The relentless increase in fully imputated dividends has been something I have learnt to live with.
Like a great number of Sharetraders who brought HGH at well under $1.00, I have never had cause to complain.
Printable View
What I like about HGH is the dividend never disappointing me. Always increases...n DRP is fabulous...just like term deposit with compounding interest...but better...
We live in a very perilous world which includes finance.
Passing judgements with the benefit of hindsight can hurt the wrong people .
I suspect Snoopy is too resilient to be hurt but I can understand if he was feeling frustrated.
Banking,borrowing and lending can be very risky and I appreciate all thoughts.
The diligence and time snoopy has put in is much appreciated by many.
Snoopy has skin in the game and we should all listen and see value in what he has to say.
An optimist will never agree with a reasoned pessimist but we should listen to both before making investment decisions
I have a brother who was a senior manager at National Westminister Bank-doing really well-then they were taken over by Royal Bank Scotland .You may Know the story but he saw what was happening and his only way out was to sell his shares and negotiate good leaving package at the age of 55.With that secured he continued to do contract work in his specialised field(unrelated to RBS misdeeds) until things went to custard.Another brother also working for Nat West did not sell-and for many years we heard his regrets .
Thanks for that 'blast from the past' Percy. A pretty good post from me in 2011 and It holds lessons for us today. The 'old rope tied up with a frilly bow knot' has held together. It has even managed to 'wrap up' Seniors Finance along the way. All good. Even the credit rating has gone up, by one half notch anyway.
But I think the veneer coating that was painted on Heartland creating a bank is getting a little thin. A bank that has outsourced its personal banking functions is hardly a bank for people in my books. But by qualifying as a 'bank' in technical terms, even though they have given up their banking licence to Westpac, Heartland are able to get away with offering call investments at 1.6%. I doubt if many investors would invest with 'Marac' or the 'Canterbury Building Societies' directly on those terms. Call yourself a bank and many people don't read beyond the 'b'. But Heartland have three B's in a row, and think they can align themselves in the public mind with banks that start with 'AA'. Which obviously they do as people keep investing with Heartland at what I consider inadequate interest rates. It is a repeat of what happened nine years ago with Heartland offering significantly lower interest rates than the then PGW owned PGW Finance for the same risk,
So what to do? What is bad for depositors is good for shareholders, so buy HGH shares! That is one point that I think Percy and I can agree on, even if we have different views on what price point to pay. For the record I see fair value for HGH at $1,63, as derived in my post 12556 for those you want to look it up.
SNOOPY
It is always good to read and consider alternative viewpoints. Thanks for your posts Snoopy. Greatly appreciated.
No doubt about it, you are a guru ....but maybe just a lucky guess?
Seeing the consensus is that Heartland is really only a Bank in name / disguise and really is just a finance company a ‘peer review’ against Aussie banks is a bit nonsensical.....isn’t it?
You never know you might find Heartland at $1.87 appears to be even cheaper if compared against a ‘peer group’ of finance companies.
I've made quite a few "lucky guesses" with this one mate, as you know :)
I'm no fan of their unsecured lending through Harmoney but it seems to be working. Bit harsh calling them a finance company and as you say, they have the extra disciplines required by the Reserve Bank of New Zealand.
I think the current risk environment for HGH is quite benign and's there's scope for reasonable earnings growth and possibly a modest PE expansion such that we should see a (well earned this time) $2.14 sometime next year :)
Heartland may not have the issues of the big Aussie banks. But it has other issues. It is still the bank with the most rural exposure as a percentage of their loan portfolio. Cashflow is much worse than other banks. As we get near the end of the business cycle some of the marginal loans at Heartland are more likely to become distressed than those made by the big banks. So in my mind no premium PE is warranted.
I expect all banks to continue to trade at below market PEs and IMO, with the increased capital requirements and scrutiny, they deserve to. This is not a reason to take your capital out of other shares and put it into banks.
I don't believe you should buy a share and justify your position by how well the return compares with today's government stock rate, I think you have to consider what the medium to long term outlook for interest rates is. Clearly interest rates are likely to be lower over the next ten years, on average, than they were over the last ten years. But does lower mean stuck at today's all time low levels? I think not. By justifying your share purchases by using today's interest rates, the only certainty you are locking in is that you are paying too much for your shares in the medium term.Quote:
Further, any consideration of an appropriate forward PE is best referenced off its own PE range I mentioned the other day, 11 - 17.5. Its not expensive especially when viewed in the context of 10 year Govt stock at ~ 1.6% which itself warrants a PE premium of 2 compared to more normal times when the risk free rate is closer to 4%.
