HLI is an Australian-based company that provides lenders with mortgage insurance (LMI). The former Genworth Mortgage Insurance has been an unheralded strong performer over recent years, although it endured a savage correction over the last few weeks. About 30% of the correction was down to dividends, but competition from the federal government First Home Guarantee has become a meaningful headwind, along with subdued credit growth. We like HLI into its current pullback aided by its forecasted 8.5% yield over the next 12-months, but note it’s a volatile beast!
- We believe value has returned to HLI, but investors must remain aware that further government involvement in their market is possible as the housing/rental crisis shows no signs of improving.
MM is cautiously bullish towards HLI under $4
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