HGH - Heartland Group Holdings

[LoungeLizard]

Illogical and just weird!

What happens when someone can only think in the negative frame of mind about a stock.

And, you do realise, the reverse is more often true. People who have invested heavily in a stock and repeatedly assert how clever they are to do so, refuse to see the writing on the wall. And get rather irritated when others draw their attention to it!

[Teitei]

And, you do realise, the reverse is more often true. People who have invested heavily in a stock and repeatedly assert how clever they are to do so, refuse to see the writing on the wall. And get rather irritated when others draw their attention to it!

Not at all, LL.

I for one am most appreciative for the checks and balances inherent in the market - where buyers and sellers participate everyday with their differing views.

I certainly would have added more to to my HGH holding on Wednesday (after considering the HBL RBNZ data) but for the cautionary posts here - saved myself quite a few thousand dollars by buying on Thursday instead.

[Teitei]

Actually its quite common mate. Confirmation bias is the most common form of cognitive bias.
People have limited time and attention so form an opinion and then latch onto absolutely anything that validates their viewpoint and often completely dismiss anything that contradicts their point of view.
Fascinating subject.  Of course, I never suffer from any of these forms of bias lol
https://www.verywellmind.com/cognitive-biases-distort-thinking-2794763

Never fall in love with a stock.

Likewise, never write off a stock until it is truly written off as a listed entity!

[SCOTTY]

A good time to be in dividend reinvestment scheme and collect a few more while the price is low 

[Shareguy]

100% guarantee that the inability to provide forward guidance means that things are getting worse not better.  If things were getting better then they would issue soft guidance, in the knowledge that its likely be upgraded. 

Other small banks are having no problems issuing guidance whilst operating under the exact same conditions.  Judo for instance provided very specific guidance.

Lack of guidance and "messy" reporting is just another reason for Australian bank analysts to not bother covering it, and thus Australian fund managers to not bother buying it.  Therefore the share price will likely continue to wither in the wilderness. 

For those willing to wait 2-3 years to get your money back (maybe) why are you not simply investing in things that will provide a good return right now?  Plenty of companies delivering good results in this crappy business environment, imagine how much more upside a good business has in a good environment, vs a poor business. 

I think KW has some valid points. I'm going to continue to hold at this stage.

[winner (n)]

What would you say if someone offered you an investment with a promised return of close to 14%?

You might say: "How much can I buy?"

Alternatively, you might say: "What is the catch?"

Sensible people must take the latter view. If you thought that you were being offered a reliable real return at such an exalted level, you would buy as much as you could.

Well, Heartland offering 14% .....that's it ROE target isn't it.

So what is the catch? The obvious answer has to be that maybe that return is subject to elevated levels of risk ...but what can go wrong...not much by sounds of it.

[LoungeLizard]

What would you say if someone offered you an investment with a promised return of close to 14%?

You might say: "How much can I buy?"

Alternatively, you might say: "What is the catch?"

Sensible people must take the latter view. If you thought that you were being offered a reliable real return at such an exalted level, you would buy as much as you could.

Well, Heartland offering 14% .....that's it ROE target isn't it.

So what is the catch? The obvious answer has to be that maybe that return is subject to elevated levels of risk ...but what can go wrong...not much by sounds of it.

I think the term you're looking for is dividend trap. Investors in HGH in recent years have lost a lot more money from their capital than they ever got back from dividends. As I said, it's hugely ironic that HGH seemed to be proud of the current yield even though that is entirely due to their share price having collapsed.

[Teitei]

I think the term you're looking for is dividend trap. Investors in HGH in recent years have lost a lot more money from their capital than they ever got back from dividends. As I said, it's hugely ironic that HGH seemed to be proud of the current yield even though that is entirely due to their share price having collapsed.

It is in the nature of markets that when a company is doing well that the market prices in ever better scenarios - ATM being the best case in point in recent years.

It is also in the nature of things that when a company is not doing so well that the market prices in ever worse scenarios - TWR being an excellent case in point.

Don't ever allow yourself to be caught in that perception trap.

Buy high, sell low!

[LaserEyeKiwi]

I think KW has some valid points. I'm going to continue to hold at this stage.

Management said net margins were already improving by the end of the reporting period, implying things are already improving from that perspective.

[Basil]

You'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week.  So the recession was a bit deeper than many of us thought, so what.  That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either.  "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too.  New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say.  Bugger that, I'd rather taker a forward looking view. 

Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt.  Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.

There's always sunshine after rain, these things have always been the same.  You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time.  Sometimes on a sunny day the view from a mountain top gives you more perspective.  Today was one of those days.  Heartland will grow its earnings per share nicely in the years ahead.  All you need to do is have patience and give it plenty of time.

[Shareguy]

You'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week.  So the recession was a bit deeper than many of us thought, so what.  That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either.  "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too.  New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say.  Bugger that, I'd rather taker a forward looking view. 

Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt.  Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.

There's always sunshine after rain, these things have always been the same.  You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time.  Sometimes on a sunny day the view from a mountain top gives you more perspective.  Today was one of those days.  Heartland will grow its earnings per share nicely in the years ahead.  All you need to do is have patience and give it plenty of time.

