalent of the RBNZ giving Heartland a yellow card - the complete opposite of an overseer's endorsement.

    I take your point on some of Alan Hubbards bookkeeping practices that I don't think are being applied at Heartland!

    Quote Originally Posted by iceman View Post
    Secondly, you are totally wrong saying HGH can demand early repayments of borrowers of the reverse mortgages and indicates you have not studied them in any detail.
    They all have 3 promises:
    #Lifetime Occupancy Guarantee
    # No Negative Equity Guarantee
    # Loan Repayment Guarantee (no repayments required until end of loan)
    Yes but all those guarantees assume that HGH remains as a going concern. If the loan structure collapses and the Australian Seniors operation goes into administration all of those promises mean diddly squat.

    Quote Originally Posted by iceman View Post
    Finally you say I sound like Alan Hubbard because I have confidence in the Management and Board of HGH and HBL. Apparently this relates to your concern about what you call the "funding mismatch"
    HGH in the FY19 presentation back in August had this to say about it and I particularly point you to the last bullet point which I have highlighted:
    " Continued diversification of funding with a focus on matching asset duration, increasing leverage and improving capital efficiency:
    • Established A$ medium-term note programme, A$50m issued.
    • New A$250m committed reverse mortgage funding facility.
    • Additional funding in progress with a potential new funder.
    Long term reverse mortgage-backed structure being developed. "
    The key words in your highlight is 'being developed'. That means the funding mismatch is not yet fixed. The funding risk remains until it is fixed.

    Quote Originally Posted by iceman View Post
    So lets agree to disagree.
    You are entitled to an opinion that is different to mine. I am fine with that.

    SNOOPY
    Last edited by Snoopy; 03-01-2020 at 06:53 PM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  7. #12797
    percy
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    Quote Originally Posted by Snoopy View Post
    This is a forum.


    I don't withdraw any of my previous warnings. They were all of their time. Just because events post my warnings turned out in a certain way that allowed HGH to prosper, doesn't mean those alternative future scenarios I highlighted should not have been considered as 'reasonable alternative scenarios' by potential investors. Had they panned out, Heartland.may have been knobbled.

    Most obviously where I 'got it wrong' was the recovery in the Lakes District property market that allowed Heartland to trade out of what seemed at the time to be extremely marginal property developments. Without the benefit of hindsight I don't think this property market recovery was in any way a sure thing and I certainly have no regrets about not investing in Heartland at that time.
    I can not remember you ever getting anything right with Heartland.
    Just pages of drivel,and "Fail" tests.
    In hindsight totally lacking any foresight.
    Heartland have a history of doing what they said they would do,as far back as saying they would receive a banking licence.
    Last edited by percy; 03-01-2020 at 06:10 PM.

  8. #12798
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    Quote Originally Posted by percy View Post
    HGH share price.
    3/1/2019........................$1.32
    3/1/2020........................$1.87................. increase of 41.67%
    3/1/2021........................$2.50................a increase of 33.7%.???????????????????......................lol .
    LOL You'll get your $2.50 at some stage, that's for sure
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  9. #12799
    percy
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    I knew you would love that post.
    Don't know what I am going to be saying when it does.?...lol.
    Last edited by percy; 03-01-2020 at 06:30 PM.

  10. #12800
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    Quote Originally Posted by percy View Post
    I knew you would love that post.
    Don't know what I am going to be saying when it does.?...lol.
    Something along the lines of relentless promotion no doubt. You forgot to mention when it was $2.14 … been a loooong recovery, sigh that still seems a long way away. That was a summer of great expectations dashed by sobering reality. Few posted their successful exit and long wait for re-entry, and while others fell silent, one lone voice carried the mantel waiting for redemption, still waiting.

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