Home Capital Group (HCG.TO) Buy, Sell or Hold

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Home Capital Group (HCG.TO)

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44.26

-0.00 (0.00%)

as of Sep 1, 2023, 8:00:00 pm Market Open.

104 watching

HOLD

They had near death experience a few years ago and was saved by Warren Buffet. It was unfairly attacked by the OSC. History shows they do not make imprudent loans and their securty on loans has been fine. A recession may increase their cost of bad loans, but not in a threatening way. They do need to reduce their cost of funding, however. Through Oaken they pay the highest rate for GICs. The company is pretty safe now.

TOP PICK

Had a long downtrend until early 2017--a brush with death--then has gradually risen. It's testing resistance now, but seeing growing volumes. If this rises above resistance, pretty decent upside is coming. (Analysts’ price target is $26.61)

BUY

A great turnaround story. Big recovery with a solid business plan. This will return to the $30's soon. He's been watching it for a long time. Fundamentals score high, too. No, it's not a bank equivalent. It's unique. Exit at $21. Should hit $29 by the end of the year.

DON'T BUY

The issue is that Canadian housing growth is starting to slow. Also, with interest rates so slow, what is their funding model? HCG is at fair value now, after being rescued for dead by Warren Buffet. Can they keep originations and how profitable will it be? Also, what recent weak jobs data, how long will people keep buying homes?

DON'T BUY

The big challenge are their loans that are on the brink of default--they've ticked up a lot. If you can't get a home loan from the big banks, you go here. So, those homeowners will have trouble paying off their loans in a recession or cool-down.

HOLD

Likes the company. Where does it go from here? FMV is 150% higher than it is right now, and it's been there before, so the potential is there. They've been buying back stock. He thinks the company should reward shareholders with a dividend.

RISKY

It can be viewed as a speculative buy because things have turned around. It was a 100 bagger at one point. There were some disclosure problems and then Warren Buffet came in and is not exiting. Operationally they have been doing well.

PAST TOP PICK

(A Top Pick Jul 30/18, Up 25%) Balance sheets don't lie. There was nothing wrong with HCG, though many were afraid of this. HCG is still cheap and has terrific upside. He'd like to see the dividend return.

HOLD

It is very cheap right now. There is 180% potential upside, if you believe analysts earnings forecast. They need to use their earnings to pay a dividend. This would give the signal that management is under control again.

DON'T BUY

He feels badly about HCG. It had an enviable record as a lender until it got hit by short sellers. Berkshire-Hathaway was a white knight. True, some mortgage documents had some falsified information, but HGC never had bad debts. HGC was a victim of a concocted story and the short-sellers benefitted. B-H rescused HGC, but HGC has never restored its profitability, especially with new restrictions on first-time homey buyers. He has huge sympathy for HGC, but he wouldn't buy it. If you own it, hold.

DON'T BUY

It's been sideways for year without a yield and making no money. You could trade it around $18, but it's a dead stock. If you hold, this will be frustrating. Possible good upside though.

DON'T BUY

They've come back from the worst and re-orgnized their businesses. But they will be challenged. The banks too as home sales decline and those prices are flat.

HOLD

Different stock than it was during the selloff. Would continue to hold it at these levels where it’s basing. Next move will be up.

DON'T BUY

Was caught up with origination issues. Loan growth going forward is likely to be challenged. He prefers Timbercreek Fianancial in this space, it is much more defensive, and are not dealing with the liquidity issues that Home Capital are dealing with.

PAST TOP PICK

(A Top Pick October 5/17 Down 1%) He would have hoped the stock would have done a little better and is still sticking with it. He expects to see a resumption in the dividend soon.

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Home Capital Group (HCG.TO)