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Is Oaken Vulnerable: Home Capital Group
April 24, 2017
5:22 pm
Brimleychen
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It seems some of the paid shorters just want to create panic for a bank run here. They paid a lot publicity. For the depositors here, nothing needs to worry about.

You link
https://www.bloomberg.com/news/articles/2017-04-24/home-capital-founder-soloway-to-step-down-after-osc-allegations
....
The stock is the most shorted among Canadian financial companies, with investors having a short interest in about 60 percent of the shares available to the public, according to data compiled by Markit. Short sellers profit from price declines by selling borrowed securities and repurchasing them at cheaper levels.
...

April 24, 2017
5:24 pm
Doug
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Dr_Hubert said
This should get people very very concerned about HCG equity. Where is the bid in this Instrument? Had the same conversation with another investor this morning. Credit blowing out is usually a tell tale sign ...

concerned about HCG equity  

I agree, technically, this stock has absolutely no "support". Fundamentally, it's dirt cheap but will come under selling pressure, I think, as existing investors exit the stock every time the stock gets "bid up" for the foreseeable future and the shareholder base gets turned over.

Still, they've largely dealt with the bad mortgage originations from the bad mortgage brokers (I'd like to know what percentage of their mortgage book is associated with those mortgages as at their most recent fiscal quarter).

I'm looking at it as either a potential short-term buy for myself or possibly as an entry point for a long-term hold. I think, at 65-70% of tangible book value and something like 4-5 times the trailing 12 months earnings per sure, it's really attractive and I don't think it's going to go anywhere. One of three things will likely happen:
1. the shareholder base turns over over the medium-term and the stock eventually "bottoms" and resumes its upward trajectory (timelines to be determined);
2. an existing FI comes in with a bid to grow their portfolio and "book of business" but they'll have to offer a bit of a premium and I suspect HCG's Board wouldn't let it go for less than book value; or,
3. (the least likely) the regulator steps in and HCG goes under. I don't see this as likely.

Cheers,
Doug

April 24, 2017
5:25 pm
Doug
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P.S. You actually paid for a Bloomberg terminal? 😉

Cheers,
Doug

April 24, 2017
5:31 pm
Dr_Hubert
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Top It Up said

Dr_Hubert said

Mom, try to understand that HCG will be crashed and soon you will witness a run on the bank. 

ONCE AGAIN for clarity, before anyone starts running to their balconies and wondering if 15 stories is high enough ... that's neither here nor there to depositors within the CDIC limits.

Not 15, but 28 stories and in 30 days we went down to floor 17. By the end of May you will be in the confortable zone of the ground.

HCG share price down 36%

April 24, 2017
5:43 pm
Saver-Mom
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Incoherent ramblings

April 24, 2017
5:49 pm
Saver-Mom
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“While the board changes are likely to be viewed as a positive step toward bringing in new leadership at the management and board level, the significant news is the resumption of GIC sales at Scotiabank as this is likely to help alleviate a certain or full extent funding concerns," RBC Capital Markets analyst Geoffrey Kwan wrote in a Monday note.

April 24, 2017
5:50 pm
Brimleychen
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Doug said
P.S. You actually paid for a Bloomberg terminal? 😉

Cheers,
Doug  

The so-called Dr Hubert just joined our forum today, and his bloomberg chart for the HCG bond maturity next month was stolen from the twitter account of the shorter Marc Cohodes.

April 24, 2017
6:01 pm
Brimleychen
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I just visited Oaken Financials branch at downtown Toronto this afternoon, and had met a rep, her name is Jessica.

Everything is business as usual.

We are here as savers, and only worryingg about our saving safety, and are assured by CDIC as both HomeTrust and HomeBank.

As i repeated here, we will be compensated by the high rate, as results. Not only from Home Trust, but also from others alternate lenders.

That is part of reasons the big banks want to throw in the towel now.

It is very brutal in financial market. We are savers, not investors.

April 24, 2017
6:09 pm
Saver-Mom
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Brimley, you are a wise man indeed!

So much hyperbole by people of questionable motivation must not be taken seriously.

April 24, 2017
6:46 pm
Norman1
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Saver-Mom said

So much hyperbole by people of questionable motivation must not be taken seriously.  

I absolutely agree. Completely rabid misrepresentation of facts. Kind of weird. But, I can almost hear the heavy panting!

If one looks closely at that ominous-looking chart in posting #62, one sees that it is the price of uninsured Home Capital Group 3.4% bonds due December 2018. Last trade was 98.748% of face value. Trading for 98.748¢ on the dollar doesn't sound like they are about to roll over.

Just checked Scotia iTRADE. Far from no-bid, the last quote for the day for those bonds was bid of 97.746% and ask of 98.850%.

What about those $300+ million worth of 2.35% bonds coming due May 24? Bid 99.510% and ask 99.890%!

April 24, 2017
9:36 pm
Dr_Hubert
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For sub-prime lenders like HCG provisions for bad debts (something like 0.06%) are a FANTASY.
provisions for bad loans

April 24, 2017
9:43 pm
Dr_Hubert
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If there is a loss of confidence in HCG ability to continue as a going concern, nobody is going to buy the GICs! The profitability metrics won't mean diddly squat because there won't be any liquidity, and then the HCG Jenga tower will come crashing down. It's as if nobody learned anything from Lehman Brothers or Bear Stearns - simply mind-boggling.

April 24, 2017
9:53 pm
Loonie
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And now we're picking on certain ethnic groups?

As most "regulars" here know, I am not keen on stock market investing personally, but, even so, if I owned this stock, I would not be worrying about this latest problem. To my mind, this is a clear case of "stocks go up, stocks go down". Yawn.
Probably a buying opportunity for those who are so inclined.
There are lots better things to worry about in the stock market!

BrimleyChen: while I agree with your perspective, do remember that Oaken staff are also investors in HCG and are not objective sources about the organization. I asked someone in my first visit to that same office a couple of years ago, and was told they do get shares as part of their job. I forget the proper term for that practice.

April 24, 2017
9:53 pm
Norman1
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Dr_Hubert said
For sub-prime lenders like HCG provisions for bad debts (something like 0.06%) are a FANTASY.
provisions for bad loans  

How about you start reading the material you post, besides what someone else has highlighted in yellow?

Circled provisions is 0.06%. What does the "Net Write Off" say for that time period that is not circled? 0.05%. The provisions are higher than the actual loan write offs. Imagine that!

Maybe, just maybe, the Home Capital Group people know how to accurately estimate their losses and the dimwit with the yellow highlighter does not?

April 24, 2017
9:55 pm
Dr_Hubert
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April 24, 2017
9:59 pm
Norman1
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Loonie said
… I asked someone in my first visit to that same office a couple of years ago, and was told they do get shares as part of their job. I forget the proper term for that practice.  

That sounds like some kind of employee profit sharing program.

April 25, 2017
1:43 am
Saver-Mom
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I think Brimley was indicating that there was no evidence of any panic at the branch he visited.

Thanks, Norman, for knowing how to interpret the data and setting the record straight.

And Loonie for pointing out the criteria for suspicious posting behaviour on the other thread, which applies here.

April 25, 2017
2:52 am
Loonie
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Norman1 said

That sounds like some kind of employee profit sharing program.  

Could be. She did say "shares" and it was clearly stock market shares because she talked about how they were going up in value.

April 25, 2017
12:01 pm
Dr_Hubert
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Can we get a comment RATEHUB.CA please?

HCG removed from RATEHUB.CA

What will Dr. Smith say tomorrow? HCG and GIC's No BUENO.
no bueno

April 25, 2017
12:03 pm
Dr_Hubert
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