Heritage Global (HGBL) Planet MicroCap Showcase: VEGAS 2025 summary

Company overview and business model

• Operates as a market maker in financial and industrial assets, focusing on disposition, lending, and valuation.

• Has maintained profitability for over seven years, with a market cap around $80 million and trades on Nasdaq.

• Revenue is split between financial asset brokerage (notably charged-off loans) and industrial asset auctions.

• Pioneered the sale of written-off loans, now serving both major and regional banks, as well as fintech and alternative lenders.

• Industrial auctions are conducted for major global companies, with a focus on sectors like pharma, defense, and food.

Market trends and growth drivers

• Growth in charged-off loan supply is expected due to increased consumer debt post-pandemic and the rise of buy now, pay later models.

• Anticipates a wave of asset sales starting mid-year, with two years of growth projected as credit card and auto debt charge-offs increase.

• Industrial auction growth is driven by corporate right-sizing, environmental pressures to repurpose assets, and supply chain concerns.

• Used equipment values are rising due to supply chain disruptions and tariff worries, benefiting auction activity.

• Layoffs and plant closures create a delayed but predictable backlog of surplus assets for auction.

Strategic positioning and outlook

• Focuses on sectors unlikely to be outsourced, such as pharma and defense, ensuring long-term auction opportunities.

• Emphasizes adaptability, having shifted from traditional to online auctions and diversified client base.

• Sees a "sweet spot" for growth over the next two to three years due to macroeconomic and industry trends.

• Profitability is tied to the volume of assets available for sale, with cyclical spikes based on economic conditions.

• Encourages investment based on anticipated increases in asset supply and proven execution track record.