Perhaps, but the slow down has to come. If growth goes according to plan you can kiss good-bye to fully imputed dividends because most of that growth will come from Australia. Not that I see this as a problem. It is a natural consequence of Heartland's growth ambitions in Australia. A higher PE is more appropriate at the bottom of the business cycle, not at the top.Quote:
I think eps growth in FY21 is going to be very strong and I actually think the shares are a bit cheap and let's be honest at 7.5% gross yield we're being paid pretty handsomely to enjoy the fruits of future growth.
Did you miss the auction price plunge of over 6% in both whole and skim milk prices in December?Quote:
Close to record dairy payout forecast this year means there's little to concern yourself with there.
Perhaps so. But I don't mind giving away growth opportunities if the downside risk of losing capital is too high. I am a buyer of Heartland shares at $1.40, not $1.80.Quote:
You worry too much mate. Looking at the glass as half full is usually far more rewarding than looking at it as half empty and looking for problems.
SNOOPY
The same Aussie banks that lend billions for decades long LNG projects with no idea whether with commodity cycles whether it will be profitable or not ?
The same Aussie banks that launder money for terrorist organisations and charge dead people fees and manipulate investors into a "diversified" portfolio made up entirely of their own financial products ?
The same Aussie banks that are dangerously under capitalized according to the Reserve Bank of New Zealand ?
ANZ has massive exposure to dairy as does Rabobank.
HGH's dairy exposure is reducing. I try not to overreact to any one change in the dairy auction price these days, I learn from past mistakes unlike SUM dogs.
Growth in Australia will be very strong but the bulk of their business is still in N.Z. so your claim of no imputation credits is baseless.
I am comfortable with my own assessment of valuation for HGH. You've been worried about this stock ever since it was 85 cents when I first bought in.
All banks have a mismatch in funding. They lend long and borrow short, its simply how it works and the vast majority of people roll their short term deposits over and over and when required various banks make their short term deposits more attractive than normal to get the funds required. This mismatch in funding you regularly go on about...I am sorry but it is needless worry.
You don't understand the retirement sector at all...oh dear is all I will say.
Thankfully this Beagle has his own nose to follow and my nose works.
A forward PE of 13.5 for HGH is fair and reasonable in my opinion as is a gross yield of 7.5%. The average Aussie bank I follow is currently on a forward FY20 PE of 13 and I think a small PE premium is fully warranted for HGH. If you can't see the value at this level maybe you should sell ?
I have just bought some more at $1.85 this week which tells you exactly what I think.
Yes, you and I both know these Aussie banks have issues (although LNG is widely regarded as a suitable transition fuel on the way to to lower carbon economy, and all mineral prospecting has risk). Now that these issues are out in the open the Aussie banks can do something about them. I expect the behaviour of these Aussie banks to improve. I am not denying that the Aussie banks have issues.
You are talking about the likes of ANZ,NZ. You cannot buy shares in ANZ.NZ. You have to buy shares in the whole group. The capitalization of the whole group is being dealt with by the Australian Reserve Bank.
Agricultural Loan Portfolio {A} Total Loan Portfolio {B} Percentage of Agricultural Loans {A}/{B] Heartland Group Holdings EOFY2019 $741.947m $4,787.079m 15.5% ANZ Bank EOFY2019 $38,562m $618,295m 6.2%
What the above table doesn't show is that the ANZ 'agricultural' figure also includes mining. Take that out and you can see that it is likely that the rural exposure of HGH is very likely triple that of the parent ANZ, in relative terms.
I didn't say that. I said future dividends would likely not be fully imputed if the Australian expansion goes to plan. I am quite comfortable with this, if the growth strategy pans out.
I am not talking about Heartland Bank. I am talking about Heartland Australia the non-banking group with a BBB- credit rating (below the BBB of Heartland Bank). Heartland Australia has no access to depositors and is set up to run on wholesale funding entirely. You may not be worried about any funding mismatch but Jeff is. Furthermore Jeff is doing something to fix it. Perhaps you had better e-mail Jeff and tell him to cease and desist and stop wasting time?