Well said Basil

[winner (n)]

Basil's right in saying that the time to buy is when multiples (PE or P/B) are low and then hope for any rerating but have comfort of a dividend stream if the rerating doesn't happen. The other bit of this strategy is to sell when multiples get excessively high.  This has worked well with HGH in the past

The impact of significant capital raises is shown in the table below

Whereas Normalised NPAT has grown at 7.3%pa  over the last 6 years EPS has only 1.4% pa (hardly staggering eh)

The capital raises and retained earnings have seen Book Value (Shareholder Equity) increase by $574m in those 6 years ....CAGR of 10.9% pa but on a per share basis CAGR of 1.9% pa.

Those low per share CAGR %ages have a drag on share price performance.

Dividend in FY18 was 9 cents/share ...in FY24 its 7 cent so dividend is lower.  Over the last 6 years dividends have totalled 57.5 cents

Also to highlight the impact of the increase in the number of shares the value of the the dividend paid in FY18 and FY24 was the same $57m ..just less per share eh

In spite of what the likes of Craig's say I expect per share growth in the future to remain anaemic. Capital raises are inevitable.Per share numbers drive the share price along with market sentiment (reratings) só one needs to factor this into one's thinking.

I've woken from my snoozing (never really was asleep) and followed Basil into getting more  and benefitting from a likely rerating from the current low multiples and hopefully collecting some dividends until the rerating is over (say 1,5 BV whatever that be) and realising the gains ...and waiting to do it all over again one day.

Is a punt really because I'm not that confident that Heartland are going to do what they say they wil do and I can't join in with enthusiasm many on here have at the moment.

That $200m by 2008 Plan is a master stroke. When they needed a pile of cash they said let's come up with a cool story and put it in a cool presentation with plenty of cool graphics.

Maybe a fairy tale (or one of fantasy) but it surely has worked for them eh ...got $200m new cash and telling the story again has kept 'investors' happy. But will it ever come true?

That's how I see it anyway. Wish me good fortune please

Here's the interesting table of ratios compared to 2018

You cannot view this attachment.

[Waltzing]

just need to add the div and the SP rows on the bottom W(*DIV/?SP)

nice prezzo....

[Teitei]

You'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week.  So the recession was a bit deeper than many of us thought, so what.  That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either.  "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too.  New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say.  Bugger that, I'd rather taker a forward looking view. 

Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt.  Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.

There's always sunshine after rain, these things have always been the same.  You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time.  Sometimes on a sunny day the view from a mountain top gives you more perspective.  Today was one of those days.  Heartland will grow its earnings per share nicely in the years ahead.  All you need to do is have patience and give it plenty of time.

And what a glorious day it was too at One Tree Hill/Cornwall Park yesterday!

A perfect sunny warm 1st day of Spring 2024.

Might have crossed path with you as I was there yesterday afternoon. Getting a carpark was the biggest issue with so many people there celebrating Father's Day at the BBQs.

[LaserEyeKiwi]

Basil's right in saying that the time to buy is when multiples (PE or P/B) are low and then hope for any rerating but have comfort of a dividend stream if the rerating doesn't happen. The other bit of this strategy is to sell when multiples get excessively high.  This has worked well with HGH in the past

The impact of significant capital raises is shown in the table below

Whereas Normalised NPAT has grown at 7.3%pa  over the last 6 years EPS has only 1.4% pa (hardly staggering eh)

The capital raises and retained earnings have seen Book Value (Shareholder Equity) increase by $574m in those 6 years ....CAGR of 10.9% pa but on a per share basis CAGR of 1.9% pa.

Those low per share CAGR %ages have a drag on share price performance.

Dividend in FY18 was 9 cents/share ...in FY24 its 7 cent so dividend is lower.  Over the last 6 years dividends have totalled 57.5 cents

Also to highlight the impact of the increase in the number of shares the value of the the dividend paid in FY18 and FY24 was the same $57m ..just less per share eh

In spite of what the likes of Craig's say I expect per share growth in the future to remain anaemic. Capital raises are inevitable.Per share numbers drive the share price along with market sentiment (reratings) só one needs to factor this into one's thinking.

I've woken from my snoozing (never really was asleep) and followed Basil into getting more  and benefitting from a likely rerating from the current low multiples and hopefully collecting some dividends until the rerating is over (say 1,5 BV whatever that be) and realising the gains ...and waiting to do it all over again one day.

Is a punt really because I'm not that confident that Heartland are going to do what they say they wil do and I can't join in with enthusiasm many on here have at the moment.

That $200m by 2008 Plan is a master stroke. When they needed a pile of cash they said let's come up with a cool story and put it in a cool presentation with plenty of cool graphics.

Maybe a fairy tale (or one of fantasy) but it surely has worked for them eh ...got $200m new cash and telling the story again has kept 'investors' happy. But will it ever come true?

That's how I see it anyway. Wish me good fortune please

Here's the interesting table of ratios compared to 2018

You cannot view this attachment.

Do we think more large capital raises are inevitable? If they are retaining up to 50% of earnings instead of paying out as dividends, surely that is a significant source of funds for growth?