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Real-Time news about Hhg (London Stock Exchange): 0 recent articles
|red square: I have been buying HHG for sometime - here's my reasoning:
HHG comprises principally the closed life assurance and pension books of Pearl, National Provident Life, NPI Limited and London Life which are effectively closed to new business, plus Henderson Investments and Towry Law.
Assets under management are £27 billion across annuities, pensions, savings, investment products, industrial branch business and protection policies.
There are approximately 5 million life and pension policies in force with a Traditional Embedded Value of £1145 million, Market-Consistent Embedded Value is £1271 million.
Hendersons have approximately £70 billion under management, including the assets of HHG.
Current market Cap is £1.33 bn.
A number of interesting points to make :
The value of closed books of business is moving steadily upwards as balance sheet worries reduce, and the path to operation efficiencies become marginally clearer.
Recently Swiss Re purchased LAHC's closed book for US$ 604 million, and shortly RSA will announce the sale of its' closed book to Resolution Life Group for US$ 1.37bn.
By deducting the MCEV from the current market cap we can place a value on Hendersons (very roughly at least) - this gives us a figure of around £60 million. But bear in mind that insurers are still trading at a discount to their MCEV - a 10% discount would give a value of £200 million to Hendersons
Compare that to for example, Aberdeen Asset Management with £20bn under management and a market cap of £136m and Amvescap as a larger example with £200 bn under management but a market cap of £2.6 bn
Fund management groups are currently fairly cheap by historical standards (bear market worries pre-dominantly), but using Amvescap as a benchmark, one could argue that Hendersons should have a market cap in the order of £ 700 million to £ 1 billion.
If the full value of the embedded value plus Hendersons was reflected in the share price, it would put a value of between 73 and 85p per share.|
|m.t.glass: More HHG asset sales in the offing
By Duncan Hughes
June 28, 2004
(Sydney Morning Herald)
Speculation is swirling about more sales for AMP's UK financial services spin-off, HHG, after a leading British insurer last week increased its stake to 3 per cent.
HHG, the only company listed on the Australian Stock Exchange that does not have Australian operations, has 860,000 local shareholders who opted to keep their shares after AMP's demerger.
The company, which was split off from AMP last December, has sold its half share in Virgin Money and retains funds management business Henderson Global Investors, three UK life funds and Towry Law, a financial planning business whose offshore operations have been under regulatory scrutiny.
Speculation it planned to sell its three UK life funds, with Pearl Assurance likely to be first candidate, were raised recently after HHG separated its funds management and life operations.
Talk about a sale is back on the agenda after another UK life insurer, Royal & SunAlliance, announced it was in talks with possible buyers of its life book.
"Uncertainty surrounding the future of its life services operation has caused the share price to be volatile," said Nicholas Boyd-Mathews, global asset manager for Patersons Securities.
"Henderson has been attracting new business and is a recovery story, at worst."
Sydney Morning Herald
Some investors aren't frightened off, even by a bit of bad news on several fronts.
The canny lads at Perpetual Investments have pinned their ears back by lifting their stake in AMP's sometime UK basket case, HHG, from 8.97 per cent to 10.18 per cent, clearly not perturbed by the looming prospect of AMP selling off its 11 per cent stake some time over the next year.
In typical style Perpetual is keen to invest at a time when a stock is confronted by bad news, as HHG has been on many fronts for some time.
While HHG insists any potential damages are all provided for, it's worth noting that UK solicitors Class Law Solicitors, which is trying to pull together a class action against HHG over failed funds recommended by financial advice subsidiary Towry Law, has put together a long brief on the matter on its website.
The action is being led by Denis O'Hare, one of the Cyprus victims, but Class Law is hoping to pull together aggrieved clients from locations such as Bahrain, Hong Kong and Japan.
