Hearts and Minds Investments (HM1) Maintains Stable Net Tangible Asset Backing Amid Market Fluctuations

Overview of Hearts and Minds Investments’ Portfolio and Market Positioning

Hearts and Minds Investments Limited operates as an Australian listed investment company focused on cultivating a diversified portfolio of investments. Listed on the Australian Securities Exchange under ticker HM1 and headquartered in Sydney, New South Wales, the company offers exposure to both listed and unlisted investment opportunities. The latest update did not detail the full composition of its portfolio.

The company’s investment strategy emphasizes selective exposure to growth-oriented assets. Its principal unlisted investment is Rokt Pte Ltd, representing a significant portion of capital allocation. This structure enables participation in opportunities beyond traditional listed equity markets, providing shareholders access to companies at various development stages.

Rokt Pte Ltd Valuation Steady Despite Software Sector Instability

Hearts and Minds Investments continues to value Rokt Pte Ltd, its sole unlisted stock, at the same level as 31 December 2025. This approach aligns with the company’s valuation methodology for unlisted assets amid notable market volatility affecting the software sector. The board’s decision indicates no material change in Rokt’s fundamental value was identified during the recent reporting period.

As a technology-focused enterprise, Rokt’s valuation is particularly significant given the documented turbulence in global software and tech stocks during 2024 and 2025. By maintaining a stable valuation, the company signals that recent market fluctuations in comparable listed software firms do not justify a downward adjustment. The announcement highlights "significant market volatility, including in software stocks," confirming the board’s consideration of these factors in finalizing NTA figures.

Weekly Net Tangible Asset Performance as of 24 July 2026

The pre-tax NTA per share for Hearts and Minds Investments remained steady at $3.53 for the week ending 24 July 2026, unchanged from $3.53 the prior week ending 17 July 2026. This stability reflects consolidation in portfolio valuations with no significant changes over the seven-day period. The company reports multiple NTA measures—pre-tax, post-current-tax, and post-tax—offering investors varied perspectives based on tax assumptions.

The post-current-tax NTA per share increased slightly to $3.47 from $3.45, a $0.02 rise week-on-week, reflecting tax provisions on operating results and realised portfolio gains or losses. The post-tax NTA per share, accounting for tax on unrealised and realised gains and losses, also edged up from $3.28 to $3.29 per share. These modest increases suggest slight positive momentum in the underlying investments during the reporting week.

Understanding the Three-Tier NTA Reporting by Hearts and Minds Investments

Hearts and Minds Investments provides three NTA metrics reflecting different tax assumptions. The pre-tax NTA of $3.53 per share excludes any tax provisions, presenting a base case of net tangible assets. However, as a listed investment company with taxable investment income and gains, tax-adjusted measures offer a more accurate economic picture.

The post-current-tax NTA of $3.47 per share includes provisions for tax on operating profits, losses, and realised portfolio gains or losses but excludes tax on unrealised gains. The most conservative measure, post-tax NTA at $3.29 per share, incorporates tax provisions on operating results, realised, and unrealised gains and losses, reflecting the theoretical tax liability if the entire portfolio were liquidated at current valuations.

Market Volatility Challenges in Valuing Investment Company Holdings

The company’s recognition of significant market volatility, especially in software and technology stocks, contextualizes its valuation decisions. Illiquid and unlisted securities pose valuation challenges in volatile markets due to the absence of continuous pricing. The board’s judgment in valuing such assets introduces inherent uncertainty in reported NTA figures. Maintaining Rokt’s valuation suggests a cautious approach rather than reactive adjustments to short-term market fluctuations.

Investors should note the reported NTA figures are "unaudited and indicative only," underscoring their preliminary nature and the estimation involved in valuing unlisted investments. The referenced software sector volatility reminds investors that Rokt’s true economic value may differ from its stated valuation if sector weakness persists or if Rokt’s business conditions change materially. Without frequent market pricing, investors depend heavily on management’s periodic valuations and disclosures.

NTA per Share as a Key Valuation Metric for Closed-End Investment Companies

For closed-end investment companies like Hearts and Minds Investments, NTA per share is a fundamental metric to assess underlying asset value relative to market share price. The difference between share price and NTA per share—known as the "discount" or "premium" to NTA—is critical for investors. Shares trading at a discount may indicate value opportunities, while a premium reflects investor confidence in management or portfolio quality.

Weekly NTA updates, as provided by Hearts and Minds Investments, offer investors timely insight into portfolio performance between formal financial reports. The minor week-to-week changes—stable pre-tax NTA and slight post-tax increases—suggest modest positive portfolio movement amid broadly stable market conditions.

Tax Efficiency and Shareholder Net Asset Distribution

The $0.24 per share difference between pre-tax NTA ($3.53) and post-tax NTA ($3.29) represents roughly a 6.8% tax provision on pre-tax net assets, reflecting accumulated tax liabilities from realised and unrealised gains. For shareholders, the post-tax NTA better represents economic value after tax obligations.

Tax efficiency is a crucial consideration for long-term investors, as realising gains can trigger significant tax liabilities that reduce shareholder value. The $0.18 per share gap between post-current-tax and post-tax NTA indicates unrealised gains in the portfolio. If these gains are realised, tax liabilities could crystallise, potentially affecting shareholder distributions or necessitating capital preservation.

Key Factors for Investors to Monitor Going Forward

Investors in Hearts and Minds Investments should watch several indicators in coming weeks and months. First, the stability of Rokt Pte Ltd’s valuation amid software sector volatility is critical; future updates may reveal valuation adjustments depending on operational performance. Changes here would significantly impact the company’s overall NTA and share price.

Second, the trajectory of tax provisions—whether post-tax NTA narrows or widens relative to pre-tax NTA—will signal changes in portfolio realisations. Third, ongoing developments in the technology and software sectors remain important, as continued weakness could pressure a reassessment of Rokt’s valuation. The company’s statement that it "continues to carry Rokt Pte Ltd at the same value as at 31 December 2025" reflects cautious confidence in the current valuation.

Finally, investors should review the company’s formal financial reports and management commentary for insights on operational and strategic developments affecting Rokt and other portfolio holdings.

Company Governance and Investor Communication

Hearts and Minds Investments Limited follows a structured investor communication approach, providing weekly NTA updates to the market. Registered with the Australian Securities Exchange and governed by Australian Corporations Law, the latest update was issued by Company Secretary Natalie Climo to the ASX Market Announcements office. Weekly disclosures after Friday close offer shareholders timely portfolio performance information.

The company’s registered office is located in Sydney’s Chifley Tower. Additional information is available via the company website at HM1.com.au or through investor relations contacts provided. The unaudited and indicative nature of weekly NTA figures indicates these are management estimates pending formal audited figures in periodic financial reports.