Opinions David Baskin
Home Capital GroupHCG.TOBUYJan 09, 2014
David BaskinOwned
$77.30
Stock price when the opinion was issued
$44.26
As of Sep 01, 2023. Market Open.
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DON'T BUY
If you want to own a lender, please own Canadian bank stocks instead. HCG and others don't have the same access to capital, so they can get caught in a liquidity squeeze. Borrowers pay a higher rate of interest. If housing market has a hiccup, HCG would be more exposed than the banks.
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STRONG BUY
A few years ago, it was one of his beloved stocks until it got slammed by comments from the U.S. and OSC. It has since rebounded. Its fair market value is 154% higher than the current price. If it can break out from the current $45 price, this will enjoy a nice upside. They are also buying back a lot of shares, which he thinks is stupid; raise the dividend instead.
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BUY
What is interesting about them is that they came through mortgage hell in 2008 with barely a ripple. It has also emerged from COVID-19 issues with barely a ripple. It is very cheap compared to its long term book value of $45. The fair market value is huge and the balance sheet is fine. He wishes they would institute a dividend that would give investors more comfortable that everything is fine. He thinks deferred mortgage payments will not be an issue for them. In a recovery, it will do very well.
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PAST TOP PICK
(A Top Pick Oct 01/19, Up 41%) He recommended it when it was basing and, as he predicted, it popped. Now, it's peaking, so he expects a 10% pullback, so wait.
Javed MirzaOwned
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BUY ON WEAKNESS
PARTIAL SELL
Recently he took profits, because his cost base was a third of its current price. It's had a tremendous run. The company has come back from its problems a few years ago, thanks to new managers who will continue to do well. He would buy more later. You can take some profits now.
Michael SprungOwned
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Looking at the balance sheet, he is convinced their loan to value ratio is very reasonable. Even if there was a disaster in Canadian housing, say prices went down 25%-30%, feels this company would still be fully covered on its mortgage book. Have recently opened up a retail deposit taking institution, which will increase their availability of capital at a reasonable price. Excellently run and trading at a lower multiple of earnings. Lower than the banks, but with a higher growth rate but lower dividends.