Author Topic: HCG.to - Home Capital Group  (Read 87360 times)

KCLarkin

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Re: HCG.to - Home Capital Group
« Reply #20 on: July 13, 2015, 08:59:51 AM »
The traditional originations are the important number to watch. These "only" fell 15% year over year. But, there is enough circumstantial evidence to cause longs some sleepless nights.

Still, there are some pretty famous US shorts who either don't understand the company or are being dishonest (I suspect dishonest). Why does Marc Cohodes think that a drop in originations is the same as a drop in revenue? The company earns the bulk of its revenue from interest on existing loans not auctioning off new originations.

I closed most of my (long) position in February. Should be a fun battleground stock but still not cheap enough to get me excited.


benhacker

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Re: HCG.to - Home Capital Group
« Reply #21 on: July 13, 2015, 09:14:09 AM »
KC,

These "only" fell 15% year over year. But, there is enough circumstantial evidence to cause longs some sleepless nights.  --> agree

Still, there are some pretty famous US shorts who either don't understand the company or are being dishonest (I suspect dishonest). Why does Marc Cohodes think that a drop in originations is the same as a drop in revenue? The company earns the bulk of its revenue from interest on existing loans not auctioning off new originations.

--> Agree^2.  It's always the case, but especially so in controversial names, to make sure you know what you think the drivers are for the business, and also what you should or shouldn't care about. These battleground names just drudge up a lot of commentary by folks with... complex... motives.

Glad we both made money here even though we disagreed.
Ben Hacker
Beaverton, Oregon - USA

KCLarkin

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Re: HCG.to - Home Capital Group
« Reply #22 on: July 28, 2015, 09:07:31 AM »
I sold my last few shares today. I was hoping to unload into a dead cat bounce but I have no interest in owning the company when a director resigns two days before earnings:

http://www.newswire.ca/en/story/1576133/home-capital-group-inc-announces-director-resignation

I made a small profit on this but would have made a very large profit if I had traded more aggressively.

LesPaul

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Re: HCG.to - Home Capital Group
« Reply #23 on: July 28, 2015, 10:40:54 AM »
I had heard that the drop in origination was due to a number of sketchy brokers being cut off from HCG's funding...perhaps as a way for them to further legitimize HCG (the B lender stigma may never go away) & avoid worse consequences in the future?

I'm also not that worried about the resignation - if it was Soloway resigning I'd be very worried.

Full Disclosure: Own no shares but I think there might be a real opportunity here. Maybe not!

Edit: I'm not good at sentence structure!

KCLarkin

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Re: HCG.to - Home Capital Group
« Reply #24 on: July 28, 2015, 11:13:04 AM »
The resignation isn't the problem. The timing of the resignation is. There is either severe (understandable) tension on the board. Or the director is trying to cover his ass. It's a coin flip. Given the very crowded short trade, this will likely pop at some point. But I can also see it dropping below book. Too hard for me...

KCLarkin

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Re: HCG.to - Home Capital Group
« Reply #25 on: July 28, 2015, 11:23:18 AM »
Quote
In November, chief financial officer and executive vice-president Robert Blowes announced he was retiring at the end of 2014. In January, chief risk officer David Novak stepped down. More recently, Marissa Lauder, who headed Home Capitalís risk teams, left the company.

This may all be priced in but the red flags are waving.
http://business.financialpost.com/investing/home-capital-group-inc-stock-sinks-ahead-of-key-earnings-call-surprise-director-resignation

LesPaul

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Re: HCG.to - Home Capital Group
« Reply #26 on: July 28, 2015, 01:28:03 PM »
The resignation isn't the problem. The timing of the resignation is. There is either severe (understandable) tension on the board. Or the director is trying to cover his ass. It's a coin flip. Given the very crowded short trade, this will likely pop at some point. But I can also see it dropping below book. Too hard for me...

Valid points, thanks - I didn't understand your point initially.

KCLarkin

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Liberty

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Re: HCG.to - Home Capital Group
« Reply #28 on: July 29, 2015, 07:23:35 PM »
I don't know the details of HCG simply because, as I said earlier, I wouldn't touch anything that has to do with Canadian RE until we're out of this bubble, but I'm watching with my popcorn. Here are some tweets from tonight that I found interesting:

Quote
"the number to wrap your head around $960.4 mm of originations should be compared to equity of $1,536 mm or 62.5%. Not total assets."

"they used weasel wording - $960m is what they originated in 2014 only. How much did those shady brokers originate in total? The number could feasibly be several billion of the total loans on their b/s"

"external sources tipped us off " Where are your internal controls? Really?

These I wrote: "So HCG has 4000 brokers, but the 45 "bad" ones closed 12% of total new mortgages in 2014? Talk about productive fraudsters!"

"What if among the 4000 there's just another 100 bad apples that hasn't been found yet and is as productive as the 45?"
« Last Edit: July 29, 2015, 08:03:52 PM by Liberty »
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KCLarkin

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Re: HCG.to - Home Capital Group
« Reply #29 on: July 29, 2015, 07:35:08 PM »
The shorts can't be fully trusted either. The suspended brokers originated $1B in loans but that doesn't mean that all $1B was fraudulent.