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Hearts and Minds Investments Limited
Financial Services · Asset Management
Updated 18 hours ago
$2.83
MARKET CAP
$648.02M
P/E RATIO
6.1
DIV. YIELD
6.5%
FRANKING
100%
Hearts and Minds Investments Limited (HM1) is a listed investment company that provides a concentrated portfolio of long-only positions in 25-35 global securities based on the conviction ideas from respected fund managers.
View full descriptionThe Warsi Rating combines two proven approaches: value investing principles and dividend strategy. A stock must score 70+ on both to be rated Solid or higher.
$2.42
For 6% dividend yield
Business quality and balance-sheet durability.
Profit generated per $1 of shareholder investment
1.1% average is below the 12% threshold. This suggests the business may lack a durable competitive advantage.
Current Snapshot
10Y Avg
1.1%
Threshold
12.0%
Worst Year
-14.8%
Why It Matters
ROE shows how effectively management turns shareholder capital into profit. High and stable ROE can signal pricing power, cost discipline, or both.
Formula
Net Income / Shareholders' Equity x 100Method
Use the 10-year average ROE and review the weakest year to check whether returns stayed resilient across cycles.
Worked Example
This company's 10-year average ROE is 1.1%, meaning each $1 of shareholder equity generates $0.01 in annual profit. The threshold is 12%, and the worst single year was -14.8%.
How to Interpret
Higher and steadier ROE generally supports stronger long-term compounding. Large drawdowns in weak years can point to fragility.
Lower ROE means your investment compounds more slowly. At 1.1%, this business needs more capital to generate the same returns as competitors. Consider whether other strengths (yield, stability) compensate for weaker profitability.
Sources
Real cash left after running the business
Negative free cash flow means the company is consuming cash. May need to raise debt or equity to fund operations.
Current Snapshot
Current FCF
$-3M
Pass Rule
> $0
Status
Negative
Why It Matters
Free cash flow is the cash available after core operating and capital needs. It is central to dividend capacity.
Formula
Operating Cash Flow - Capital ExpendituresMethod
Review whether free cash flow is consistently positive and whether it is sufficient relative to dividends and debt needs.
Worked Example
This company generated $-3M in free cash flow — cash left after operating costs and capital expenditure. Negative FCF means the company is consuming more cash than it generates.
How to Interpret
Persistently negative free cash flow can force reliance on borrowing or equity issuance to maintain payouts.
Negative cash flow means dividends may require borrowing - an unsustainable situation. The company is spending more cash than it generates, which can't continue indefinitely.
Sources
Price versus estimated intrinsic value and required return thresholds.
What percentage of the stock price comes back as earnings each year
Excellent value. 16.5% earnings yield significantly exceeds the 7.5% required return.
Current Snapshot
Current Yield
16.5%
Required Yield
7.5%
Spread
+9.0pp
Why It Matters
Earnings yield reframes valuation as return on price paid. It helps compare equity earnings power against lower-risk alternatives.
Formula
(Earnings per Share / Stock Price) x 100Method
Calculate current earnings yield, then compare it to the required yield for the stock's industry setting.
Worked Example
With EPS of $0.47 and a share price of $2.83, earnings yield is 16.5%. The required yield for this industry is 7.5% (based on 4.5% government bond rate plus a risk premium).
How to Interpret
A yield above the required level suggests better valuation support; below it indicates thinner compensation for equity risk.
Strong earnings yield means you're well-compensated for owning shares instead of buying safe bonds. The business is priced to deliver solid returns.
Sources
Consistency of profits over time
Only 3/8 positive EPS years. Buffett requires predictable earnings he can forecast 5-10 years out.
Current Snapshot
Positive Years
3/8
Allowed Losses
2
EPS CAGR
80.3%
Why It Matters
Consistency in EPS helps distinguish resilient earnings power from one-off performance spikes.
Formula
Positive EPS Years / Available EPS YearsMethod
For 8+ years of data, apply industry-specific loss tolerance. For limited data, every available year must be positive.
Worked Example
This company reported positive earnings in 3 of the last 8 years, with 2 loss years. The allowed loss tolerance for this industry is 2 years. EPS growth rate (CAGR) is 80.3%.
How to Interpret
Fewer loss years and stronger EPS continuity generally improve confidence in future dividend and valuation assumptions.
Volatile earnings create dividend uncertainty. When profits disappear, dividends often follow. Forecasting your future income becomes difficult.
Sources
Is the business growing or shrinking over time?