I thought about that. $1.85 is some 13% above my fair valuation. Many shares on the NZX are overvalued by that amount or more. When it gets to 20% above my fair valuation I will think again,
SNOOPY
@SNOOPY thanks for your thoughts ..... will continue to watch
4-Traders Low to High TP $1.48 - avg$1.57 - $1.70 ..........1-sell : 2-hold : 1-buy
As far as I am concerned fair value for HGH, right here, right now, IS $1.75 being made up of the an underlying $1.725 + $0.025 of the next dividend (assume/hope 4c will be declared).
Obviously not buying more at current SP.
With me selling down 10% of my ARV recently HGH is once more currently my largest NZX holding.
I think your interpretation of what the RBNZ was commenting on is wrong Beagle.
The NZ Reserve Bank was criticising the ANZ in NZ as chaired by John Key. This is what I term "ANZ.NZ". The RBNZ was commenting on the capitalisation of the NZ branch of the ANZ Group, the whole group headquartered in Australia. That is the listed entity ANZ, and this is what you can buy on the ASX or NZX - shares in the whole group. Yes the Australians were grizzling about Adrian Orr's suggestion that ANZ,NZ was not well enough capitalised. But that was because they would have to supply the extra capital to bolster the balance sheet of their NZ arm. Adrian Orr said nothing about the capitalisation of the ANZ group as a whole. The Reserve Bank of New Zealand has no jurisdiction in Australia and it would be inappropriate of Adrian to comment on what the ANZ in Australia should do.
A similar argument in reverse applies to HGH shareholders who 'take some confidence' that the Reserve Bank of NZ is keeping a watching oversight over HGH. The Reserve Bank is keeping tabs on the NZ subsidiary Heartland Bank only. But as far as Heartland Australia is concerned, the Reserve Bank of NZ has washed their hands of it. Heartland Australia is not a bank so there is no oversight from the Reserve Bank of Australia either. Heartland Australia is an unregulated wild west operation that can more or less do what it likes.
What does this mean for those taking out reverse mortgages? The guarantee of lifetime occupation between a retiree to occupy their house indefinitely into retirement and Seniors Australia will operate until the death of one of the parties to that reverse mortgage contract. I am sure that all retirees sign this thinking it will last until their own death or their voluntary move from their house. But it could be 'Seniors Australia' that dies first, particularly now because it operates under the wild west umbrella of 'Heartland Australia', a grossly undercapitalised shell (under any recognised oversight, which of course they are exempt from complying with), that exists only at the behest of the HGH board. Where would these retirees be if HGH decides to cut Heartland Australia loose? I bet those retirees haven't thought about that!
SNOOPY
Why would they cut it loose seeing as its so profitable with high growth, low risk and a high NIM...(in case you are wondering Snoopy, that's a rhetorical question).
I know you don't want an answer Beagle but...
Heartland Australia needs wholesale funding to operate. Without supporting wholesale funders, either directly approached by Heartland Australia to take on Heartland Bonds or via bank securitrzation of loans, the Seniors Australia reverse mortgage business would find it very difficult to operate at all. So profitable or not, Heartland Australia can only operate at the behest of its wholesale funders. Wholesale funders will determine whether the Reverse Mortgage business still exists in three years time - not Heartland Australia. Jeff is working very hard now to make sure the wholesale funding does continue. But it is not a done deal,
Heartland's biggest wholesale funder is still CBA bank, a former provider of reverse mortgages themselves, until early 2019. Yet CBA have chosen to abandon this "profitable, high growth, low risk and a high NIM market" as you put it. Will they continue to support Heartland Australia into the future to carry on in this market they have themselves abandoned? I think Jeff will earn his pay cheque this year!
SNOOPY
From what I understand the Aussie Banks do like RELs,however compliance is an issue for them.They can arrange/approve a standard mortgage in 24 hours,however a REL takes a little over a month to be processed,with the applicant needing legal advice and usually family consultations.They see too many steps where they can make errors,[and be legally liable].Basically they are not set up for RELS.Just too difficult.Maybe branch networks work against them.?They do have a history of giving bad advice,as The Australian Banking Royal Commission proved.
