Does MM like Helia Group (HLI)?
Hi Team , Does MM have any interest in HLI? , seems like it's in a good position 15c div plus 30c special div and company share buy back . Appreciate yout thoughts .Cheers Craig
The Latest Q&A
Answer
Hi Craig,
Mortgage insurance company HLI has really struggled since its FY 2023 result falling ~30% although 45c of the decline was dividends. The company reported a 7% lift in underlying NPAT which allowed the company to declare a fully franked final dividend of 15 cents per share and an unfranked special dividend of 30 cents per share – things read well on the surface given they have excess capital on their balance sheet.
This is actually our 2nd question on Helia in 3-weeks, which is the new name of Genworth Mortgage Insurance, we feel it had become a crowded trade but back around $3.50 the stock is looking interesting. In February we described HLI as “a complicated business, but essentially, we think of it like a bank on steroids in so far as their exposure to the mortgage market, and when bad debts are so benign, they can release capital which has been the big driver of their returns.”
- We like HLI into its current pullback ~$3.50 with its forecasted 8.5% yield over the next 12-months appealing although it’s a volatile beast!
