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Thread: Home Capital Group (HCG)

  1. #681
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    Warren will just sell at a profit later on when the storm clouds have long gone over the horizon. Just like his opportunistic lifelines in the USA in 2008/2009. There is money to be made off the desparate. HCG is ultimately just too small for him


  2. #682
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    Alternative lenders have no business model in a weak housing market, and the reports show housing has started to decline.
    Last edited by sags; 2017-06-22 at 05:50 PM.
    Someone planted a tree a long time ago so I can sit in the shade.

  3. #683
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    Quote Originally Posted by blin10 View Post
    hboy I hope you didn't sell before!
    Thank you for your concern.

    Quote Originally Posted by hboy54 View Post
    Holding for now as I don't in general trade for the short term. It won't hit 5% of portfolio until $14 something, so in the absence of new information I'd probably start selling around $18 to $20. Might just turn into a long term hold, as my financials are under TSX weighting.
    As discussed on May 11, I did indeed trim today in the above mentioned $18 to $20 range, $18.61 late in the afternoon to be precise. The new information, that is WB taking for himself the long term potential for another ~$10/share with the massive dilution, made the sale easier. HCG now 4.8% of portfolio, and financials 30% of portfolio. So as of today, I think this is removed from speculation status in my mind and is just a regular holding in the portfolio like anything else.

    Quote Originally Posted by james4beach View Post
    HCG looks exactly like the crashing lenders and banks I used to trade in 2007. What I remember from those days is that a crashing bank can easily rally +100% or +200% before it continues its journey to $0. It will whipsaw and make both bulls and bears cry for a while. Odds are, eventually it will become worthless and delist.
    I am near the top of General James' range above before HCG continues his expected journey to zero. In fairness to James about a half dozen others were calling bankruptcy here too.

    I was going to comment further, but I think I'll let my thoughts up thread stand. Pride goeth before the fall, and I might be tripping over BTE one day.

    hboy54

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  5. #684
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    Nice job hboy...takes big ones to hold this long while the herd is telling us the sky is falling.

  6. #685
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    Quote Originally Posted by hboy54 View Post
    I am near the top of General James' range above before HCG continues his expected journey to zero. In fairness to James about a half dozen others were calling bankruptcy here too.
    Well, I'm described odds. Some troubled lenders recover... others do not. If it was so obviously clear that Home Capital would be ok, then the price wouldn't have fallen so low.

    Congrats on the profits!

  7. #686
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    Quote Originally Posted by AltaRed View Post
    Warren will just sell at a profit later on when the storm clouds have long gone over the horizon. Just like his opportunistic lifelines in the USA in 2008/2009. There is money to be made off the desparate. HCG is ultimately just too small for him
    Right. The big headlines don't appear when the reverse happens -- either they dump the shares, or use derivatives to hedge the exposure/exit.

  8. #687
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    Up 27% today and 300%+ in month and half! CIBC did a good move buying HCG at all times low .... I was too scared

  9. #688
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    Quote Originally Posted by NorthernRaven View Post
    While they only get a 1% point relief on the drawn balances, their intent is to pay that down with funds from the asset sale etc. If they can do that, there's much more relief on the "undrawn" rate - it goes from 2.5% to 1%. That's much less costly for a lifeline facility that hopefully won't be used, although Equitable's standby rate is only 0.5% on their new facility from the Canadian banks, and their rate on drawn funds is actually feasible for funding, not poisonous like the HOOPP/Berkshire rates.
    Yeah, a credit line at 9% interest is pretty deadly. It's still better than no credit, but offering them a 9% credit line is hardly a vote of confidence in their solvency.

    Also, do we know what other trades Berkshire is making around HCG ? Maybe they have CDS contracts on Home Capital to protect against bankruptcy. I'm just saying, it's really hard to know exactly how they're positioned and I would not assume it's as simple as "long equity + LoC".

  10. #689
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    Quote Originally Posted by james4beach View Post
    Yeah, a credit line at 9% interest is pretty deadly. It's still better than no credit, but offering them a 9% credit line is hardly a vote of confidence in their solvency.

    Also, do we know what other trades Berkshire is making around HCG ? Maybe they have CDS contracts on Home Capital to protect against bankruptcy. I'm just saying, it's really hard to know exactly how they're positioned and I would not assume it's as simple as "long equity + LoC".
    I doubt they have all this hedging. HCG's only real problem was it's reputation and of course the bad managers that caused it. They have dealt with most of the managers and Berkshire knew that once they signed on the reputation issue would go away, very quickly, as well. It was their reputation causing a run on the bank that had me worried about bankruptcy. For an online bank this could have been very deadly. It was definitely expensive. This reputation worry is now gone and I now stand corrected. I will add this one to the hundreds of other times I have been wrong in the past and hopefully gain some learning experience from it. I didn't make any money so at least I got something out of it.

    As for a housing crash and everything else that goes with that. That is not something that anyone can be sure about, since there are really no big signs of it right now, and I know I am not going to start placing bets on it happening or not happening. Even if it does happen, there are many scenarios that can play out. With Berkshire as a significant partner, a housing crash, and the ability to pick up the babies thrown out with bath water, that comes from that, may make it a benefit to HCG, going forward. Who knows.

    Great move Hboy.

    Last edited by OptsyEagle; 2017-06-23 at 09:07 AM.

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