HGH have spent time and effort making sure their process is right.This has been in consultation with both NZ and Australian regulators.HGH's process is so good it has been approved by Consumer in NZ,and needed little [if any] change to comply with Australian Royal Banking Commission requirements.
Excellent security [ and margins] will always attract funding,particularly bonds and wholesale funding.HGH being listed in Australia means Australian funds etc can legally invest in HGH's funding products.
Westpac demerged their BT fund management business from the parent bank a few years ago, despite funds management being seemingly very profitable. Today people, if they go into a bank branch, want instant (or at least 24 hour) service. Retirement Savings and Reverse Mortgages are not things where a fast solution is necessarily a desirable solution, It may be that with ever increasing legal requirements that getting staff qualified in these specialist areas is not straightforward. Thus Heartland's approach: centralizing expert staff at a call centre, may be the way of the future? Jeff at the AGM certainly said that when questioned on the subject. I don't see why the likes of big banks couldn't take a similar approach though. These days with video conferencing technology, customers could be ushered into a special room at the branch and hooked up live with a bank employee expert at a video call centre. That to me would be a more credible solution than being handed a Seniors Australia card and being told to go home and ring them.
Personally I have a real problem with dealing with any financial institution with no local branch. When things go well it can seem easy. But when things go wrong,..? I would like to think I can go in and 'thump on a desk' somewhere local.
The problem is that as a wholesale institution if you want a two year bond and the people paying that interest are on average on a 6-8 year term there is a cashflow timing mismatch after two years. Heartland might have to offer higher interest rates to new providers of cash bonds. The banks might up their securitization interest rates ti Heartland. Or maybe Heartland Bank might be required by parent HGH to pay a 'special dividend', so that HGH could use such money to recapitalise their Australian operations (wouldn't the RBNZ like that)? It is not clear if recovering such cost increases from Reverse Mortgage holders could be done in a way that does not anger them and torpedo future reverse mortgage business in Australia . Hence Jeff's mission to lock in a longer term lending source at a low fixed rate.Quote:
HGH have spent time and effort making sure their process is right.This has been in consultation with both NZ and Australian regulators.HGH's process is so good it has been approved by Consumer in NZ,and needed little [if any] change to comply with Australian Royal Banking Commission requirements.
Excellent security [and margins] will always attract funding, particularly bonds and wholesale funding. HGH being listed in Australia means Australian funds etc can legally invest in HGH's funding products.
SNOOPY
A lot of "speculation" on your part.
Moved to Newbies
Thinking about the interest rates Snoopy, if rates go up and HGH needs to pay more for their funds would't they simply charge more interest on the reverse morgages?
The way I see it that the risk of short term funding and longer term reverse morgages is greatly reduced because of the possibility of adjustments of intetest rates of the reverse morgages.
It would be a concerne if no funding was available some time in the future but I think that is unlikely.
Yes Forest, that is how I see it too. You just pass on your increased costs, and there is not much existing reverse mortgage holders can do about that. I was trying to look one step ahead of that and consider what would happen next, and also look around to see what might cause these changes:
Q1/ Why would a lender want to increase their interest rate return?
A1/ Because they perceive an increased security risk on their loan.
Q2/ Why would the loan security be reducing?
A2/ Because house prices are no longer going up, and may be falling slightly.
Q3/ If house prices are not going up what will that do to the demand for REL loans?
A3/ Existing reverse mortgage holders may pull out all stops to repay their loan early, and growth in new REL loans may slow because the loan holders equity base will erode much more quickly.
A3 is a pretty bad result for Heartland Australia.
I am not saying that having reduced funding available is likely. I am saying it is a possibility and so should be planned for as a contingency. Some would say if something is not likely then you should not worry about it. I would say that even if something is not likely, and in the unlikely event of something happening the contingency is severe, the you should very much worry about it. Jeff is onto the problem so let''s see what he can do to fix it. In the meantime as an investor, you should discount your HGH buy price to reflect the unlikely but serious consequence that shareholders will face if Jeff is unsuccessful in sorting this out.Quote:
It would be a concern if no funding was available some time in the future but I think that is unlikely.