Revenue has grown 187% over 3 years — the business is expanding, which supports growing dividend capacity.
Current Snapshot
Revenue Change
+186.8%
Debt Change
N/A (financials)
Trend State
Improving
Why It Matters
Revenue trend shows whether the business is expanding or contracting. Debt trend adds context on whether growth is being funded conservatively.
Formula
Revenue Change (%) = (Latest Revenue - Earliest Revenue) / |Earliest Revenue| x 100; Debt Change (%) = (Latest Debt - Earliest Debt) / |Earliest Debt| x 100Method
Map annual revenue history and, where relevant, annual debt history. For financial companies, debt is excluded because deposits and reserves distort this signal.
Worked Example
Revenue changed by +186.8% across the displayed period.
How to Interpret
Rising revenue with stable or falling debt is typically stronger than rising revenue funded by rapidly rising leverage.
Revenue has grown 187% over 3 years — the business is expanding, which supports growing dividend capacity.
Sources
Annual dividends as percentage of stock price
5.12% is close but below Barsi's 6% minimum. Consider waiting for a price drop.
Current Snapshot
6Y Avg Yield
5.1%
6% Requirement
6.0%
Gross Yield
7.3%
Why It Matters
Yield translates dividend income into a percentage of the price paid, which is central to income-first screening.
Formula
Annual Dividends per Share / Stock Price x 100Method
Use the 6-year average annual dividend for consistency and compare the result with the 6% framework requirement.
Worked Example
With a 6-year average annual dividend of $0.14 and a share price of $2.83, the Barsi yield is 5.1%. The minimum requirement is 6%. Including franking credits, the gross yield is 7.3%.
How to Interpret
Higher sustainable yield improves upfront income, but unusually high yields may reflect elevated risk or weak coverage.
At 5.12%, you'd need more capital to generate the same income as a 6%+ yielder. A price drop could make this more attractive.
Sources
Track record of consistent dividend payments
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 25 Feb 2026Interim | 16 Apr 2026 | $0.14 | 100% | $0.10 | $0.04 |
Highest price to lock in 6% yield
Industry category of the business
Financial Services is not a BESST sector. Non-BESST stocks receive a lower base score but can still qualify with exceptional dividend metrics.
Current Snapshot
Industry
Asset Management
BESST Match
No
Score Impact
No bonus
Why It Matters
Sector classification helps contextualise risk and demand durability, which can materially affect dividend stability.
Formula
BESST Match = Sector in {Banks, Energy, Sanitation, Insurance, Telecom}Method
Match company sector or industry against BESST categories. A match adds scoring support but does not replace core dividend checks.
Worked Example
This company operates in Asset Management (Financial Services sector). It does not match a BESST sector, so it receives the standard base score. Non-BESST stocks can still qualify with strong dividend metrics.
How to Interpret
Sources
How much of a company's earnings are paid out as dividends
The company is paying out more in dividends than it earns (201%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Current Snapshot
Latest Ratio
200.9%
Healthy Range
30%-75%
Zone
Unsustainable
Why It Matters
Payout ratio links dividends to earnings capacity and helps evaluate whether current distributions are likely to remain supportable.
Formula
Payout Ratio (%) = (Annual Dividend per Share / Earnings per Share) x 100Method
Calculate year-by-year payout ratios where EPS is positive, classify each year by sustainability zone, and compare with the current TTM ratio.
Worked Example
$0.17 dividend / $0.47 EPS equals 36.4% payout ratio.
How to Interpret
Ratios in the middle range are usually more sustainable than very high ratios. Values above 100% indicate dividends exceeded earnings in that period.
The company is paying out more in dividends than it earns (201%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Sources
Hearts and Minds Investments Limited (HM1) is a listed investment company that provides a concentrated portfolio of long-only positions in 25-35 global securities based on the conviction ideas from respected fund managers. The Company forgoes any investment fees and instead donates to Australian medical research organisations.
Who owns the company's shares and how much leadership has at stake
Management's wealth moves with yours
A handful of professional investors are watching
Shares freely traded on the ASX by individual investors like you
Insiders hold 13.5% and institutions hold 15.1%. Look for higher insider ownership as a sign that leadership believes in the long-term value of the business.
Current Snapshot
Insider %
13.5%
Institutional %
15.1%
Float %
71.4%
Why It Matters
Ownership mix affects governance incentives, liquidity, and share-price behaviour under large portfolio rebalancing flows.
Formula
Public Float (%) = 100 - Insider Ownership (%) - Institutional Ownership (%)Method
Use reported ownership percentages, convert to percentage terms, and compute remaining public float as the residual.
