Home Capital Group (Symbol-HCG)

Discuss your favourite picks, broker, and trading or investment style.
jay
Silver Ring
Silver Ring
Posts: 426
Joined: 19 Feb 2008 21:13

Re: Home Capital Group (Symbol-HCG)

Post by jay » 03 May 2017 10:23

Maybe worth noting that Mawer New Canada had 10% of its holdings in HCG and EQB the last time I checked. I will be tracking what the fund manager does next with these holdings. This is a top small cap fund and one of the best funds out there.

ig17
Gold Ring
Gold Ring
Posts: 2379
Joined: 21 Feb 2005 20:54

Re: Home Capital Group (Symbol-HCG)

Post by ig17 » 03 May 2017 10:43

jay wrote:
03 May 2017 10:23
Maybe worth noting that Mawer New Canada had 10% of its holdings in HCG and EQB the last time I checked. I will be tracking what the fund manager does next with these holdings. This is a top small cap fund and one of the best funds out there.
They exited their HCG position last week.

https://www.bloomberg.com/news/articles ... agion-odds


bill2009
Silver Ring
Silver Ring
Posts: 252
Joined: 03 Mar 2005 14:22

Re: Equitable Group Inc (Symbol: EQB)

Post by bill2009 » 04 May 2017 08:44

I was guessing the other day that the run on Home Capital might be small businesses stashing cash there and not protected by CDIC.

jay
Silver Ring
Silver Ring
Posts: 426
Joined: 19 Feb 2008 21:13

Re: Home Capital Group (Symbol-HCG)

Post by jay » 04 May 2017 11:14

ig17 wrote:
03 May 2017 10:43
jay wrote:
03 May 2017 10:23
Maybe worth noting that Mawer New Canada had 10% of its holdings in HCG and EQB the last time I checked. I will be tracking what the fund manager does next with these holdings. This is a top small cap fund and one of the best funds out there.
They exited their HCG position last week.

https://www.bloomberg.com/news/articles ... agion-odds
Good read. Thx!

User avatar
AltaRed
Diamond Ring
Diamond Ring
Posts: 18387
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Home Capital Group (Symbol-HCG)

Post by AltaRed » 04 May 2017 11:29

Gotta remember someone else is taking the opposite side of these big exit positions.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom

jay
Silver Ring
Silver Ring
Posts: 426
Joined: 19 Feb 2008 21:13

Re: Home Capital Group (Symbol-HCG)

Post by jay » 04 May 2017 12:55

true. But IMO when a top fund manager like Mawer exits, it is worth taking note of.

User avatar
AltaRed
Diamond Ring
Diamond Ring
Posts: 18387
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Home Capital Group (Symbol-HCG)

Post by AltaRed » 04 May 2017 12:56

jay wrote:
04 May 2017 12:55
true. But IMO when a top fund manager like Mawer exits, it is worth taking note of.
Can't argue with that logic.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom

Taggart
Gold Ring
Gold Ring
Posts: 6223
Joined: 05 Dec 2005 07:34

Re: Home Capital Group (Symbol-HCG)

Post by Taggart » 04 May 2017 15:34

jay wrote:
04 May 2017 12:55
true. But IMO when a top fund manager like Mawer exits, it is worth taking note of.
Well if a top fund manager like Mawer and also QV Investors Inc. sold out of HCG last week, the same time as this amateur here, then I don't think it's something to brag about.

ig17
Gold Ring
Gold Ring
Posts: 2379
Joined: 21 Feb 2005 20:54

Re: Home Capital Group (Symbol-HCG)

Post by ig17 » 04 May 2017 19:11

Terence Corcoran:

The Kool-Aid man out to kill Home Capital raises a glass to the OSC

I hold Corcoran in fairly low regard. In this case, I agree with pretty much everything he wrote in the column.

