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HomeTrust On Sale (Oaken Financial)
June 26, 2017
12:30 pm
Brimleychen
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June 26, 2017
1:07 pm
frank87
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Brimleychen said
Look at what the shorter said
Noted Short Seller Marc Cohodes Comments On The Recent Events At Home Capital  

His M.O. is to blatantly lie and to misrepresent facts. An utter shame that Canadian media gave him so much publicity.

For anyone interested in his history, take a look at deepcapture.com

June 27, 2017
6:40 am
Saver-Mom
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"Wavering on Home Capital high-interest GICs? Buffett's got your back
By Rob Carrick
Globe and Mail Update
With Mr. Buffett helping to financially support Home Capital, the company may not need to offer premium rates for long
If Warren Buffett likes Home Capital enough to invest in its shares, then there's less reason to hold back on the company's GICs.
That 3.25 per cent, five-year guaranteed investment certificate that Home Capital's selling under its Oaken Financial brand? Get it while you can. With Mr. Buffett's Berkshire Hathaway helping to financially support Home Capital, the company may not need to offer premium rates like this for long."

https://beta.theglobeandmail.com/globe-investor/inside-the-market/wavering-on-home-capital-high-interest-gics-buffetts-got-your-back/article35420847/?ref=https://www.theglobeandmail.com&

June 29, 2017
9:47 am
Saver-Mom
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http://www.newswire.ca/news-re.....93853.html

"The Company also provided information regarding the growth of its Guaranteed Investment Certificate (GIC) deposit inflows, including Oaken and broker GIC deposits.

"We have been encouraged by the increasing strength of our deposit inflows, particularly since the recent announcement of the equity investment and new credit facility provided by Berkshire Hathaway. We believe that the improvement in deposit taking indicates a significant increase in depositor confidence in the Company", said Alan Hibben, Director, Home Capital."

Daily Gross GIC Deposits on June 26 $70 million, up from a low 6 weeks ago of ~$4 million per day.

June 29, 2017
11:56 am
frank87
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Saver-Mom said
http://www.newswire.ca/news-re.....93853.html

"The Company also provided information regarding the growth of its Guaranteed Investment Certificate (GIC) deposit inflows, including Oaken and broker GIC deposits.

"We have been encouraged by the increasing strength of our deposit inflows, particularly since the recent announcement of the equity investment and new credit facility provided by Berkshire Hathaway. We believe that the improvement in deposit taking indicates a significant increase in depositor confidence in the Company", said Alan Hibben, Director, Home Capital."

Daily Gross GIC Deposits on June 26 $70 million, up from a low 6 weeks ago of ~$4 million per day.  

Should be noted that current gross GIC deposit inflows of $70 million exceed their normal gross GIC deposit inflows of $30-40 million in a normal state. Shows that these rates are gaining quite a bit of traction.

June 29, 2017
4:37 pm
Jon
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Buffett save the day here, but I am concern what will happen when shareholder reject Berkshire' s proposal for the issuance of new share at a deeply discounted price ( I think Norman mention NAV per share is 28 bucks). Will it cause new round of bankrun?

July 2, 2017
7:53 pm
Norman1
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Jon said
Buffett save the day here, but I am concern what will happen when shareholder reject Berkshire' s proposal for the issuance of new share at a deeply discounted price ( I think Norman mention NAV per share is 28 bucks). Will it cause new round of bankrun?  

Not sure if it matters much now whether shareholders approve or reject the remaining $246.8 million of the $400 million investment from Berkshire Hathaway in September.

On Friday (June 30), Home Capital Group announced receiving $129 million from a previously-announced sale of commercial mortgages. Another $249.6 million from the sale of $252 million of residential mortgages is expected that same day.

$129 + $249.6 = $378.6 million, which is more than the additional $246.8 million potentially from Berkshire Hathaway.

The day before, Berkshire's initial investment closed and Home Capital Group received $153.2 million from that.

July 3, 2017
7:00 pm
Jon
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But Norman, if the equity investment a requirement in the terms of the LOC from BH, things can turn nasty again if shareholders reject the proposal.