Worked Example
If insiders own 13.5% and institutions own 15.1%, public float is 71.4%.
How to Interpret
Higher insider ownership can improve alignment of incentives, while dominant institutional concentration can amplify short-term price moves.
Insiders hold 13.5% and institutions hold 15.1%. Look for higher insider ownership as a sign that leadership believes in the long-term value of the business.
Sources
| Date | Insider | Type | Shares | Value |
|---|---|---|---|---|
| 16 Oct 2025 | Weiss (Gary Hilton) Director (Independent) | Acquisition at price 2.24 per share. | 1K | $3K |
| 8 Sept 2025 | Cuffe (Christopher Edgar) Independent Chairman Of The Board | Purchase at price 2.27 per share. | 50K | $114K |
| 1 June 2025 | Howes (Richard) Managing Director | Unknown | 105K | — |
| 17 Apr 2025 | Fowler (Guy) Director (Independent) | Acquisition at price 1.92 per share. | 36K | $70K |
| 17 Apr 2025 | Grounds (Matthew) Director (Independent) | Acquisition at price 1.91 per share. | 30K | $58K |
Company insiders have been net buyers of shares over the past 12 months. This may indicate management confidence in future prospects.
Value analysis may be affected by missing data.
Market data sourced from third-party financial data providers. Analysis generated using Warsi Criteria — proprietary scoring algorithms for value investing and dividend income analysis. Not financial advice. Learn how we analyse stocks →
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 10 Sept 2025Final | 16 Oct 2025 | $0.13 | 100% | $0.09 | $0.04 |
| 26 Feb 2025Interim | 2 Apr 2025 | $0.11 | 100% | $0.08 | $0.03 |
| 11 Sept 2024Final | 16 Oct 2024 | $0.11 | 100% | $0.07 | $0.03 |
| 6 Mar 2024Interim | 18 Apr 2024 | $0.10 | 100% | $0.07 | $0.03 |
| 20 Sept 2023Final | 19 Oct 2023 | $0.10 | 100% | $0.07 | $0.03 |
| 15 Mar 2023Interim | 13 Apr 2023 | $0.19 | 100% | $0.14 | $0.06 |
| 30 Mar 2022Interim | 12 Apr 2022 | $0.19 | 100% | $0.14 | $0.06 |
| 7 Apr 2021Interim | 20 Apr 2021 | $0.17 | 100% | $0.12 | $0.05 |
6 years of consistent dividends meets Barsi's 6-year minimum requirement.
Current Snapshot
History
6yr
Predictability
Moderate
Payout Health
One-off event
Why It Matters
Payment consistency is a direct test of dividend reliability. Large cuts or skips often appear before confidence recovers.
Formula
Consecutive Years = count of years with dividend payments and no disqualifying skip/cut eventsMethod
Require at least 6 years of history, then check for skipped years and large cuts, allowing approved systemic-event exceptions.
Worked Example
This company has 6 years of dividend history (2021–2026). No suspensions detected — 6 consecutive years of payments. Predictability: Moderate. Payout health: One-off event. The minimum requirement is 6 years.
How to Interpret
Longer uninterrupted records generally signal stronger income reliability than high yield alone.
A consistent track record through recent years gives confidence your income will continue. This company has shown commitment to shareholder returns.
Sources
Current price ($2.83) is 17% above the ceiling. Wait for a drop to lock in 6% yield.
Current Snapshot
Current Price
$2.83
Max Buy Price
$2.42
Delta
-16.9%
Why It Matters
The price ceiling links valuation discipline to income targets by defining the price that aligns with a 6% yield target.
Formula
6-Year Average Annual Dividend / 0.06Method
Use the 6-year average dividend (not one year) and divide by 0.06 to estimate the maximum entry price for target yield.
Worked Example
With a current price of $2.83 and a ceiling of $2.42, the entry is 16.9% above the ceiling.
How to Interpret
Prices below the ceiling imply a historical yield above 6%; prices above it imply a lower historical yield at entry.
At this price, you won't achieve Barsi's target 6% yield. Consider waiting for a pullback — market volatility often creates more favourable valuations for patient investors.
Sources
BESST alignment is a positive context signal. Non-BESST stocks can still qualify with strong yield and dividend consistency.
Non-essential businesses face demand drops during recessions — discretionary spending is first to be cut. This increases cyclical risk for dividends, but companies with decades of consistent payments can still demonstrate durability.
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