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HomeTrust On Sale (Oaken Financial)
June 2, 2017
2:35 pm
Top It Up
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

Weeks and weeks into their ordeal, HCG still hasn't been able to steady the ship ... continuing to report a slide in the Total GIC Deposit Balance.

------------------------------------------

From today's National Post

The Ontario Securities Commission’s proceedings against alternative mortgage lender Home Capital Group Inc. and three former executives have been adjourned until June 26.

June 5, 2017
2:37 pm
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

Total GIC deposits continue to slump.

June 5, 2017
4:19 pm
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From Real Estate Professional

http://www.repmag.ca/news/priv.....26350.aspx

“If you want to look at the unintended consequences of policies and what’s happened now with Home Capital, I think you will see the MIC market mushrooming,” CIBC deputy chief economist Benjamin Tal told Reuters. “You will see more and more activity going through to MICs.”

However, the trend is not without its dangers, as it means that Canadians are essentially relying on a segment with a lack of regulation and an unstable source of funding in a time of unprecedented levels of household debt.

“We’re transferring the risk from the regulated segment of the market to the unregulated segment,” Tal stated. “I really don't think it's a good thing.”

June 6, 2017
1:58 pm
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

HUGE drop in the Total Guaranteed Investment Certificate (GIC) deposits.

That explains the across the board jump, in the Oaken GIC rates.

June 6, 2017
2:04 pm
AltaRed
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Top It Up said
HUGE drop in the Total Guaranteed Investment Certificate (GIC) deposits.

That explains the across the board jump, in the Oaken GIC rates.  

Probably but at the same time, I suspect more mortgages are coming to term (since we know most HCG mortgages are not renewed at term) and thus it does not mean a liquidity issue. But it does mean a continuous slide in the size of the overall business. Interesting times ahead.

Added: HCG stock price remaining flat for awhile now.

June 7, 2017
4:23 pm
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

And the Total GIC number continues to diminish.

June 7, 2017
5:39 pm
Cranston
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While I am not a wiz at FI financial statements, I used to be real good at interpreting corporate statements. And to me their stats have decreased...but not that bad? What is the general consensus?

June 7, 2017
8:35 pm
AltaRed
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Well, as their deposits decrease and the volume of mortgages decreases, absolute cash flow from margin will decrease. Basically, their business is becoming smaller and they will have to shed costs (e.g. staff) to stay profitable.... and of course get out of that costly loan. I wouldn't be buying their stock if that is what you are hinting at.

June 7, 2017
8:55 pm
Cranston
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AltaRed said
Well, as their deposits decrease and the volume of mortgages decreases, absolute cash flow from margin will decrease. Basically, their business is becoming smaller and they will have to shed costs (e.g. staff) to stay profitable.... and of course get out of that costly loan. I wouldn't be buying their stock if that is what you are hinting at.  

No stocks for me. I sold them all off when Trump was first elected and the stock market improved.

Thinking of buying a GIC. I have some now, and yes well under $100,000 in total.

June 8, 2017
6:18 am
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Even the Marxists are weighing in

Home Capital Group Crisis Provokes Concerns Among Bourgeoisie

http://www.marxist.ca/analysis.....oisie.html

The task of Marxists is to be prepared for sharp and sudden changes in the objective situation, and it is not unlikely that a financial crisis would spark a political crisis with a collapse of support for the Liberal government, as we have previously explained. Recent world events suggest that this political crisis would be accompanied by political polarization to the left and right in society. As Marxists, we patiently explain the necessity to break with capitalism in order to once and for all end this system of crisis and instability.

June 8, 2017
9:34 am
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From the CBC

Mortgage rates ticking higher for subprime borrowers

http://www.cbc.ca/news/busines.....-1.4150023

Rates at alternative lenders have increased by as much as 150 basis points since the start of April

June 8, 2017
2:06 pm
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

June 8, 2017
7:29 pm
Loonie
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I am not 100% sure I understand their daily statements, Cranston, but it seems to me they are continuing a very slow bleed, which could go on for quite a while. I find it interesting that nothing seems to be "happening" with them right now. No announcements etc. What will it be when it comes? Nobody knows. Undoubtedly their business is shrinking as AltaRed said. I feel sorry for the employees; not their fault, and most are very good from what I've seen.

Another clue that people are not responding is that other FIs are not making an effort to come anywhere close to Oaken's current rates. So far, they may be actually benefitting from Oaken's plight as that drain must be going somewhere.

I'm wondering what your question really is in regards to whether to buy GIC. Do you not feel the CDIC insurance would work out? Not sure why you wouldn't want to take the risk, which appears to me to be minuscule.

I ask this not to provoke you but because it seems an awful lot of other people have also hesitated or pulled out, and I don't really understand why. Are they being irrational? I don't know. Oaken is doing a lot of advertising right now. What's unattractive about 3.25% CDIC-insured interest? Perhaps us "little guys" aren't enough to swing the tide? But it is us they are targeting with current advertising.

