HGH - Heartland Group Holdings

[KW]

Actually - there might be a number of good reasons.

Just some examples:

If you expect house price inflation to go back towards the medium annual price rises, then it makes a lot of sense to take a 10% loan to cover for the ORA (or parts of it) instead of selling the house at current for a price too low.

House prices would gain subject to any rises of the property market, while the ORA will not - i.e. anybody who expects annual average house prices to return to say 4 to 5 % (this is the average of the last 5 years), would win.

Might make as well lots of sense in individual cases to bridge short term cash flow issues (like waiting for an inheritance) or just to keep the family property for family to inherit. Its not for everybody just about the money.

You are paying 10% a year in interest.  So if you borrowed 50% then house prices would have to appreciate 5% a year minimum just to break even on the interest cost.  Or 15% over 3 years.   Plus you have extra funds locked up in the house that is earning nothing, and is not available to fund things like healthcare or activities.  And you still have to pay the rates, insurance, and maintenance of the property while its sitting there empty, or cover healthy homes, tenant damage and renovation costs if its tenanted out.   And these costs will have to be funded out of your pension, after paying the $200+ a week village service fees.

The loan is only for 3 years. And then you have to pay it back.  So you cant keep the property or leave it to your kids.  And what happens when its a forced mortgagee sale after the 3 year time period is up, because the owner didnt get the magical number that he believed the house 'was worth"?  The house will then be firesaled.  So its just a rip off for 3 years.  And what happens if prices actually fall for those 3 years instead?  Now you not only have to pay 30% interest on the amount borrowed, but have lost 20-30% of what is left.

Sitting around waiting for imaginary price increases to happen is not the best use of what might be the last 3 years of your life.

[BlackPeter]

You are paying 10% a year in interest.  So if you borrowed 50% then house prices would have to appreciate 5% a year minimum just to break even on the interest cost.  Or 15% over 3 years.   Plus you have extra funds locked up in the house that is earning nothing, and is not available to fund things like healthcare or activities.  And you still have to pay the rates, insurance, and maintenance of the property while its sitting there empty, or cover healthy homes, tenant damage and renovation costs if its tenanted out.

The loan is only for 3 years. And then you have to pay it back.  So you cant keep the property or leave it to your kids.  And what happens when its a forced mortgagee sale after the 3 year time period is up, because the owner didnt get the magical number that he believed the house 'was worth"?  The house will then be firesaled.  So its just a rip off for 3 years.  And what happens if prices actually fall for those 3 years instead?  Now you not only have to pay 30% interest on the amount borrowed, but have lost 20-30% of what is left.

Sitting around waiting for imaginary price increases to happen is not the best use of what might be the last 3 years of your life.

Oh dear. If you have dark thoughts and close your eyes, than for sure - everything will look black.

But nobody said that this is a get rich quick schema for everybody, but again, I do see situations where this loan might make sense depending on personal circumstances.

A bridge for house renovations to better sell it? Bridging time for family to move in? Rent it out on Airbnb and pay a manager. You need (as with any other financial decision) to look into the specific circumstances to see whether it imakes sense for the individual or not, but if feels you are just in trashing mode.

Ah yes, and if it is really the last 3 years of the mortgagee, than what? ORA (minus DMF) gets repaid and can be used to repay the loan.

[BlackPeter]

Oh dear. If you have dark thoughts and close your eyes, than for sure - everything will look black.

But nobody said that this is a get rich quick schema for everybody, but again, I do see situations where this loan might make sense depending on personal circumstances.

A bridge for house renovations to better sell it? Bridging time for family to move in? Rent it out on Airbnb and pay a manager. You need (as with any other financial decision) to look into the specific circumstances to see whether it imakes sense for the individual or not, but if feels you are just in trashing mode.

Ah yes, and if it is really the last 3 years of the mortgagee, than what? ORA (minus DMF) gets repaid and can be used to repay the loan.

Just saw this in the Herald: https://www.nzherald.co.nz/business/heartland-bank-offers-retirees-loan-to-buy-into-village-without-selling-house-first/FHTYLVEQTFAP7CIR4W7W2TMIL4/

Looks like not everybody is trashing the offer ...

[winner (n)]

Jeez ..HGH down to 75 cents ...... and looks to be heading even lower

Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash

[Basil]

Jeez ..HGH down to 75 cents ...... and looks to be heading even lower

Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash

Down from $1.15, (more than a third), in early February when some were suggesting the worst was behind them. A fresh 15 year low going all the way back deep into the timeline when they traded under the old ticker code.    OCA in the dog box too at only 60 cents.

