Street Capital Group Inc (SCB.TO)

Sold his holdings at about $2.85. Looks attractive here at $2.12. He would have to take a look at what is going on. A little bit of macro headwinds with questions about housing and interest rates. A lot of pieces in the puzzle. For riskier money, this is probably a decent time to enter the trade.

Did really, really well for a period of time, then earnings came out and people realized it was a longer-term story and it fell a bit. Last quarter, mortgage growth was 33%, originations were good and trading at 11X earnings. Earnings are expected to increase this year. The rate picture and housing picture still look okay this year in Canada. Think the renewals will be fine. Very, very interesting at this level.

(Market Call Minute.) Banks are walking away from the mortgage brokerage industry in Canada, giving opportunities to smaller companies like this.

Had a good run. There is some hype that is built into the stock price. Prefers Home Capital (HCG). No major issues with CXS, however.

(Market Call Minute.) Likes the business they are in.

He would make an argument that this is probably a good Buy here. He would be interested in getting back into this name. Doing a great job in the mortgage business.

Essentially they match up a mortgagee with a financial institution. This goes on to the financial institutions book, but they continue to administer the mortgage. Because they are administering the mortgage, they continue to have a relationship with the borrower. When the mortgage comes up in 5 years, they are the ones they are most likely to turn to. Because of this, their margins are about 2.5X of the renewals of the originals. They are in their 6th year of operation so we are now starting to get in the Golden age where they are getting the rollovers of the mortgages.

Mortgages. They don’t underwrite them themselves but are basically an agent. Do okay when they originate a mortgage, but do even better when they refinance it. Typically they refinance after 5 years. Have eaten up a lot of market share in 5 years. Refinancing is just starting now, that is, the business they wrote in 2008 is now starting to be rewritten and every year it gets bigger and bigger. What you want to be cautious about is how long can the housing market continue. If interest rates stay low, they should be okay. Have some hidden assets that are worth anywhere from $.30-$.80 a share and they are going to dispose of them and will probably pay a special dividend or redeploy the capital elsewhere.

(Market Call Minute.) Sold his holdings about 2 months ago. If it pulled back a little, he would probably Buy.

In a high profile area in terms of mortgages and is growing very fast and is still quite cheap. Their mortgage subsidiary is becoming a bigger player, probably #4 and it’s still a relatively tiny company. Any stock that has gone up so much tends to be exceptionally volatile. Feels this is quite viable. Likes the management team, the sector, the growth and the valuation. If the housing market rolls over, their business is going to slow down but he doesn’t think that is going to happen.

Still offers good opportunity. Focusing on their Book and they are streamlining their business making it easier for investors and analysts to follow, which is in part why the stock has moved up. Still reasonably priced with good opportunity for growth going forward.

Likes it. Met with CEO yesterday. Bulk of portfolio are 5 year mortgages, maturing next year.

They buy mortgages in the mortgage broker channel and are the tops in this game. Just reported and didn’t just beat earnings, but crushed them. Thinks there is more good news to come.

Have completely changed their business. Now focused almost entirely on the mortgage market. Have a subsidiary that is growing exceptionally fast and doing much better than the overall market. Likes it when he finds a company that is doing better than the industry. Despite the big, big run, it is still relatively cheap.

Mortgage company. They originate prime and insured mortgages via mortgage brokers. They use in-house underwriters to assess mortgage applications. As a result, their arrears in their portfolio are 20 basis points as compared to 32 basis points, which is the average. Appear to be on track for a 40% growth rate in the number of mortgages sold in 2013. Analysts forecast earnings to grow at 41% this year and 58% next year.