June 8, 2017
7:48 pm
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Loonie said
I am not 100% sure I understand their daily statements, Cranston, but it seems to me they are continuing a very slow bleed, which could go on for quite a while. I find it interesting that nothing seems to be "happening" with them right now. No announcements etc. What will it be when it comes? Nobody knows. Undoubtedly their business is shrinking as AltaRed said. I feel sorry for the employees; not their fault, and most are very good from what I've seen.

Another clue that people are not responding is that other FIs are not making an effort to come anywhere close to Oaken's current rates. So far, they may be actually benefitting from Oaken's plight as that drain must be going somewhere.

I'm wondering what your question really is in regards to whether to buy GIC. Do you not feel the CDIC insurance would work out? Not sure why you wouldn't want to take the risk, which appears to me to be minuscule.

I ask this not to provoke you but because it seems an awful lot of other people have also hesitated or pulled out, and I don't really understand why. Are they being irrational? I don't know. Oaken is doing a lot of advertising right now. What's unattractive about 3.25% CDIC-insured interest? Perhaps us "little guys" aren't enough to swing the tide? But it is us they are targeting with current advertising.  

If a ship was sinking would you climb aboard?

It's not sinking fast any longer. It has taken quite a bit of water. I think they want the government to help bail out the water. Not many regular people want to bail out water.

My point is. Most people don't want to keep a eye on the situation. I don't want to be thinking. Is the ship sunk yet? Or is it close to being sunk? And also have the burden of needing to check if everything is okay frequently.

It's the process I think most people are afraid of. More than worrying about personal loss. I don't want to beat a dead horse about personal loss being a possibility but extremely unlikely.

June 9, 2017
5:24 am
frank87
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FYI, recent Globe and Post reports that Home is negotiating a settlement with the OSC. Needless to say, the sooner they get past that, the sooner they can start to regain confidence again.

June 9, 2017
6:16 am
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From the Globe and Mail

Home Capital fielding private-equity takeover offers

https://www.pressreader.com/canada/the-globe-and-mail-bc-edition/20170609/281754154297450

Mortgage lender Home Capital Group Inc. is fielding preliminary takeover offers and is in negotiations to settle regulatory allegations as Canada's largest alternative mortgage lender bounces back from a financial crisis.

Home Capital recently received proposals from groups led by Toronto-based private equity firms Onex Corp. and Brookfield Business Partners LP, a unit of Brookfield Asset Management Inc., according to sources familiar with the situation.
...
A number of U.S. private equity funds are also in talks with Home Capital and its financial advisers, sources say.

The offers received to date are "speculative, conditional and not that attractive," said a source close to the process playing out at Home Capital …

June 9, 2017
7:24 am
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Well I for one, don't really care WHAT the outcome of the talks are because, for me, buying GIC's at the current rates are a "no brainer". I don't think these great rates will be around for long once the company gets its house in order, so it's now or never IMO.

With that in mind I topped up all my accounts yesterday, while still making sure I stay below the insured levels. And, providing those limits aren't exceeded, there's absolutely no reason why others can't do the same.

"Fear of process" is an unreasonable fear, because you don't have to apply for the insurance or anything like that. If the worst happens, CDIC will contact clients directly - not the other way round. So what is it about the process that's so scary folk are continuing to "look a gift horse in the mouth"? I don't get it.

As long as you have enough funds in other institutions to cover you over the time it takes to get your money from CDIC, I don't see what the problem is. Anyway, it's a calculated "risk" that I've just taken, because the current Oaken rates are well worth it IMO. sf-smile

June 9, 2017
7:59 am
frank87
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Typhoon said
Well I for one, don't really care WHAT the outcome of the talks are because, for me, buying GIC's at the current rates are a "no brainer". I don't think these great rates will be around for long once the company gets its house in order, so it's now or never IMO.

With that in mind I topped up all my accounts yesterday, while still making sure I stay below the insured levels. And, providing those limits aren't exceeded, there's absolutely no reason why others can't do the same.

"Fear of process" is an unreasonable fear, because you don't have to apply for the insurance or anything like that. If the worst happens, CDIC will contact clients directly - not the other way round. So what is it about the process that's so scary folk are continuing to "look a gift horse in the mouth"? I don't get it.

As long as you have enough funds in other institutions to cover you over the time it takes to get your money from CDIC, I don't see what the problem is. Anyway, it's a calculated "risk" that I've just taken, because the current Oaken rates are well worth it IMO. sf-smile  

Ironically, the sooner that other people come around to your line of thinking, the sooner that these elevated rates end. So perhaps it'd be wise to keep this more hush hush. sf-wink

June 9, 2017
8:35 am
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We don't really know anything about possible negotiations with OSC or takeover bids. The news report is "according to sources familiar with the situation". There has been no comment from any of the principals.
We also don't know what the motivation is for spreading these rumours.

June 9, 2017
2:21 pm
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Todays Liquidity and Deposits update from HCG

http://www.homecapital.com/pre.....202017.pdf

Total GIC deposits continuing their downward trend - doesn't seem to be much "appetite" for their industry-leading GIC interest rates.

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