Rysto
Silver Ring
Silver Ring
Posts: 108
Joined: 10 Nov 2010 21:16

Re: Home Capital Group (Symbol-HCG)

Post by Rysto » 04 May 2017 22:26

I'm sorry, but that article is bull. It's not the OSC's fault that HCG's depositors inexplicably panicked and raced for the exits. What's the OSC supposed to do, ignore violations of the law in case people might overreact to the news? The narrative that the OSC is responsible for HCG's collapse is being pushed by Bay Street in an attempt to undermine the regulator and make it easier for them to rip us off. Don't fall for that game.

gaspr
Silver Ring
Silver Ring
Posts: 162
Joined: 10 Feb 2015 11:39

Re: Home Capital Group (Symbol-HCG)

Post by gaspr » 04 May 2017 22:39

The issue of short selling is a bit disturbing all right. Seems too easy for someone to grab a big short position and then go out and spread lies and rumors to create huge gains if successful. Perhaps the Credit Unions have an advantage here, in that they are member owned.

ig17
Gold Ring
Gold Ring
Posts: 2379
Joined: 21 Feb 2005 20:54

Re: Home Capital Group (Symbol-HCG)

Post by ig17 » 04 May 2017 23:51

Rysto wrote:
04 May 2017 22:26
I'm sorry, but that article is bull. It's not the OSC's fault that HCG's depositors inexplicably panicked and raced for the exits. What's the OSC supposed to do, ignore violations of the law in case people might overreact to the news?
Alleged violations of the law. HCG management failed to disclose certain information in a timely fashion. Was that information material enough to warrant a prompt disclosure? That is open up for debate. In any case, they did disclose it in Summer 2015. Market digested the disclosure and moved on.

Cohodes goaded OSC to act ever since he started shorting HCG. He publicly humiliated the regulators every time he went on BNN. How much did his actions influence OSC decision making?

Rysto wrote:
04 May 2017 22:26
The narrative that the OSC is responsible for HCG's collapse is being pushed by Bay Street in an attempt to undermine the regulator and make it easier for them to rip us off. Don't fall for that game.
Rip us off? Please.

ig17
Gold Ring
Gold Ring
Posts: 2379
Joined: 21 Feb 2005 20:54

Re: Home Capital Group (Symbol-HCG)

Post by ig17 » 04 May 2017 23:57

gaspr wrote:
04 May 2017 22:39
The issue of short selling is a bit disturbing all right. Seems too easy for someone to grab a big short position and then go out and spread lies and rumors to create huge gains if successful.
+1

Rysto
Silver Ring
Silver Ring
Posts: 108
Joined: 10 Nov 2010 21:16

Re: Home Capital Group (Symbol-HCG)

Post by Rysto » 05 May 2017 00:44

ig17 wrote:
04 May 2017 23:51
Alleged violations of the law.
Well... yes. That's how the legal process works. Enforcement of the law starts with the government making allegations and bringing the matter to trial. You seem to be implying that the OSC's is following an unusual process here.

User avatar
AltaRed
Diamond Ring
Diamond Ring
Posts: 18387
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Home Capital Group (Symbol-HCG)

Post by AltaRed » 05 May 2017 00:46

I will wait until the outcome of the OSC process to take sides.... the hearings of which are now deferred to June 2nd. Seems that is unreasonable time to keep HCG and its investors hanging...unless that was an HCG request. Often we criticize OSC for acting too timidly or not at all on transgressions with abject failure to prosecute in many cases. I don't think we really know what all went on and the air needs to be cleared.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom

User avatar
NorthernRaven
Silver Ring
Silver Ring
Posts: 254
Joined: 21 Nov 2010 13:23
Contact:

Re: Home Capital Group (Symbol-HCG)

Post by NorthernRaven » 05 May 2017 00:52

ig17 wrote:
04 May 2017 23:51
Rysto wrote:
04 May 2017 22:26
I'm sorry, but that article is bull. It's not the OSC's fault that HCG's depositors inexplicably panicked and raced for the exits. What's the OSC supposed to do, ignore violations of the law in case people might overreact to the news?
Alleged violations of the law. HCG management failed to disclose certain information in a timely fashion. Was that information material enough to warrant a prompt disclosure? That is open up for debate. In any case, they did disclose it in Summer 2015. Market digested the disclosure and moved on.

