Opinions
Ross Healy
Home Capital Group
HCG-T
PAST TOP PICK
Jan 19, 2018
$15.490
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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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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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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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(A Top Pick May 8/17. Up 127%.) Still likes the stock. He bought this when it was trading at about 20% of its BV, and after examining it, came to the conclusion that the market was dead wrong. When you get this kind of return, you should take your money out, and then play with the money for free. However, this is still trading at quite a discount to its BV, and its FMV is well over 100% higher than what the stock is currently. Expects they are going to reinstate some kind of a dividend.