But it will be interesting to see if the action goes anywhere since it appears these clients have to feel aggrieved enough to be prepared to individually fund the costs of continuing any action. HHG fell 2c to $1.16.|
For those of you who have held on to the shares, Perpetual Investors (highly ranked value fundmanagers, having said that please note that we have all acheived higher returns having bought the shares at lower prices) have just announced an increase in their shareholding in HHG from 6.29% to 7.38%, I have checked to see if their new purchases were on market or via the new placement. They purchased shares between 1.20 and 1.22 just prior to the release of the results and also just after on 01/04/04, thus all were on market purchases. This has pushed up their average purchase price to atleast 1.15/ 0.46p, the Perpetual fundmanager told me he was buying them as long term purchases when I spoke with him at the analyst meeting last week.
The price opened up AUD 0.03 today to AUD 1.25 and there are nearly double buys versus sells, ofcourse the US employee numbers have encouraged positivity in the market, however I have noticed a general decline in the number of sells since last week, this may mean that retail investors are finishing off their selling, actvivity in the share price for the rest of this week may indicate if this is the case if sell volumes remain subdued/continue to decline.|
|sueerbag: Hi all,
Todays Oz leading financial paper wrote up a very positive article on HHG, interveiwing fundmanagers 'Tyndall' with respect to their view on the stock, in a nut shell Tyndall said the results were positive, better then expected and that even though the capital raising was unexpected, it was justified because buying the rest of Henderson was a good idea which would improve cashflow, liquidity/solvency and thus future investment returns, the fundmanagers are positive and they carry more weight then the investment analysts, who get it wrong 50% of the time according to every statistical report/study I have read about analyst forecasts.
This article will almost certainly have a positive effect on the share price, because it will put HHG in a positive light with retail investors who like to have a punt.
I will be looking out for more articles in other papers today.
I reccommend that you all have a look at the HHG/AMP website which should have a copy on the analyst presentation you can download and may even have a recording of the presentation, including directors responses to questions put forward at the meeting.
Buying from institutionals will probably pick up in the next few weeks, don't worry too much about any weakness in the share price at the moment, the share placing will scare off a few people, but its the institutionals that have the greatest buying power and effect on the price. They may be waiting to hear whether or not their subscriptions to the share issue have been filled, in which case if they were'nt allocated the number of shares they wanted they will be forced to buy on the market, it will take them time to establish how much they can allocate to HHG, because they may need to sell shares in other companies to fund buying into HHG, also some of them will just be waiting to see if they can buy the shares on any short term dips in the price, Perpetual was buying shares in HHG between prices of 1.04-1.09, ofcourse it is now highly unlikely that they can buy at those prices again, so fundmanagers will be looking for some guidance from movements in the price over the next few weeks for new entry levels.
By the way one of my favourite hobbies is analyst bashing ( I was an analyst in a previous life both on the sell side and buy side) analysts basically follow the say so of the analyst in the investment industry with the loudest most confident voice, they have a herd mentality and would rather belong to a majority group which is wrong, than to a minority group which is right, they follow the safety in numbers mentality. This means that they never reccommend a stock at its lowest price, and tend to only reccommend stocks once nearly everyone has already noticed that stock, turned positive and bought it, at which point it is being reccommended at a much higher price,and often overvalued price. The result is a lot of investors buying at the top with the price left with only one way to go, down.
Analysts often also reccommend stocks in copmpanies they already own themselves, it is almost impossible for their employers to monitor the stocks analyst own, it is upto the analyst to inform their employers of the shares they own, and they never do this, or they buy shares in family members names.
The investors chronicles small companies section was probably one of the best sources of good stock finds for me when I lived in the UK, ofcourse you should always do your own additional research, but I have never lost money on any of my investments chosen from those articles, unfortunately there is nothing as good in OZ, because the magazines here have their reports written by the same group of analysts who write for the rest of the investment community.
Thats enough hogging of web space for one day, the price should go up in the next couple of months, despite some possible short term dips.
Hope we all make a bundle.|
|robert_gammon2001: here's the confirmation: Financial firm HHG (LSE: HHG.L - news) added one percent to 49-3/4p as dealers said it had completed a sale of shares to raise about 118.7 million pounds, with strong demand keeping the placing price at a slim discount to Tuesday's closing price of 49-1/4p.
and the share price has so far remained more or less unchanged.|
|sueerbag: Sorry for being so late, I forgot that daylight saving was moved on Sunday night.
