Street Capital Group Inc (SCB-T)

Has held this in the past, but it is going to take a bit of time for them to start to see the benefits of their bank license, which they just recently got. In the meantime, they built up a lot of costs and have been sitting on those costs without any revenues to offset them. The ramp-up will take at least 6 months, if not longer. You are going to have to be patient.

He has been involved with this in the past with a Long position, hedged against Home Capital Group (HCG-T), as it traded at a significant discount to that. Still thinks it is an interesting name, but it has been waiting for its bank license to come through. Until that comes through, he is going to sit on the sidelines. It is a good name.

Likes it. It is in the housing sector. They act as a middle man between institutions who want to lend mortgages and borrowers who want to borrow. They sometimes use a broker to facilitate the trade. Then they take it off their books so there is no risk for themselves. Likes the growth profile of the business. Should be a decent year for them.

(A Top Pick June 18/14. Up 27.47%.) Continues to like this. They are #4 in terms of their market share as a residential mortgage lender in Canada, just behind Home Capital Group (HCG-T). They have about $21 billion on mortgages under their administration. It has a lot of potential, which he feels is not being captured by the street.

A residential mortgage lender, but don’t actually take the mortgage on their own Book. They act as a facilitator between a financial institution that wants to lend money, and a borrower who wants to borrow money. They would administer it, but it would immediately go off their books, so they don’t have any default risks personally. It absolutely got pulverized by the market last year. It was down 24% in 2014 compared to their peers Home Capital Group (HCG-T) and Equitable Group (EQB-T), Equitable was up 29% and Home Capital was up 24%. Thinks it was really unfairly punished by the market. The Q3 numbers were the real catalysts for the stock, which very much surprised the street, so that in the last 3 months, there has been a recognition, and the company is up 28%, where Home Capital is down about 18% and Equitable Group is down about 14%. Probably trades at about half the valuation of its peers. Expects the stock to grow at about 30% this year and is trading at only 6X forward earnings.

(A Top Pick Dec 16/13. Down 11.27%.) A perplexing one because they have actually delivered on their earnings this year, and are down compared to some of their peers. Thinks 2015 will be an interesting year for them. Expecting them to get their bank license in the 2^nd half of the year. Generally, their business is going very, very well. A high growth business that is trading at about half the multiples of Home Capital (HCG-T).

There is a lot of attractive valuation in this stock. Have had a lot of costs this year in preparing for their bank license, and they don’t have any of the revenues. He is hopeful that when the bank license comes in, they will be able to capitalize on their investments.

Used to follow this and owned it, but got out when he got frustrated with how the market behaved. This is one of those stocks that would sell off for no reason. They put out good numbers and the stock would go down. This company is in the mortgage space and would be hurt by a housing correction. He is not interested in this one right now.

(A Top Pick Aug 2/13. Down 16.69%.) This has been a disappointment, however this is a reasonable opportunity, but he would not buy it today.

Non-bank lender. In operation over 5 years and now that 5 year mortgages are renewing they are getting an increase in profits. They are down vs. HCG-T. He might short HCG against CXS-T.

(A Top Pick July 26/13. Up 5.55%.) A special dividend was paid out in April. This has been a frustrating ride. It has been volatile and difficult to understand, because of all the non-core assets. Their mortgage business is superb and a market leader, and now reaching the stage of renewals, which should give higher margins.

This has done very well. Balance sheet is in good shape. Appears to be smartly managed. Thinks it is at Fair Value. One of his concerns is the real estate market, which he thinks is overheated. If interest rates go up, and he thinks they will, the real estate market could be dramatically slashed, and this company might get hit, but the balance sheet is in good shape, and they can handle it.

A lender in the residential space. Likes their potential earnings growth. Because the typical mortgage in Canada is 5 years, they are starting to get some of those rollovers coming through in the portfolio, and the profitability in those is about 2.5X an originated mortgage. Thinks there will be quite an improvement in profitability going forward. Inexpensive at about 9X earnings. One of the catalysts coming forward is their application for a bank license, which will open up some other opportunities.

Still likes it. It was a top pick. They sell, or administer mortgages. Typically you renew a mortgage after 5 years and this company is 5 years old. They make lots more margin on a renewal than on the original sale. As long as the housing market stays robust they should do okay. They have been selling non-core assets. He wasn’t impressed with how one was disposed. The stock chart does not look healthy, but it doesn’t look like a loser.

Had a pretty big pull back. There was a fair amount of enthusiasm for the stock this summer so the question is, was that misplaced or not. Finds it to be very attractive at the current levels. Released their results at the end of March which he felt were quite good. There are some competitive pressures within the mortgage lending space. Announced about a year ago that they were going to clean up the business so it is now a holding company that holds one asset, Street Capital, a mortgage lender. Around April 28, you will be receiving shares in Heritage Global, which is currently trading in the US. Management does not know when to sell so leaving the decision to you.