Cohodes goaded OSC to act ever since he started shorting HCG. He publicly humiliated the regulators every time he went on BNN. How much did his actions influence OSC decision making?

Rysto wrote:
04 May 2017 22:26
The narrative that the OSC is responsible for HCG's collapse is being pushed by Bay Street in an attempt to undermine the regulator and make it easier for them to rip us off. Don't fall for that game.
Rip us off? Please.
It's worth taking a look at the actual OSC allegation document.
OSC wrote:
  • The insured (“Accelerator”) mortgage business was down by 32.5% compared to Q3 2014;
  • Effective January 15, 2015, Accelerator volume targets were being reduced by 50% to $100 million per month;
  • HCG had terminated 4 underwriters, 2 brokerages and 30 brokers. There were a number of other brokers on management's watch list;
  • The terminated brokers had a cumulative total of $881.4 million in Originations in 2014, representing approximately 10% of HCG’s total 2014 Originations;
It is hard to see how reduced originations (the lifeblood of Home's business and growth prospects) due to removal of fraudulent brokers who had provided 10% of the previous year's originations could not be considered "material". This information was available in February 2015, yet until July 2015 their financial disclosures and discussions dismissed originations numbers as related to weather and similar factors. The point is emphasized in that when they did disclose the truth in July 2015, their stock dropped 19% - obviously the market considered it "material" information! I believe the July disclosure was prompted by the OSC, after the Home audit committee received a "whistleblower" memo from one of their VPs - who knows what or when Home might have disclosed if their hand hadn't been forced.

This is hardly the "largely minor and legally subjective management decisions about shareholder disclosure" that Terence Corcoran tries to dismiss it as. If OSC enforcement action (which relates to past events and doesn't necessarily impugn Home's underlying mortgage book) should have been considered an obvious risk of the run on deposits that has occurred, Home's management could have foreseen it in February when they got preliminary notice, and been arranging their backstop financing since then. I'm not sure how the OSC could just ignore what they obviously see as clear and serious violations of the material disclosure rules.

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11546
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: Home Capital Group (Symbol-HCG)

Post by adrian2 » 05 May 2017 10:14

NorthernRaven wrote:
05 May 2017 00:52
It is hard to see how reduced originations (the lifeblood of Home's business and growth prospects) due to removal of fraudulent brokers who had provided 10% of the previous year's originations could not be considered "material". This information was available in February 2015, yet until July 2015 their financial disclosures and discussions dismissed originations numbers as related to weather and similar factors. The point is emphasized in that when they did disclose the truth in July 2015, their stock dropped 19% - obviously the market considered it "material" information! I believe the July disclosure was prompted by the OSC, after the Home audit committee received a "whistleblower" memo from one of their VPs - who knows what or when Home might have disclosed if their hand hadn't been forced.

This is hardly the "largely minor and legally subjective management decisions about shareholder disclosure" that Terence Corcoran tries to dismiss it as. If OSC enforcement action (which relates to past events and doesn't necessarily impugn Home's underlying mortgage book) should have been considered an obvious risk of the run on deposits that has occurred, Home's management could have foreseen it in February when they got preliminary notice, and been arranging their backstop financing since then. I'm not sure how the OSC could just ignore what they obviously see as clear and serious violations of the material disclosure rules.
:thumbsup:
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11546
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: Home Capital Group (Symbol-HCG)

Post by adrian2 » 05 May 2017 14:43

Just to elaborate on my personal evaluation of this stock on the totem pole:

I've had a brokerage account for about two decades. Here are all my actual and thought about shorts during that time frame:
1. around the turn of the millennium, I've shorted eBay, closing the position with a modest gain in a matter of weeks;
2. same period, shorted Nortel (300 shares) to the extent of the indirect holdings in XIU. I've kept this for maybe a year, closing it in tranches with a substantial gain;
3. a few years later, I've tried to construct a win / no lose option combination on Air Canada. The flaw in the otherwise good math was that it required maintaining a short position in AC, from which I was booted out a few times, with no recourse.
4. a few years ago, considered shorting RIM (now Blackberry). Never went to actually pull the trigger.
5. last few weeks, considered shorting HCG. Again no action.