SNOOPY
This presentation Percy?
http://nzx-prod-s7fsd7f98s.s3-websit...018/290747.pdf
This is a very good summary of how the loans work from a consumer perspective. However I did raise an eyebrow when I saw the case of Jack and Bev (p30) who used part of their reverse mortgage to 'pay off another mortgage'. Did someone at Heartland not tell them that a reverse mortgage interest rate is higher than a regular mortgage? Surely they would have been better off just paying off the small remaining mortgage, then taking out a much smaller reverse mortgage capital sum for their own lifestyle benefit? Perhaps cashflow was an issue with those residual mortgage payments? But if they wanted more regular cashflow they could plug into the state government reverse mortgage scheme at a better rate that Heartland could offer. What were those Heartland advisors thinking? Very poor advice given to this poster couple Jack and Bev by the look of it!
None of those pages you referenced Percy talks about the funding the reverse mortgage portfolio by Heartland Australia. For that you had to go on to page 42. The future funding strategy is listed as follows:
"1/ Continue to develop multiple warehouse facilities,"
Job done. Heartland have broadened their Securitization program beyond just CBA Bank to include Westpac and ME bank.
2/ "Potential A$ Medium Term Note programme (senior unsecured) utilising Heartland Australia Group’s BBB-rating (Fitch)."
Job partly done. Following on from as issue of $A50m in subordinated notes in March 2019 (two year term) , Heartland announced the day after the AGM (November 2019) that they have completed a senior unsecured bond placement of A$100 million with a key Australian institutional fixed income investor. In both cases these are medium term investments only, so the timing mismatch is not fixed. More $A bonds to come?
3/ "Broadening providers of senior funding and introducing mezzanine investors •Potential rated Reverse Mortgage Backed Note programme•
Job NOT done (although Jeff is on to it).
The presentation does show that the average term for an Australian Reverse Mortgage is 6.6 years (p25, slightly less than I thought). But it does not resolve any of my concerns about the funding mismatch at Heartland Australia. Nevertheless Jeff is on the job to fix things, so I have in no way given up hope.
SNOOPY
Good, just leave him to do his job. The glass is half full mate and all equities involve risk.
Yes they do and the price you pay should reflect that risk. Heartland is my newest NZX investment. I bought an initial stake in January 2019 and have participated in two DRPs since. My average acquisition price is $1.39. My fair value estimate of the worth of each HGH share is $1.63. I am quite happy to sit in my current position
Technically I should add a couple of cents to that as we are half way to earning that upcoming interim dividend, which I am guessing will be 4c. So if I could accumulate some more shares at $1.63 to $1.65 I would be in. But I won't be in at $1.87. That doesn't mean that HGH won't be worth $1.87 one day. But, to me, that price does not reflect the risk inherent in HGH today. I am not a seller at $1.87- all share investments should be given room to breathe with the market- , but I am definitely not a buyer. YMMV and it obviously does. Good luck Beagle.
SNOOPY
Good buying Snoopy. I managed to get a small top up at $1.32 about a year ago and some more at under $1.50 but I have no idea what my average price is as its a complicated mess of shares transferred over from the former Heartland Bank, DRP shares acquired over the years and sales when the share price really did get overpriced a few years ago as well as my latest top up at $1.85.
There's been a few people mentioning they are hoping for a dividend increase this year but I think with the new more stringent RBNZ capital requirements and taking into account last year's dividend increase I think that's unlikely this year and I'm quite relaxed about that.
Although I have lost visibility of all my transactions due to name change...grrrr…..I think/hope Direct Broking still tells me my correct average price which is $1.06. As per Horus's technique I sometimes use this to calculate the % of my portfolio and justify where it has got to.
We are not saying we didn’t pay for our shares. We are saying, the effect of dollar cost averaging over time, reduces the average cost of our total purchase. Which, as you have already discovered, can sometimes result in a negative average price. So yeah, it can feel as though you get some free shares along the way.
We know what we mean don’t we Percy ;)
Buying or selling shares should be based on whether or not you think the share is over valued or undervalued at the current price. Previous Losses or gains on a share should have nothing to do with that decision.
[QUOTE=justakiwi;784707]We are not saying we didn’t pay for our shares. We are saying, the effect of dollar cost averaging over time, reduces the average cost of our total purchase. Which, as you have already discovered, can sometimes result in a negative average price. So yeah, it can feel as though you get some free shares along the way.