Just got back from analyst presentation, results overall were good in all areas.
Nothing spectacular,no negative news.
On the plus side there was a reduction in costs, targeted cost/income 70% in mid term, 80% next year. More than 46% increase in Henderon investment income in secong half. Overall operating profits above analyst expectations and net loss below expectations. Liquidity/Solvency improved overall and is in line with FSA/UKGaap regulatory requirements.
Biggest dissaPOINTMENTS IS THE SHARE ISSUE OF 260M SHARES TO RAISE £118M FOR PURCHASE OF REMAINING 20% of Henderson, atleast the money is being put to good use.
I am not sure if there will be a fall in the share price once the trading halt is lifted, as is usually the case after a share issue to reflect the dillution of shares (worse case scenario 10%- 15% reduction from current price).
Based on numbers alone, it looks like the shares are still undervalued, and if they remain at the current share price will still be undervalued, regardless of the new issue.
The embedded value calculated by HHG for its life services division was £1150m, equating to a value of appx 90-98p for that division alone ( I divided 1150m by 41% of 2846m = new no. shares after issue, I used 41% because this represents the ratio of life business value to total HHG value). Embedded values allow for future forecasted profits. I have quoted the traditional embedded value, there are two different values used by HHG, I have used the most conservative.
Thus even ignoring Henderson investment business, share price looks undervalued.
The net asset value of the business was claimed to be £1,700m, using this the book value/share is 0.60p, this is a conservative value which doesn't allow for brand value, management ability, goodwill etc.
This gives a price/bookvalue ratio of 0.83, which is below thw average 1 ratio for most companies in the sector.
I tried to do a valuation using net profits but got some silly numbers and gave up. However in a worse case scenario basis my silly number were way above the current share price, the lowest number I got was 68p.
By the way HHG expects to make £80m in operating profits for life services next year.
I spoke to one Salomom Smith Barney analyst in the meeting who used to work in the UK, the only real down side he could see was the possibility of HHG failing to meet new FSA solvency requirements which have not yet been released. The FSA is still working on the paper 'ICAS CP195' and hasn't confirmed what the new requirements will be.
However, lets not forget that once HHG fully owns Henderson, its solvency will be strengthened further and should be enough to cover any increased liquidity requirements.
The Salomon guy also hinted that it may not be a good idea to trust HHG with respect to the positive outlook they had. I personally don't think HHG is another Enron and I found the management presentation frank and straightforward.
The Perpetual fundmanger was also present,they have been increasing their holdings in HHG, they now hold 8%. He was generally positive, but it was scary seeing him ask for advice from the Salomon analyst, who seemed to base his own view on another analyst he was freinds with in the UK. Lots of Chinese whispers, if he was that good at valuing companies, he wouldn't still be working at Salomon.
The biggest danger to the share price is the lack of understanding of analysts, who when confused prefer to play it safe and go for a hold/sell reccommendation, Having said that, there is currently not one analyst in Oz reccommending a buy, so even if one analyst changes his view to positive, the price will probably rise.
I think it will be another year before this companies share price reaches its full potential, due to the lack of trust resulting from the AMP disaster, among the analyst community and due to the Australian lack of understanding of UKGAAP.
Overall I am still positive, there may be a decline in the price in the short term ie next 2/3 months. After which I expect the price to rise beyond its all time high. Lets also not forget that AMP has the option to offload its HHG shares after June.
PS is there anyone awake yet.|
Thanks for replying, will any of you be attending the analyst presentation, this is where I beleive any queries about correct valuation methods will be resolved and the best clues for future growth and any possibility of takeovers will be aired.
