HGH - Heartland Group Holdings

[Ferg]

Recession not normally good for banks but it's likely to create an exceptional demand for reverse home loans ...[snip]

I like the compounding nature of reverse home loans but it is capital hungry.  Interest earned is non-cash while interest expense is a cash outflow....until the loan is repaid.  So managed growth is good for this part of their lending portfolio.

[Teitei]

Recession not normally good for banks but it's likely to create an exceptional demand for reverse home loans so the whole cost of living thing could really be good for loan demand...but possibly hard to see them keeping delinquent loans to their targeted 0.30% in this environment.

Contact just took out a reverse mortgage late 2023 with Heartland in Australia. He needed the money to recapitalise his business after it was affected by Covid and the post covid economic blues.

He was initially quite frustrated with the requirements (including financial information, cashflow forecasts from an approved financial advisor, latest property valuation etc) but could not get the money elsewhere so he persevered. The trading banks did not want to know basically as they insisted on monthly repayments which his business could not sustain in the short term while he rebuilt the business.

In any case, he ended up getting $150k at 9% pa interest rate on his freehold property valued at $700k.

Basically, the loan will double every 8 years at that rate - so in 16 years, the loan will be $600k which is still fine if the property value stays at at least $700k. In practice, the property should at least (in a city like Sydney) keep pace with inflation. And I guess my contact and Heartland will know within 5 years whether the business has turned around - certainly will not be for lack of trying!

The good news for my contact and Heartland is that his business has started receiving quite sizeable orders from the Asian markets since the beginning of the year.

 

[entrep]

There's $1. Now how much lower? My bids are still in.

[LoungeLizard]

There's $1. Now how much lower? My bids are still in.

Still a lot of the overhang to be sold, so downward pressure will continue I feel for a week or two more. Mid-90's is on the cards.

  Interesting psychological moment for investors. Double down or pull-back? In the last CR, market fear triumphed and the SP went on a real slide. That's still a possibility here I feel. I don't think the reverse mortgage business is the silver bullet that some seem to think it is. Not in the short-term at any rate. NZ economy, and to a lesser degree, Australia's, are in a recessionary trough and bank lending and margins are feeling the squeeze. Macroeconomics sets the market tone and HGH, due to their business model, are out of favour. I don't see that changing and there's more of a chance of a further shift down than up.   

[winner (n)]

Done some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders

I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years

I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters.  They have lost their way.

They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.

Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)

Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.

So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less

[Waltzing]

Buckle up winner? 

https://www.youtube.com/watch?v=UVoFR6qnA1E

[winner (n)]

And the raving about $200m npat in 2028 is just a pipedream

Come to conclusion just a ploy to keep punters happy and to seduce them into parting with cash in the capital raise.

My assessment is if things goes their way they might get to $145m ....and that's being optimistic.

[Basil]

Comparing OCA and HGH is like comparing chalk and cheese.  At a village operational level I have real concerns how much money they are losing.  Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years.  Sure HGH faces challenges from a weak economy, but they are very different companies.

[BlackPeter]

Done some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders

I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years

I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters.  They have lost their way.

They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.

Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)

Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.

So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less

Oh dear.

Need to be careful with talking yourself into a depression. If we all get infected by that we well might ruin the economy ;

Do you want to share any tangible data supporting your dark thoughts and fears, or is this just from your mood-o-meter??

BTW - it appears other people see plenty of green shoots - hey, it is spring in the Northern hemisphere anyway:

https://www.wsj.com/finance/wall-street-banking-green-shoots-bf90f0d8
(probably paywalled)

Smile  ; Life is good and the sun is shining (well at our place anyway) ...

[winner (n)]

Comparing OCA and HGH is like comparing chalk and cheese.  At a village operational level I have real concerns how much money they are losing.  Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years.  Sure HGH faces challenges from a weak economy, but they are very different companies.

Wasn't comparing them like that ..... more how the market per se views their performances and how they will price both.

We know how the market sees Oceania and I reckon that Heartland is going down that track .....punters hopeful but company performance not meeting expectations time and time again ...you know what happens then eh.

[winner (n)]

From that WSJ article BP linked

The phrase "green shoots" is an elegant way to hedge—another vegetational metaphor, which relates to the shielding of property. "Green shoots" suggests possibility rather than a guarantee.

And somebody wrote a paper "Someone forgot to water the green shoots"

[LoungeLizard]

Done some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders

I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years

I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters.  They have lost their way.

They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.

Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)

Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.

So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less

Yep, I' afraid I too came to that conclusion at the cap raise before this one (starting to lose count) and exited after being a holder for a number of years. Prior to that I think I was holding on out of loyalty and, because I was still in the green, thinking I could afford to stay in and wait for the upswing. False logic of course but it was the shambolic, heavily discounted CR 18 months ago and the ill-timed expansion into Australia that did it for me.
The SP had been in decline for years, the high yield was really only being funded through regular capital raises and the pivot to Australia was fraught with danger. Sold out at $1.80, well below the peak, but now the SP is approaching half that value - in only 18 months. And Jeff, the architect of it all, has packed his bags, just as the hard work has begun.

It is still possible that HGH will come right again, the Aussie venture bear fruit etc etc, but the time frame of that (3-5 years) during which dividends will be cut and the SP probably will decline further doesn't make it a compelling buy. I think we are at a time again when their will be sluggish or no growth and either defensive (IFT) or yield stocks (HLG) will be back in favour.

It's times like these when I am again reminded of the great philosopher K.Rogers advice:
"You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away - and know when to run."

[BlackPeter]

From that WSJ article BP linked

The phrase "green shoots" is an elegant way to hedge—another vegetational metaphor, which relates to the shielding of property. "Green shoots" suggests possibility rather than a guarantee.

And somebody wrote a paper "Someone forgot to water the green shoots"

I thought you might pick that up ;

And yes - its like in spring ... green shoots can welt (with unsufficient water) or they can be killed off by a late frost.

Still - haven't yet seen a spring where growth didn't take off - even with some early resets. Have you ?

I can't believe we have these chats. This must be the time of maximum depression. Ideal time to invest ;

Just wondering at what point in the diagram we might be?

You cannot view this attachment.

[Breezy]

Comparing OCA and HGH is like comparing chalk and cheese.  At a village operational level I have real concerns how much money they are losing.  Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years.  Sure HGH faces challenges from a weak economy, but they are very different companies.

When your shares are down they are down no matter what the company is, as long as they are going to survive then down is down and it matters little. Most of my shares are down currently ranging from about 5% to near 50% and they are all in completely different sectors. The potential gain for OCA is just as great as HGH.

[winner (n)]

BP ...heavy frost here this morning but no worries as it's not spring

You place me on that diagram ...I'd place you about Denial

Weird ...it looks a bit like the HGH chart ...at least up to the  FEAR bit ......with more downside coming