We know what we mean don’t we Percy ;)[/QUOTE
This has me more than curious I'm guessing you have owned since inception and they owe you say 40c and over time you have collected more than 40c in dividends?
Huh? :huh:
I’ve read this twice and am still not entirely sure what you’re asking.
All I’m saying is that’s how dollar cost averaging works. Sometimes you pay more per share, sometimes you pay less. When you take the average you have paid over a specific period of time (or from first purchase if you want) you will have paid less per share than you would have, had you not spread your purchases. You already know this. You told us your average is a negative figure. Not sure why that bothers you - it’s a good thing! No doubt you have bought a hell of a lot of shares to achieve that but it shows that dollar cost averaging has worked a treat for you.
I’m really not understanding what your problem is.
[QUOTE=tim23;784711]
Off course we know what we mean.
However. over the years I have been heavily criticized for harping on about my growing portfolio of FREE SHARES.
As I have always pointed out I LOVE THEM...lol
Best example is having a share triple and selling half.
Buy 100 shares at $1,sell 50 shares at $3.left with $50 and 50 "FREE SHARE'worth $150.................
Think of a number of posters would call this BLISS.?
Ah so..I’ve been doing the SUMs wrong
In you example each share averages out at -$1 (negative) - I don’t keep the spare $50 as already have enough spare cash for the oysters and chips
Let’s say the share price goes to $5 and I buy another 10 - only then would I have FREE shares - 60 of them .....they become FREE because I spent some cash in buying another 10.
But Brain is right - only buy if you think it’s good value - so if $5 in this example is way overvalued one wouldn’t buy another 10 and 50 you have wouldn’t become FREE by buying another 10 - oh well buy a crayfish to go with the oysters and chips and forget about FREEing my 50 shares.
Never include divies in this averaging or FREE thing ...complicated enough without it
Good grief.
To think I have spent a life time trying to build up a portfolio of FREE shares.
Bit long in the tooth to change my misplaced objectives now.
ps Is buying based on overvalued/undervalued as much fun as collecting FREE Shares.?........................................lo l.
This is the holding I initially bought thanks in major part to analysis (with the caveat of DYOR) I read on this site! I don't have any what could be called free shares as between 2012- 2018 I have accumulated ten small parcels and sold none. Each purchase was at a higher price than the previous one. Sharesight calculates that my HBL/HGH holdings have performed 50% better than the annual performance of the NZX50. So I am happy with its performance to date. I had been tempted several times to sell my holding but I held through the gloom.
I was very lucky a number of years ago to receive some sage advice from a very skilled investor:"Add to your winners,sell your losers."
By adding to your HGH, at increasing prices,you have been doing the right thing.
Take no notice of my FREE share nonsense,I am just having fun.[although if you did sell some HGH you too would end up with some FREE shares.lol]
Kia ora Percy
Thank you for that. I have just checked in for the day and have been feeling quite confused and ignorant for the last few posts on this thread. I can't imagine selling anything right now, and I was really confused by your comments about seeking FREE SHARES as a lifetime investment strategy.
Standard mortgages in Australia change funders every 3.8 years
Global Dairy Prices up 2.8%
That’s a good sign ......for the Heartland share price
That should settle the other Beagle's nerves. Maybe HGH is a takeover target ? https://www.stuff.co.nz/business/118...k-market-share
A merger between Kiwi Bank,TSB,SBS and perhaps The Co-Op Bank would make sense.
Can't see HGH being much interested,as they have too many of their own organic growth opportunities.
Kiwibank is 51% owned by NZ Post
NZ Post have no money and lots of it own issues
Kiwibank buying BNZ (or anything) as per that article is nonsense
Here is something not so good. Those residual Dairy farm loans may be difficult to quit. A market update from Keith Woodford
https://keithwoodford.wordpress.com/...nue/#more-2116
"None of the Big Four banks are interested in new dairy lending unless the investor has high equity. The related policy is that all banks now want repayments of principal whereas interest-only loans were the norm for many years. At least two of the Big Four banks are actively trying to reduce their exposure to New Zealand dairying."
Heartland crashing down to $1.84 at the market close, minus 2c for the day!