It seems to me that shorting HCG may turn into a #3, being forced out by the big guys.
Sorry if I offend any current holders of it, but IMO the stock is a POS.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

User avatar
Mordko
Silver Ring
Silver Ring
Posts: 142
Joined: 24 Jan 2016 09:26

Re: Home Capital Group (Symbol-HCG)

Post by Mordko » 05 May 2017 23:06

The regulator may be partially responsible for the run on small banks. The problems at HCG have been public for a while. An action seemed warranted because the pattern of behavior was just too similar to the poorly regulated shadow banking system in the US prior to 2008. Instead OSC sat on their hands for a long time and let everyone think "game as usual".

Then they suddenly acted at the very time when the fears of of a housing crash are at the highest. Had they acted decisively straight away, the consequences would have been milder.

On the other hand... Yes, let's wait for the hearing. I'd like to understand if there was specific new information which finally forced OSC to act.

User avatar
jonforest
Silver Ring
Silver Ring
Posts: 160
Joined: 02 Mar 2005 23:40
Location: Ontario

Re: Home Capital Group (Symbol-HCG)

Post by jonforest » 06 May 2017 16:42

Mordko wrote:
05 May 2017 23:06
The regulator may be partially responsible for the run on small banks. The problems at HCG have been public for a while. An action seemed warranted because the pattern of behavior was just too similar to the poorly regulated shadow banking system in the US prior to 2008. Instead OSC sat on their hands for a long time and let everyone think "game as usual".

Then they suddenly acted at the very time when the fears of of a housing crash are at the highest. Had they acted decisively straight away, the consequences would have been milder.

On the other hand... Yes, let's wait for the hearing. I'd like to understand if there was specific new information which finally forced OSC to act.
There was mention in a G&M article last week that there is an email in which the CFO bragged about burying info so deeply in their financial report that it wouldn't be noticed. That, I think, suggests deliberate attempt to mislead, which is a serious matter.

User avatar
Mordko
Silver Ring
Silver Ring
Posts: 142
Joined: 24 Jan 2016 09:26

Re: Home Capital Group (Symbol-HCG)

Post by Mordko » 06 May 2017 16:55

Yes, bragging would be. Proves the CEO is an idiot.

Actually doing it is accepted though. Isn't that what annual reports are for?

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11546
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: Home Capital Group (Symbol-HCG)

Post by adrian2 » 06 May 2017 17:37

Mordko wrote:
06 May 2017 16:55
Yes, bragging would be. Proves the CEO is an idiot.

Actually doing it is accepted though. Isn't that what annual reports are for?
Acceptable for you, maybe.
Not for me, thank you very much.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

User avatar
Mordko
Silver Ring
Silver Ring
Posts: 142
Joined: 24 Jan 2016 09:26

Re: Home Capital Group (Symbol-HCG)

Post by Mordko » 06 May 2017 18:19

I don't read reports. These days I just index. However I know enough to be aware that reports have always been used to bury bad news. And, yes, the rules have changed a lot to make them more transparent. Perhaps that's why we have fewer and fewer publicly traded companies.

Can't win...

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11546
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: Home Capital Group (Symbol-HCG)

Post by adrian2 » 06 May 2017 22:54

Mordko wrote:
06 May 2017 18:19
Perhaps that's why we have fewer and fewer publicly traded companies.
Care to substantiate? [the posts which moved the discussion from HCG to possible reasons for fewer public companies nowadays has been severed and moved to a new topic. Please avoid topic drift when posting. Keep discussions on topic!] Moderator M
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

Post Reply