this dude away with the fairies lol and is obviously long and hurtingQuote:
This just now from Chris Lee.
I fully agree with his summary and look forward to Jeff continuing to be Jeff.
Onwards and upwards and a great time to buy, happy Easter all
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In recent days, some in the market have been guessing that Heartland Bank might have a rights issue.
Heartland is awaiting news that it has been granted an Australian banking licence. When this is granted, Heartland may confirm acquisitions which will enable it to expand into various niches of Australian banking.
It may need more capital to do this. It has previously declared its plan to raise Tier Two capital.
Some in the NZ market have reached the view that Heartland will have to resort to a rights issue when it gets its licence, instead of a Tier Two note issue.
The market has gained conviction about this guess because it expected global banking frailties to put an end to any plan held by a bank like Heartland to offer Tier One, loss-absorbing bonds, such as Credit Suisse had offered, prior to its collapse.
One wonders if the market’s assumptions are wrong.
Heartland currently has ample capital and might wish to offer what I call ‘’temporary capital’’ by offering Tier Two notes, a hybrid product, not the same as Tier One, loss-absorbing bonds.
The concept of issuing Tier Two is founded on the company belief that it will make future profits that enable the company to generate revenue reserves, in effect replacing ‘’temporary’’ Tier Two capital with future accumulated profits.
If global banking tremors ease, it is absolutely feasible that Heartland might issue Tier Two notes, move forward with its Australian expansion, and thus create more ‘’capital’’ to fund the growth without any need to raise share capital.
Those institutions trying to second guess Heartland’s plans by short-selling Heartland’s shares may well find, like Posie Parker, that they have tomato sauce on their toupees.
Heartland has been extremely well managed for more than a decade, has skilfully delivered each year more profit and dividends than it ever promises, has built a growing credit rating, and to be blunt, has been smarter than the big banks, ahead of the curve in several areas, finding lending niches and delivery systems that have been clever.
It has built a digital business requiring very little expenditure on branch representation. It is probably fair to say that other banks somewhat resent the nimbleness of Heartland.
It dominates the profitable reverse mortgage market and has managed its liquidity cleverly.
My own view is that it should more regularly offer 3, 4 or 5-year bonds, to strengthen the match between deposits and loans, but Heartland has proved itself adept at maintaining a very liquid business, its capital and liquidity ratios better than most of its competitors.
Recently, it lost a stalwart when its long-serving chairman Geoff Ricketts died suddenly. As new chair Greg Tomlinson will be an outstanding replacement, Tomlinson being from the very top drawer of New Zealand’s business leaders.
If Heartland issues Tier Two bonds, probably at rates of around 7.00%, I will be a buyer.
If the short sellers retreat, having burnt a few bob at the Totalisator window, I will not be present at the Wailing Wall.
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does not even seem to mention how the banking crisis and economic downturn will effect hgh
shorting the stock has done very well for those people who can do it ( they obviously have read the tea leaves well )