HGH - Heartland Group Holdings

[Basil]

The people who bought HGH five years ago at $1.10 probably thought the same thing.  They're still waiting .....

The smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course?  Yes absolutely because its done it several times already.  History has this funny habit of repeating....you can even see that in the charts if you have a decent look 

[LoungeLizard]

The smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course?  Yes absolutely because its done it several times already.  History has this funny habit of repeating....you can even see that in the charts if you have a decent look 

You could be right - or wrong.

This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.

The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.

The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons. 

[snapiti]

You could be right - or wrong.

This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.

The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.

The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons. 

way way way to pessimistic, Jeff standing aside after 15 years at the helm(30 years in senior banking roles)  and a new growth challenge for the company is a good thing. I am really confident they will attract a very high caliber replacement.
I don't think many are expecting green shoots out of the next reporting, I am not, certainly the market is not. Next report may not show them either. I think the market is now pricing in a worsening in fortunes.
I don't agree with you that the next report is critical either, can you explain why you think it is so 'critical"
It's great you and the markets don't believe in the projections.....@ the current SP there is good value on offer if they don't get anywhere near those projection.
For me I would rather be investing now than when all was much rosier and the SP was much much higher.
Reality is the companies fortunes have to a large degree changed because of factors beyond their control so a lot of the noise you make is well just that

[LoungeLizard]

way way way to pessimistic, Jeff standing aside after 15 years at the helm(30 years in senior banking roles)  and a new growth challenge for the company is a good thing. I am really confident they will attract a very high caliber replacement.
I don't think many are expecting green shoots out of the next reporting, I am not, certainly the market is not. Next report may not show them either. I think the market is now pricing in a worsening in fortunes.
I don't agree with you that the next report is critical either, can you explain why you think it is so 'critical"
It's great you and the markets don't believe in the projections.....@ the current SP there is good value on offer if they don't get anywhere near those projection.
For me I would rather be investing now than when all was much rosier and the SP was much much higher.
Reality is the companies fortunes have to a large degree changed because of factors beyond their control so a lot of the noise you make is well just that

The FY report is critical because without any "green shoots" the market is primed to react badly. The HY report was bad - NP, EPS, NIM were all down whilst borrowings and impairments were up. And the dividend was cut. Basically if there's no good news the TA worm won't change - at best the SP will stay around the $1 mark. But there's a sizeable chance that the FY report won't be that flash either - and the dividend could be cut again. If that's the case then all bets are off as to where the SP will end up. 90c would be the minimum I would think.

For me, investing is a risk and reward assessment, pure and simple. At the moment there's a lot of good stocks (TRA, IFT, HLG, SPK) that are oversold and accumulating those stocks is a better option. More likelihood of the SP returning to normal levels, lower risk of further decline, and in many cases a better yield. Why roll the dice on HGH when there's better options elsewhere?

[KW]

The smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course?  Yes absolutely because its done it several times already.  History has this funny habit of repeating....you can even see that in the charts if you have a decent look 

That was just the Covid stock market insanity.  That isnt going to repeat. Just like GME isnt going from $10 to $120 again, no matter what Roaring Kitty posts.

[Basil]

That was just the Covid stock market insanity.  That isnt going to repeat. Just like GME isnt going from $10 to $120 again, no matter what Roaring Kitty posts.

Try harder KW.  Bring up a 10 year chart.  HGH has been to $2+ multiple times already...ask me how I know 

I think Lorriana's comment earlier today about this doubling in the next five years is actually VERY conservative.
Sure we're in the depth's of a recession now but things are hardly booming in Australia at present and a quick look at the peer group metrics I have followed for more than a decade, (and HGK almost always trades within 1-2 PE above or below shows FY25 PE's as follows
ANZ 12.6
WBC 14.2
NAB 15.3
BEN 12.2
BOQ 13.3
Average 13.5
HGH 7.3

HGH is so deeply out of favour its share price could increase 84% just to get back to the average multiple of its peer group as it currently stands right now....let than sink in for a minute or two
I have used that peer group comparison very successfully as a yardstick to assess fair value and look for extreme opportunities on the buy and sell side for HGH for over a decade and its currently a SCREAMING BUY.  I have never before witnessed such an extreme divergence between HGH's metrics and its peer group.  I couldn't care less if the usual suspect(s) thinks the peer group isn't relevant, I know it works from decade+ long experience).

In addition to the massive metrics anomaly, eps is forecast to grow very nicely in the years ahead, (consensus for FY26 which starts in less than 14 months time) is for 16 cps.  Put a mid cycle normal PE of 13.5 on that and it could be ~ $2.16 late next year !

