Home Capital Group (HCG.TO)

Residential non-bank lending. They have done well. We are still seeing robust activity in Toronto and Vancouver in the housing sector. HCG has different businesses. But she would prefer a big bank because they are not so concentrated.

Biggest non-bank lender in Canada. Customers don’t have 3 years of stable income which the banks like to see. It is selling off because of energy concerns. But it picks and chooses its regions and they have less than 4% exposure to Alberta, Saskatchewan and Newfoundland. The sell off is a buying opportunity.

Non-conventional lending, but not high risk. The stock did very, very well for a long time, but valuations got a bit extended and he sold his holdings. Trading at nearly all-time highs. If you like what they do and you like financial services in general, some of the non-bank financials will continue to do very well.

They do mortgage financing to clients that banks don’t necessarily provide to. Have a very good record on credit quality. She is looking into this one for herself. With a pullback in the banks, this is a very good time to be looking into them. Currently she would be more interested in the Canadian banks rather than this company.

Have been growing their earnings at 20% per annum for the last 15 years and he doesn’t see this slowing down. The risks on this are headline risks. This is one of the cheapest things that he follows. If you are a long-term investor and are patient, continue to hold. He is not adding to his position at this time.

The best in its businesses of picking up the non-very high end loans. It has had a decent correction. Thinks the talk of the demise of the Canadian housing market is totally overdone.

This is a non-prime mortgage lender. He likes the name, because their lending standards are quite stringent. His view is relatively constructive on the Canadian housing market. A very well-run company with a diversified housing portfolio.

This has been hit lately. It is always easy to be Short or be negative on a narrative. The narrative is “Canadians have too much debt, the housing market is overvalued, and with oil and gas going down, etc., etc., so Short banks and this company.”. Has heard this story every year for13-14 years. As interest rates go low, people can carry more debt. At the end of the day, you are not paying a high valuation. They have delivered double-digit growth pretty much every single year since it existed. Yield of 1.91%.

A blue chip company. ROE has not gone below 20% since 1993, which is due to Down cycles. Doesn’t expect this to change. Every once in a while, the stock goes up really, really fast and then it corrects, so there is a bit of volatility. The correction that happened in December hit a lot of stocks. Financial services stocks are sometimes perceived to be risky. In this case this is a mortgage lender in Western Canada. Because of the drop in oil, the concern is whether people can pay their mortgages in Alberta or Saskatchewan. He thinks this is going to be fine. This is a good time to get in. A 12 month target price of $58 is very reasonable.

This is an alternative lender in Canada and one of the premier financial growth stocks. Has grown at an almost 20% clip for the last decade. Grew right through the 2008 crisis. Never had big problems with exposure to bad debts. Sold his holdings because it had had an incredible run from the middle of 2013. Has pulled back to just under 10X earnings and he is keeping an eye on it.

You can’t argue with what the management team has done. Phenomenal job. Great return on equity growth. They continue to build the market up. For a longer-term investor, it certainly has good prospects. Had a recent selloff. Their latest quarter was not as strong as the market was anticipating, because so much expectation had been built in based on what they had done in the past. Also, as capital has moved out of Canada, it has been targeted a number of times by US institutions as a Short sale, because of their exposure to the housing sector. Bank of Canada just came out with a report saying the housing market in Canada is probably 30% overvalued. This company is very careful about the sectors and the areas that they take clients in. With its pullback, the P/E ratio and the metrics it is trading at. For an investor with a 3-5 year timeframe, this is probably a great entry point. It will probably go lower.

(A Top Pick Oct 18/13. Up 39.68%.) Have had a very consistent ROE. Risk management is extremely prudent. With interest rates low and stable where they are, he thinks this will continue to generate those 20%-25% returns every year. One of those great stocks that you can ride forever and ever. One of the cheaper stocks on the TSO.

Very diversified portfolio of mortgages, so he wouldn't be concerned about their exposure to any particular community. Extremely well-managed. Their loan losses are very, very low. Good management team.

(Top Pick Oct 25/13, Up 37.35%) They have done nothing, but the right thing. ROE is very high. Raised their dividend when markets were down.

(A Top Pick Oct 18/13. Up 39.04%.) There is a tremendous amount of intellectual capital tied up in the building. You get a steady 20% ROE. Very, very low loan losses, because their loan to value is very, very low.