Peter Gibson
Kingsway Financial Services
KFS-T
DON'T BUY
Jun 22, 2006
3 companies, Brookfield Asset Management (BAM.A-T), Home Capital (HCG-T) and Kingsway Financial (KFS-T) have been great calls for the last couple of years and all 3, in the last couple of months, have started to show weaker characteristics. Most of it is probably due to higher interest rates and prospects in the real estate market.
Even in the best of ties it has had quite a few challenges. The risk reward is negative. Doesn’t see a positive catalyst and risk of stock going to zero or near zero.
Turned a US company over to charity but regulators took them to court. Won but it is now being appealed. If they win it will be great for them. Has looked at this for a couple of years but hasn't liked what management was saying. New management is coming in. Could go bankrupt or become a 5-10 bagger.
The $4 level is significant. It'll be a fight to rise to $4. Yes, their insider buying is a good sign, but expect volatility here. To average in, look at the $2.63 level.