SNOOPY
Chatting with my client 'Johnny" just before Christmas he told me that he had just sent off a couple of truck loads of mature steers to the works which will result in a record ever price of more than $2,600 per head. He's been farming for more than 40 years and never seen prices that high.
A lot of HGH's lending is livestock finance so that's good.
Not that rosy .............NZ dairy farm sales plummet, prices weaken, despite firm outlook
https://www.nzherald.co.nz/business/...ectid=12295844
What!!!!sell...sell...sell..... anyway that was 2019...now is 2020..lol
YES off course I forgot last year ............now :scared:
I am not bringing up the plunging price of dairy farms in an attempt to start a run on Heartland shares. I am trying to show that this, combined with the Heartland Australia funding mismatch, poor cashflow (inherent in a growing Reverse Mortgage business) and the late business cycle's likely effect on second tier lenders are all reasons why Heartland should not trade a a premium to other banks. The big banks have their own problems, different to that of Heartland Bank. I think the whole sector should trade at a discount to the market - no exceptions!
SNOOPY
It already is Snoopy and always does. Forward PE of HGH is about 13.5 compared to the median for the market of 19 and average by market cap of about 30. That's plenty enough of a discount in my opinion.
If you want something new to worry about, start right here https://www.msn.com/en-nz/news/world...cid=spartandhp
We are getting close to dancing on the head of a pin Beagle. I think we both agree that there is a least one opportunity to invest in the finance sector in today's market. We have both bought into HGH this year. Whether one should continue to accumulate at a PE of 12 (HGH at $1.64) or a PE of 13.5 (HGH at $1.85) comes down to what yield you would see as acceptable to offset the inherent risk of the investment.
Given your raw PE figures for all Australasian banks, I would be inclined to accumulate ANZ and reduce HGH. Of course the problems at ANZ dwarf any problems at Heartland in dollar terms. But in proportion to the size of the bank I think the potential problems at Heartland are at least a match for those at ANZ. I don't see Heartland as any less risky than the other banks and I think it should be trading on a PE of 12. That is a fairly minor variation on your position in the big picture of things.
SNOOPY
The two beagles are almost in agreement. It is now time to send you to the Middle East and see what you can do there.
:lol: :lol:
Snoopy - I investing in HGH primarily for yield and growth in yield in the years ahead. Its the only bank here that pays fully imputed dividends and I believe they will continue to do so for the foreseeable future.
Quite apart from the massive issues yet to be resolved with Australian banks https://www.marketscreener.com/news/...nks--29752485/
including their substantial undercapitalisation of New Zealand operations, none of them provide meaningful imputation credits which means you're on the back foot (paws:) ) in regard to yield right from the get-go.
I'm comfortable with 7.5% gross yield in this ultra low interest rate environment which assumes no increase in the dividend for FY20 and I'm also comfortable with a PE of 13.5
Its difficult to find better value on the NZX than HGH at present.
In terms of the difference in PE's between HGH and ANZ its probably worth noting that according to average forecasts of analysts on market screener they are forecasting average growth in eps for HGH over the next 3 years of ~ 5% per annum and for ANZ ~ 4% per annum.
Can't resist posting this which my step-daughter just sent me.. Apologies for the thread diversion but it seems appropriate on a day like this.
Maybe something for the Iranians and American's to think about...Quote:
WHY DOGS LIVE LESS THAN HUMAN
Here's the surprising answer of a 6 year old child.
Being a veterinarian, I had been called to examine a ten-year-old Irish Wolfhound named Belker. The dog’s owners, Ron, his wife Lisa, and their little boy Shane, were all very attached to Belker, and they were hoping for a miracle.
I examined Belker and found he was dying of cancer. I told the family we couldn’t do anything for Belker, and offered to perform the euthanasia procedure for the old dog in their home.
As we made arrangements, Ron and Lisa told me they thought it would be good for six-year-old Shane to observe the procedure. They felt as though Shane might learn something from the experience.
The next day, I felt the familiar catch in my throat as Belker‘s family surrounded him. Shane seemed so calm, petting the old dog for the last time, that I wondered if he understood what was going on. Within a few minutes, Belker slipped peacefully away.
The little boy seemed to accept Belker’s transition without any difficulty or confusion. We sat together for a while after Belker’s Death, wondering aloud about the sad fact that dogs' lives are shorter than human lives. Shane, who had been listening quietly, piped up, ”I know why.”
