HMC Capital (ASX:HMC): Investors have sent it down 70% in a year but the CEO says it is performing…Who is right?

Between investors and HMC Capital’s management (especially David Di Pilla), they cannot both be right about the company. Investors have sent shares down 70% in 2025, yet the company claims things are going well, and Di Pilla reiterated that at last week’s AGM. Only one is right, so who is? That is what we’ll seek to answer.

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About HMC Capital

HMC is a ‘real assets’ manager. Historically, it was just a property owner, but it has become a broader diversified fund manager. Its stated medium-term goal is $50bn.

The company only listed itself in October 2019 when it had just under $1bn in assets. It has gone on to list no less than 3 further REITs, HomeCo Daily Needs REIT (which ultimately merged with Aventus), HealthCo Healthcare & Wellness REIT and date centre owner DigiCo.

Unlike many asset managers, it has multiple growth vectors with exposure to property, real estate, credit, infrastructure and energy. It has a high amount of liquidity, a good track record of returns in PE and its management is highly aligned with shareholders.

In 2025, the company recorded $224.6m in pre-tax operating earnings, up 74% in a year, and pre-tax operating EPS of $0.56, up 51%. Its AUM was A$18.7bn, reflecting 47% growth, and it had no drawn debt according to its balance sheet.

HMC told investors it was entering FY26 with “significant momentum,” a strong balance sheet, and an enhanced capacity to raise and deploy funds at scale. Nonetheless, it was targeting just $0.40 EPS in FY26 and just $0.12 distribution.

Investors and management are not seeing eye to eye

As we noted, shares are down 70%. Of course, it is difficult to pinpoint anything specific. Yes, investors hated lower EPS estimates, but that in its own right shouldn’t mean a 70% decline.

Unfortunately, it isn’t going so well in some of its investments, particularly renewable energy. Perhaps investors perceive it is burning a lot of money and not making much back. This is true in a lot of the sector, but not necessarily at the company.

However, there have been some incidents that would give rise to that perception. In particular, HMC delayed the settlement of its $950m  acquisition of Neoen’s Victorian renewable assets by one month. That deal is strategically important for its energy-transition platform, so the delay rattled confidence.

On top of that, the head of HMC’s energy-transition business, Angela Karl, resigned unexpectedly, which spooked investors about continuity in that divisional. The company also reported a fire incident at one of the Bulgana wind farm turbines, which raised safety and operational concerns.

There are also concerns about performance in the individually listed REITs. In particular, HealthCo was hit by financial distress at Healthscope, which is a major tenant. Healthscope entered administration in May 2025, and it was not able to pay rent until November. The money has come in now, but the situation was enough for HealthCo to suspend distributions until the situation was resolved. And this meant delayed cash flows to HMC as it is an investor.

Investors are nervous

General investor sentiment has not helped. There’s broader risk-off sentiment in growth and alternative-asset stocks. In times of macro stress or higher rates, investors may be less willing to “pay up” for high-growth or high-risk managers.

Especially when it is paying out such a low proportion of its earnings. Why invest in a company that’ll earn 40c EPS but only pay back 12c, when you can invest in a REIT that’ll give you back at least 90% (if not 100%) because paying dividends is one of key reasons REITs exist?

Some analysts have pulled back optimism. For example, Morgan Stanley cut its target, citing more conservative AUM growth, whilst Jarden (even in spite of saying the drop was overdone) believed things would remain volatile.

And of course, it goes without saying, the company’s $50 bn AUM target in 3–5 years is very aggressive. Some investors may be re-evaluating whether that ambition is still credible given recent execution risks. If the growth trajectory doesn’t play out exactly as hoped, the downside from current share prices could be large.

Conclusion

Does HMC Capital deserve to have declined 70% in a year? Probably not. But investors do have legitimate concerns that the company needs to resolve.