FY28 could see ~ $200m earnings for about 20 cps, assuming 1,000m shares on issue by then with DRIP and 20 cps x 13.5 PE gives $2.70.

I think all the end of the world talk is well and truly overdone.  HGH already have a well proven business model in Australia, a dominant 43% share of the reverse home loan market and demand growth there is growing at ~ 20% per annum. 

[KW]

Try harder KW.  Bring up a 10 year chart.  HGH has been to $2+ multiple times already...ask me how I know 

10 year chart is even worse!  HGH is the same price as it was in Sept 2014.  It reached $2 once in 2017, then nothing until Covid.

To paraphrase Zuck, if it were a growth company, wouldnt it have grown? 

You cannot view this attachment.

[Basil]

For a start there's the high yield every year which isn't showing in that chart.
Been to $2+ twice, current price represents your best chance to jump on board and double your money + (assuming 8 cps fully imputed for FY25), 11% gross yield, with yield growing every year after that.  From a fundamental analysis perspective, it's a truly compelling buy but if all you do is TA you'll miss out or pay quite a lot more when the squiggly line is clearly going up.
Consensus DPS for FY26, (starts only 14 months away) is 9.5 cps fully imputed = 13.2 cps gross = 13.3% gross based on 99 cent share price + further growth in the years after that.  How many shares do you own with a yield like that ?
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/

[KW]

If you inflation adjust $1 in 2014, the share price should be $1.27 today.  So its actually still lost 21% in real terms over that 10 year period.  

[Basil]

No argument about that but frankly K, I've lost count of the number of times I've said this is a trader's stock not a buy and hold long term stock.  Buy in gloom, sell in boom and a very healthy dividend carry while you own it.  Date the stock, you don't have to marry it.

I use a very simple "deep value" strategy of buying in deep recession and / or when HGH is at "actionable level" of misalignment with the metrics of its peer group and selling in boom or when its significantly overpriced relative to its peers.  It's never been this far out of whack with its peer group before, nothing even remotely like this has happened before.  Lots of people are absolutely obsessed with hating on this stock so sentiment has never been worse.

[KW]

No argument about that but frankly K, I've lost count of the number of times I've said this is a trader's stock not a buy and hold long term stock.  

If you want to swing trade it then you should be looking at the technicals.  You buy the start of the upturn, not in the middle of the downtrend. 

[Crackity]

Lots of people are absolutely obsessed with hating on this stock so sentiment has never been worse.

Oooo - you buying OCA too Bazza?

I like this game 😂

[snapiti]

You could be right - or wrong.

This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.

The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.

The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons. 

lol.....do you really think investors are buying at current prices thinking green shoots are going to appear at the next reporting....there is no show that is going to happen....me thinks a modest deteraition in the fundamentals are priced in 90cps to $1.
Given the macro environment anyone expecting green shoots is a fool IMO.

[Basil]

Touche Crackity lol.  I did buy some more TRA at $3.90 this week and HGH at 96 cents, (multi year low point).
Not pretending I know exactly where the low point is with either of those two but deep value abounds in spades so if I got it a bit wrong, time will fix that.
Consensus is FY24 11.7 cps, FY25 13.2 cps, FY26 16.05 cps.
Average 12 month price target $1.37  https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Still plenty of dry powder for more HGH.  Might wait for the chart to start looking a bit healthier for the other half.  No harm in having a mixture of strategies.  Buy about half in various tranches when you think its extreme value and the other half when the chart suggests support is there for a new uptrend.

[snapiti]

The FY report is critical because without any "green shoots" the market is primed to react badly. The HY report was bad - NP, EPS, NIM were all down whilst borrowings and impairments were up. And the dividend was cut. Basically if there's no good news the TA worm won't change - at best the SP will stay around the $1 mark. But there's a sizeable chance that the FY report won't be that flash either - and the dividend could be cut again. If that's the case then all bets are off as to where the SP will end up. 90c would be the minimum I would think.

For me, investing is a risk and reward assessment, pure and simple. At the moment there's a lot of good stocks (TRA, IFT, HLG, SPK) that are oversold and accumulating those stocks is a better option. More likelihood of the SP returning to normal levels, lower risk of further decline, and in many cases a better yield. Why roll the dice on HGH when there's better options elsewhere?

you indicate you think the SP might tank on a report with no green shoots and weaker fundamentals. If the SP weakens further on already highly predictable weakness in the results I will certainly be buying. I am certainly predicting some modest weakness in the report, I only hope the market over reacts