[Clearasmud]

Jeez ..HGH down to 75 cents ...... and looks to be heading even lower

Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash

Jeez this company isn't trouble is it.
I got my cash there.
I think not though,its got a fantastic reverse mortgage business which over compensates the ugly rest of it.

[winner (n)]

Jeez this company isn't trouble is it.
I got my cash there.
I think not though,its got a fantastic reverse mortgage business which over compensates the ugly rest of it.

Don't say things like that clearasmud .... Could start on a run on the bank

All the more reason why Nicola shouldn't be looking to relaxing capital requirement levels

[snapiti]

I wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth

[Basil]

I wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth

A LOT according to one of my clients who travels a lot. Tow trucks are kept very busy towing away vehicles dumped at the Auckland international airport carpark from what I hear. Many brands of new car depreciate 30% the moment you drive them off the lot, worse for some secondhand cars sold by some dealers at jacked up prices so they can overtrade the customers trade-in and make them feel good they have some equity in it.
Despite this and me pointing out at the annual meeting that the unemployment rate is headed higher and business liquidations at the highest levels since the GFC Leanne Lazurus sees no issue whatsoever with the risks involved with 100% vehicle finance.  Worse, neither do either of the directors that were involved in that group discussion. My contention is simply this, vast amounts of arrears are simply swept under carpet each balance date with extensive use of "Heartland Extend" to conceal the level of delinquent loans in their $1.6 Billion vehicle loan book.  The market (share price) is telling you there's more holes in their vehicle loan book that a giant block of Swiss cheese.  It's the recklessness with which they go about meeting their sales targets that irks me the most.  It's all about selling as much debt as possible and she'll be right. 

[SCOTTY]

Looks like T A trading systems have hit the sell button?

[BlackPeter]

I wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth

Funny post.

Maybe you should just read the financials in the latest HY report (speciafically going through point 7), and you can stop wondering ;

But I suppose you really only wanted to stir instead of wonder, didn't you?

Spoiler alert - while the total of impairments did increase compared to the same period last year, it was just by a single digit percentage.

[snapiti]

Funny post.

Maybe you should just read the financials in the latest HY report (speciafically going through point 7), and you can stop wondering ;

But I suppose you really only wanted to stir instead of wonder, didn't you?

Spoiler alert - while the total of impairments did increase compared to the same period last year, it was just by a single digit percentage.

BP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a  chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.   
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet

[raW tent Buffer]

I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet

The flip side to that is the RM business, which is doing very well here and in Aus. I think there will be an inflection point this year in the SP but depends on how many more provisions are to come...

[LaserEyeKiwi]

BP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a  chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.   
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet

The smart money buys when the stock is out of favor and sells off way below a sensible intrinsic value, and then unloads once the opposite occurs and the valuation overshoots. Not to toot my own horn too much, but this is exactly what I did post covid with Heartland. Doing the same again now.

[BlackPeter]

BP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a  chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.   
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet

[\quote]
 

I never buy or sell just because a number of anonymous avatars on this or any other forum say so. If this is your investment strategy, than good luck with that.

I came as well a long time ago to the conclusion that there is no such thing as "smart money". Money is paper, plastic or bits, and none of these is smart. Some people using money are certainly smarter than others - but haven't yet seen an analysis which stocks have been bought or sold at what stage by smart people (and how to measure that). Have you, or are you just grandstanding?

President Dumb considers himself a genius, but he bankrupted already six companies. Is this what you call smart?

Warren Buffett is an experienced investor who  normally manages to achieve above average returns. He might be smart in investing money, but he made as well enough mistakes. Anybody followed his wisdom to buy airlines prior to Covid?

OK - but back to HGH. Yes, I do see tham at current SP good value. I do see neither their company loan book nor their  car loans as a catastrophy, and unless president Dumb manages to crash the global economy (which admittedly is a risk) I do see things going up from here. So, yes, they made some mistakes and the markets punished them for it. Does not mean though, that they are worth nothing. They do have a well running RM business and I don't really see the value of this reflected in the current SP.

Markets typically overreact - and find it difficult to look at the big picture which means, that the current price well might be below value.

But anyway - just my view - and up to you whether you prefer to run instead behind the herd. Clearly a strategy as well. Less thinking required and it offers some safety in the numbers of the herd, though one has to pay for it by only getting already polluted water and grass which others already defecated on. Is this what the "smart money" does? - I leave this to others to judge.