July 3, 2017
7:37 pm
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I can't do justice to the conversation between Norman and Jon, but I did read, I think it was in the Globe and Mail, at the time of the BH deal, that there had been about 70 other offers / potential offers / serious inquiries, other than BH. This would suggest another deal could be made - perhaps even with BH, since Buffett says he finds Canada so attractive. (!) Meanwhile, very busy at the Oaken store in TO last Friday. HCG has successfully bought time.

July 3, 2017
8:15 pm
Norman1
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My reading of the June 21 press release is that only the interest rate on the LOC from Berkshire depends on the initial and additional investments. The LOC itself is not.

Interest rate will either be

  1. 9.5% on outstanding + 1.75% on undrawn or
  2. 9.0% on outstanding + 1% on undrawn

depending on certain things.

July 4, 2017
9:09 am
frank87
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Norman1 said
My reading of the June 21 press release is that only the interest rate on the LOC from Berkshire depends on the initial and additional investments. The LOC itself is not.

Interest rate will either be

  1. 9.5% on outstanding + 1.75% on undrawn or
  2. 9.0% on outstanding + 1% on undrawn

depending on certain things.  

Whether the rates on the LOC moves up depends on the Board's recommendation and NOT on how shareholders vote. The Board won't change its recommendation that shareholders should approve the 2nd tranche of the equity investment but the Board can't actually vote for shareholders. Also, the LOC and Berkshire's initial equity investment are NOT contingent on the shareholder vote on the 2nd equity investment.

July 4, 2017
9:11 am
frank87
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Loonie said
I can't do justice to the conversation between Norman and Jon, but I did read, I think it was in the Globe and Mail, at the time of the BH deal, that there had been about 70 other offers / potential offers / serious inquiries, other than BH. This would suggest another deal could be made - perhaps even with BH, since Buffett says he finds Canada so attractive. (!) Meanwhile, very busy at the Oaken store in TO last Friday. HCG has successfully bought time.  

If you've been following their daily liquidity updates. Their recent daily GIC gross inflows are now DOUBLE what they were pre-crisis. It seems likely that they may need to drop rates soon as they may be getting too MUCH liquidity (in combination with recent asset sales).

July 4, 2017
9:30 am
AltaRed
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Hopefully not until Labour Day. I want to re-invest maturing proceeds into a juicy HT GIC about that time.

July 5, 2017
11:49 am
Doug
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Norman1 said
My reading of the June 21 press release is that only the interest rate on the LOC from Berkshire depends on the initial and additional investments. The LOC itself is not.

Interest rate will either be

  1. 9.5% on outstanding + 1.75% on undrawn or
  2. 9.0% on outstanding + 1% on undrawn

depending on certain things.  

Correct and the plan is for the 9.0-9.5% to not apply within a couple months so they'd only have to pay the 1-1.75% standby fee, or $20 million on the $2 billion emergency "backstop" line of credit, and I'm assuming that's an annualized fee/rate so, payable monthly that'd be what...$1.66 million?

Cheers,
Doug

July 5, 2017
12:49 pm
frank87
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Doug said

Correct and the plan is for the 9.0-9.5% to not apply within a couple months so they'd only have to pay the 1-1.75% standby fee, or $20 million on the $2 billion emergency "backstop" line of credit, and I'm assuming that's an annualized fee/rate so, payable monthly that'd be what...$1.66 million?

Cheers,
Doug  

After the recent sale of $250 million in residential mortgages combined with recent commercial mortgage sales, Home will likely have paid off the initial drawdown on the Berkshire LOC in a few weeks time.

The 1% standby fee will hold unless the Board for some reason decides to reverse their recommendation to accept the 2nd equity tranche. Don't see that happening, but definitely see the probability that investors reject the 2nd equity tranche in spite of the Board's recommendation as a better than 50% chance.

July 5, 2017
12:55 pm
Brimleychen
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AltaRed said
Hopefully not until Labour Day. I want to re-invest maturing proceeds into a juicy HT GIC about that time.  

With the new offer from Tangerine @3.22% and the rate hike expectation, I think HT GIC rate will prevail until Labour Day. Have a great summer.

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