HGH - Heartland Group Holdings

[lorraina]

Jeff,Jeff,Jeff.
Geoff died.

[Basil]

Opps sorry, my bad.  With both Geoff and Jeff gone, maybe things will get better, or maybe not, best to wait and see.

[Shareguy]

Interestingly the placement was at an 18% discount to the prevailing price. How does this compare with others? Right up there with the level of discount RYM, (with all their egregious mismanagement of debt) had to offer to get their deal done, 21.9% and was higher than Fletchers (with all their endless fiasco's), 17%, (13.9% on a theoretical ex rights price).

Why is there so little apparent confidence in the market in Heartland such that you had to discount the share issue to desperation pricing?  (A good question to ask at the annual meeting).  Do you accept that there is an enormous amount of work to do to restore confidence such that the shares might lift a bit from their decade low? 

Reading through their book of excuses, Opps sorry, annual report yesterday, it was pleasing to see Geoff received no short-term incentives and took a big pay cut this year compared to last.  I suspect he was pushed by the board.  I wonder if he will be at the annual meeting to be held accountable for some of the reckless lending that led to such a poor result?

Disc: I reduced my portfolio allocation yesterday at break even on cost from ~6% to ~3%.  I think they have wasted an enormous amount of management time and energy on woke agenda's and taken their eye of their core responsibility to maximize shareholder returns.    "Go woke, go broke"
My conviction level with this company is now much lower than it once was.  I'd wager many other shareholders feel much the same.

Some good points you have raised Basil. I can't attend the meeting but I'm sure us holders appreciate you asking the hard questions. I am hoping that they will release some guidance, which I reckon the lack of is holding the SP where it is. The current share price would suggest to me that the market is not expecting good news.

We need proof of both an improving macro backdrop and operational efficiencies to get more comfort around targets. On saying that I'm not expecting the first half of FY25 to be that flash and a repeat of the last 6 months, given the state of the economy.

Will they continue with the $200m NPAT target by FY28. How is Australia going for both livestock and Challenger.

Craig's lowered their FY25 NPAT forecast from $111.0m to $103.3.

[snapiti]

Interestingly the placement was at an 18% discount to the prevailing price. How does this compare with others? Right up there with the level of discount RYM, (with all their egregious mismanagement of debt) had to offer to get their deal done, 21.9% and was higher than Fletchers (with all their endless fiasco's), 17%, (13.9% on a theoretical ex rights price).

Why is there so little apparent confidence in the market in Heartland such that you had to discount the share issue to desperation pricing?  (A good question to ask at the annual meeting).  Do you accept that there is an enormous amount of work to do to restore confidence such that the shares might lift a bit from their decade low? 

Reading through their book of excuses, Opps sorry, annual report yesterday, it was pleasing to see Geoff received no short-term incentives and took a big pay cut this year compared to last.  I suspect he was pushed by the board.  I wonder if he will be at the annual meeting to be held accountable for some of the reckless lending that led to such a poor result?

Disc: I reduced my portfolio allocation yesterday at break even on cost from ~6% to ~3%.  I think they have wasted an enormous amount of management time and energy on woke agenda's and taken their eye of their core responsibility to maximize shareholder returns.    "Go woke, go broke"
My conviction level with this company is now much lower than it once was.  I'd wager many other shareholders feel much the same.

so a wee bit of a confession on why I sold out about 8 weeks ago, apart from lame company excuses.
We recently found out that my son had taken out a car loan with heartland bank, the amount he applied for was was for the full car value amount 20k plus 2 k extra for a new set of mag wheels. Now my son did have a job at the time but is unfortunately one of the worst money managers I have ever experienced.
Cut a long story short the car got repoed and was sold for 5k.
My issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending 

[Basil]

My issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending 

Makes you wonder that's for sure.  I read from Turners they tightened their lending criteria several times last year to preempt untoward losses from lending.  Meanwhile HGH spend forever and a day on ESG garbage and fiddle around while Rome burns.

Kids learn best from the school of hard knocks.  I am sure you could easily have stepped in and enabled him to keep his car but good on you for making sure he learnt a valuable lesson.

I see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m.    Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed.  They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.

I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive.  More to come on this when I have time.