Henderson Global investors bought out a company called Sabre group here last year, I beleive this was a good purchase, the company was a cash cow, its share price had declined prior to the takeover due to a new CEO, with some silly expansion ideas. Henderson paid about a 30% premium for the company, I beleive it was bought so henderson can use the cash it throws off to invest in other companies, a bit like a float, the same way Berkshire Hathaway uses cash from companies it acquires,so I have a lot of faith in Henderson. Does anyone know how much of the total HHG share price is made up by Henderson?
|sueerbag: Hi Geoffheap,
I am an investor in HHG, here in OZ, I bought in at appx 40p, give or take a penny depending on exchange rates. I am intereted in your valuation of HHG at 61p, posted on 25 Jan 04, in respose to 'Doubleorquits', how did you compile your numbers and where did you get your data from? Here in Oz there have been mixed feelings about the company, when they were first floated, Merill Lynch said they would not be covering them, as they were not worth covering, however since they were touted as a buy by a US fundmanager (whose name I forget, in the leading Financial newspaper here, Merill suddenly realised, they were worth covering and initiated coverage with a buy at a target value of $1.20 on the stock. National Australia Bank was forced to offload the stock in January, after incurring fx trading losses resulting from rogue traders in its SEAsian offices, this was one of the main reasons HHG price fell to 1.04, after its rise to 1.18, on the back of takeover rumours.
Perpetual trustees, known for value investing, started buying the stock in January and increased their holding on 20/02/04 from 5.02% to 6.29% at an average share price of AUD1.04/1.05.
AMP are not allowed to sell their remaining stake in the company untill after June.
The last two days have been interesting with very large buy and sell orders placed on the stock, this morning buy orders on the stock were 21m units, and sell orders 13m units, some of these have been undisclosed which hints at institutional buying/selling. It is now lunchtme and the price has fallen 2% from opening price of 1.18 to 1.16, and is down 1% on yesterdays closing price of 1.17, the number of sell orders have increased and the number of buy orders have fallen , buy orders are now at 19m units and sells at 16.5m units, with one very large sale order at 6.67m units with a limit order price of AUD1.18. There have been no announcements to the markets about institutions becoming substantial holders or ceasing to be substantial holders. But something will probably be posted by the end of tommorrow.
It looks like some profit taking has started.
If your valuation is correct the price could rise to AUD1.35, if we include a 10% margin of safety, then the stock could reach 1.22, the high for this stock since floating in Oz has been 1.21c to date, this was in the absence of any news to the market and ocurred on 11 March, after it rallied without pause from 1.14 on 9th March, immediately after hitting 1.21, it fell to 1.15,due to the Madrid bombing.
It has traded between 1.15 and 1.18 since the bombing.
As you have probably noticed, I am dedicating a lot of time to the stock, I do not know whether there will be an analyst meeting in OZ on the 31 March when the results are released, will you be going to the one in the UK, or do you know anyone that is going?
|ronster1: AMP results were out today (shares rallied in AUS on the results) and there has been a welcome rally in HHG share price: currently above 47p - long may it continue. A break above 50p should speed up the rally in my opinion. Currently capitalised at £1.2 bn and definitely entering the FTSE 250 in the next reshuffle (this month) and who knows perhaps a FTSE 100 entry in the not too distant future (end of the year?). What capitalisation is needed to get into the FTSE 100? I think it is around £2 bn but not sure. So, if it is £2bn - a share price of approximately 85p should mean entry into the main index. Now, that would be nice. But, let's see the first set of results on 31st March and then see what time horizon that will be possible.|
|ronster1: Been a rather poor performance the last couple of weeks - edging downwards slowly even though there has been some aggressive buying by directors in the last couple of months. Fortunately, today the share price has edged up slightly but we were approaching 50p only a few weeks ago. Financials have been weak of late with a stock rotation into telecoms but hopefully this will change again in the near future. There has been positive write ups in Investor's Chronicle, Shares and Barrons but this has not been adequately reflected in the share price. This is bound to change in the future and yes, with the results in the next few weeks - all should become clearer. Also, entry into the FTSE 350 Index at the next review (March, I think)should generate plenty of interest. This is one to tuck away for a year and look at the share price then.|
Hhg share price data is direct from the London Stock Exchange