Home Capital Group (HCG.TO)

(Top Pick Sep 26/12, Up 14.82%)

(A Top Pick Dec 12/11. Up 7.13%.) Best management financial services company in Canada.

Short. The stock has been fine and a descent performer and he shorted it after the last report. He thinks any sub-prime lender is going to take a hit over the next two years.

Likes this one. In the mortgage business and kind of a niche lender. Basically, you buy it at $45 and it tends to go to $55 and comes right back to $45 roughly every 6 months like clockwork. Has always been cheap. Loan to value is very healthy. You’ll always have the wall of negativity because it is mortgages and is always trading at 6 or 7 times earnings.

(A Top Pick Nov 10/11. Up 5.11%.) Company is growing very nicely. Keeps originating mortgages and doing well with their credit card business. He is still very bullish on them. Fast grower. Dividend has gone up just about every year since he’s owned it. Very prudent lenders so even if there is a housing bust, loan losses will be quite small. You get more growth than the banks at a similar PE ratio and the dividend will probably grow up to the bank level. 1.8% yield.

(A Top Pick Aug 29/11. Up 5.37%.)

Trading at 7-8 times next year’s earnings because of the overhang that Canadian real estate is going to collapse, which he doesn’t see happening. (Sees a slow decline.) Banks are turning away good loans, which are going to this company. Increased their loans by 39% this last quarter.

Just because someone doesn’t qualify for a loan at the bank they may be happy to loan. New immigrants. They do good due diligence on all of their loans. 15% earnings growth, 7 times PE for 2013.

(Market Call Minute) Buy because it is cheap and it always outperforms.