Home Capital Group (HCG.TO)

If you own this, it is probably okay to hang on to, but he wouldn't advocate buying it here. The opportunity was last year when there was a crisis. Often, with financial institutions, it's all about confidence. If there is no confidence and they don't have access to capital at reasonable costs, it’s very hard for them to be in the lending business. This has been stabilized somewhat by the investment by Berkshire Hathaway, selling some businesses and new management.

(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.

He likes that this has weathered its disaster. It’s probably found a level at its current price. He would continue to own and wait and see how it plays out.

It has been on his radar for a long time. It has always been puzzling that they traded at a high single digit PE ratio. They seem to be chronically undervalued. He regretted not owning it and then everything blew up. Warren Buffet is now a large equity holder of it. There is obviously something they like but he thinks there are better opportunities. He would steer clear for now, although he is impressed with the concept of the space.

Chart shows a series of lower highs from 2015 on. It has stopped making a lower low, so maybe there is hope. However, you need to make a higher high first. It will be difficult for this to get back up.

(Market Call Minute.) Has been struggling since the little disaster they had in the spring. Higher activity in the mortgage market by the government. He would either Hold or stay away.

You have to ask yourself why you are buying this. Is it for the yield or share price appreciation? If the yield, there are a lot of other places where you could get a similar yield, or even a better one. On share price appreciation, there is a lot of risk. If you are okay with the speculative nature, then maybe take a half position and hope to strike it right before things turn around. There are still lots of questions on this stock in terms of the business itself. Also, they are in a sector that is feeling pressure from rising interest rates, high household levels of debt. He wouldn't be a buyer. Keep it boring and get a lot of safety at the same time by looking at Canadian banks, or even the US banks.

Has been in a kind of whirlwind in the last 6 months or so. Warren Buffett came in with a lifeline, and gave them a new lease on life. New regulations are being introduced in the housing market, which will have a little impact on their business. He would rather own a safer name such as a bank.

Doesn’t think there is any money to be made in this. There are a lot of people more bullish on the stock than he is. Their capital issues have gone aside. They have the new investors and new management. His problem is the business model. It is a funding issue. The cost of financing has gone up, and he thinks the spread is tight, so where do they make money going forward?

He had been anxious to see how diluted the BV was going to be. Actually, not much happened. The balance sheet remains pretty much intact. Now that all the rubbish is behind them, the company can do what they were doing. Analysts are starting to get a little friskier with their earnings forecasts. In the next 6-12 months, he thinks we are going to see more and more upside momentum. On top of that, they may very well reinstate part of the dividend. The stock is trading at a huge discount to Book. (Analysts’ price target is $17.)

(A Top Pick Nov 4/16. Down 43%.) The whole market was somewhat askance at how the situation on this was handled. It literally caused a run on the bank. Also, for a while, it was tenuous as to whether this would survive. It fell so fast, that he decided not to dump his shares. His feeling was that the fundamentals of this business were still intact. They’ve managed to execute a recovery which was very astute. This was followed by Warren Buffett stepping in, and funding costs started going down. Recently announced they were going to stop paying some of the excessive rates they were paying on GICs, etc. He is still buying shares.

Seasonality does not apply to this because of all the things that have been going on during the last few months. Technically, there has been a low on the stock, followed by a Buffet bump and the stock reached what seems to be an overhead resistance level. There is basically a trading range now, and it wouldn’t be unusual for that range to stay there for quite a while.

This will probably motor up, because it was an extraordinarily important core company in the lower end of the mortgage market. There was a smell in the company, and new management came in. Quite often when new management moves towards the smell, it often later exits. Canadian Western Bank (CWB-T) seems to be taking some of their business.

This has been a battleground stock over the last year. There has been a lot of controversy, which culminated with an infusion of capital from Warren Buffett. The trouble was entirely of their own creation. They are going to survive and they have new management. The dividend is not likely to be reinstated anytime soon. He would prefer Canadian banks instead.

[Non-caller Question - news headline regarding class action settlement prompted host question] They recapitalized themselves. A ruling was made today on their lawsuit. This is probably the last thing they had to do to clean up. They were caught because they did business with these guys, caught it and then did not disclose it. The damage did more harm than the discloser. He thinks the shorts may be wrong in this one.