[winner (n)]

Submitted 4 questions

Say they will endeavour to answer ann questions submitted on ....yeah right .... Betcha no response

[winner (n)]

Most didn't want to know when I posted this a while ago but seems some a now agreeing. Seems Heartland has had bad leadership for a year or so now and this has flowed through the organisation.

I mentioned Flood in that post ...but the guy they've appointed has been there too long so things won't change. Opportunity lost.

My earlier post -

One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.

"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."

Let's call this "The Jeff Greenslade Problem". How does a person or an organization keep its creative vitality once they have already become successful, already become comfortable?

This, we think, is one of the cardinal problems of any type of successful business that has seen a lot of growth.

Good that Jeff is 'retiring' and definitely a time for new blood and renewed dynamism in Heartland ....from outside the organisation ...be a bad move if they take the easy route and 'promote' Chris Flood

[snapiti]

Makes you wonder that's for sure.  I read from Turners they tightened their lending criteria several times last year to preempt untoward losses from lending.  Meanwhile HGH spend forever and a day on ESG garbage and fiddle around while Rome burns.

Kids learn best from the school of hard knocks.  I am sure you could easily have stepped in and enabled him to keep his car but good on you for making sure he learnt a valuable lesson.

I see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m.    Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed.  They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.

I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive.  More to come on this when I have time.

well it was not that simple, as he had also racked up 20k on an unsecured loan with harmony @ 19% interest as well, I did bail him out of that one but he now has a written loan agreement with DAD, 0% interest $30 a week until paid

[lorraina]

so a wee bit of a confession on why I sold out about 8 weeks ago, apart from lame company excuses.
We recently found out that my son had taken out a car loan with heartland bank, the amount he applied for was was for the full car value amount 20k plus 2 k extra for a new set of mag wheels. Now my son did have a job at the time but is unfortunately one of the worst money managers I have ever experienced.
Cut a long story short the car got repoed and was sold for 5k.
My issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending 

Is your son still liable for the outstanding amount.?

[snapiti]

Is your son still liable for the outstanding amount.?

I assume so, that's been left up to him to deal with as he is to old for me to wipe his butt, the last letter I seen from Heartlands was the repo man is coming and the debt will be handed over to a collections agency for recovery, I know the repo man came and took the car.
I suspect his credit rating will be shot to pieces

[Basil]

I see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m.    Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed.  They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.

I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive.  More to come on this when I have time. from above

It appears to me they are trying to creatively ringfence these assets separately from normal provisioning and try and they appear to be trying to make the argument they are separate special cases.  This has all the hallmarks of creative accounting in that:-
1. They are not being provisioned within normal bad and doubtful debt parameters
2. They say they will be working to resolve these matters in an orderly and responsible manner. This is simply B.S. code speak for, we don't want to take a massive haircut and ruin our regular reporting at the bottom of the economic cycle but want to spread these losses over a number of years and report them separately to try and create the illusion they are extraordinary items.  AKA Do a Fletcher's and report substantial extraordinary items year after year after year and try and pretend they're not recurring.
3. By holding more than $200m on doubtful assets on the balance sheet at face value they are misrepresenting both their operational profitability and balance sheet ratio's and simply hoping for a better outcome on realizations as the economy recovers. 
No worries though...if these so-called special case losses eat away at the capital ratio over time, they could do another capital raise at $1 and shareholders would be "really thrilled" for the opportunity to show further support, (sarcasm).

[winner (n)]

Hey Basil. ..when Harmoney share price gets to 2 bucks that'll put a dent in those ring fenced assets

[Basil]

LOL. I called Harmoney a flawed business model and warned others many times, loudly and clearly to stay away years ago on the other channel when they were north of $2.
38 cents now.   That's not been a very harmonious investment has it!

[winner (n)]

Jeff didn't give guidance for FY25 before he left

F24 NPAT  was $75m ...normalised $103m lol

No doubt guidance will be provided on Wednesday

Methinks if it normalised NPAT is say $95m the share price could go to the 80's. ...even lower if Andrew says the $200m target was only a pipe dream dreamt up by Jeff to seduce punters into putting cash in the collection plate

[snapiti]

I very much suspect with unemployment rising that you will get the normal cheerleading followed up with a minimal but very meaningful we are not in the best of times caveat.
At least the SP has priced in the current situation and the company will be aware the SP is priced as a divi stock with not a lot of growth priced in