Startled, we all turned to him. What came out of his mouth next stunned me. I’d never heard a more comforting explanation. It has changed the way I try and live.
He said, ”People are born so that they can learn how to live a good life — like loving everybody all the time and being nice, right?” The six-year-old continued,
”Well, dogs already know how to do that, so they don’t have to stay for as long as we do.”
Live simply.
Love generously.
Care deeply.
Speak kindly.
Remember, if a dog was the teacher you would learn things like:
• When your loved ones come home, always run to greet them.
• Never pass up the opportunity to go for a joyride.
• Allow the experience of fresh air and the wind in your face to be pure Ecstasy.
• Take naps.
• Stretch before rising.
• Run, romp, and play daily.
• Thrive on attention and let people touch you.
• Avoid biting when a simple growl will do.
• On warm days, stop to lie on your back on the grass.
• On hot days, drink lots of water and lie under a shady tree.
• When you’re happy, dance around and wag your entire body.
• Delight in the simple joy of a long walk.
• Be faithful.
• Never pretend to be something you’re not.
• If what you want lies buried, dig until you find it.
• When someone is having a bad day, be silent, sit close by, and nuzzle them gently.
That's the secret of happiness that we can learn from a good dog.
We lost two dogs last year and none left at present so it was rather poignant for me.
Good point about the downtrend and uptrend Percy...it's always easier to swim with the tide than against it !
I have never heard of this company. Competition?
https://www.lifetimeincome.co.nz/
https://www.goodreturns.co.nz/nz-income.html
No.
Very different product.
This one you buy an annuity.ie pay the issuer say $500,000 to invest and draw down a weekly/fortnightly amount.Westpac also [[use to?]do them.Do not know whether other banks do so.
Reverse Equity Loans,ie HGH's product you use your equity in your house to draw down lump sums or weekly/fortnightly/monthly amounts.It is for people who do not have the spare capital to buy an annuity, as all their capital is tied up in their house.Means they can live in their house and have an income.
Both are based on capital invested,or house value,drawings,and your age.
https://www.msn.com/en-nz/money/news...cid=spartandhp
Looking pretty good isn't it Snoopy :) With pretty looking cows like that one, what could possibly go wrong :D
Heartland are back in the frame according to the UDC rumour mill
https://www.interest.co.nz/banking/1...ng-buy-udc-anz
Last time the rumour mill had then HBL buying UDC the HBL share price went to $2.14.
I have been wondering whether the current HGH share price has again risen on UDC rumours.
With HGH experiencing strong organic growth,particularly with RELS, I see the need of buying UDC has deminished .
With HGH directors and management being such big HGH shareholders I can't see them paying over the top,as they will have to front up for the inevitable capital raise.
Replacing ANZ funding would also be a big issue.
All that said, if HGH did go ahead,UDC would be a great fit,and if HGH brought UDC at a great price, shareholders and institutions would support a capital raise.
Most probably see HGH rerated [upwards].
Agreed. Throw this into the mix and we live in interesting times... https://tmmonline.nz/article/9765162...nvestor+market
Would makes good sense.
Next up Co-Op,TSB and SBS merger ?
We certainly live in interesting times..lol.
Read the news...HGH has been shortlisted by ANZ to buy UDC..any comments holders?
What news? Only thing I could find was old rumor : https://www.interest.co.nz/banking/1...ng-buy-udc-anz
But if it would be true I'd say as a shareholder that this is either good or bad. Good, if they manage to buy UDC for a sensible price, but bad if they get too excited and join a bidding war ...
Well that would be timely. Just bought a whole heap this morning at the open...although I didn't see that news report, its good good prospects right now, so happy to add to my holding.
I added recently too. When the lead cat and dog agree what could possibly go wrong lol
Keith Woodford always a good read
Here’s something he wrote recently on dairy debt
https://keithwoodford.wordpress.com/...equity-pincer/
The big picture message from all of the above is that however one looks at the data there will now be a considerable proportion of dairy farmers who now have minimal equity in their farming business.
If Jeff says UDC will be great for Heartland ....and even if he asks me to put 20% more cash in .....and he says it will be eps accretive ...i’ll be a starter