Topic: How To Invest

The Successful Investor Hotline – Friday, June 23, 2017

Article Excerpt

HOME CAPITAL GROUP INC., $18.61, Toronto symbol HCG, is a mortgage lender serving borrowers who fail to meet the stricter standards of Canada’s big banks and other larger, traditional lenders. The stock jumped 30% this week after billionaire investor Warren Buffett’s Berkshire Hathaway Inc. (New York symbol BRK.A) agreed to purchase Home Capital common shares and supply it with a new line of credit. Under the terms of the deal, U.S.-based Berkshire will use two transactions to purchase a total of 39.38% of Home Capital’s outstanding shares. The first involves buying $153.2 million worth of shares at $9.55 a share. In the second phase, which requires shareholder and other approvals, Berkshire will buy an additional $246.8 million of stock at $10.30 a share. It expects to complete the first phase by June 29, 2017. In addition, Berkshire will supply Home Capital with a new $2 billion line of credit. The company will use those funds to pay down the cash it borrowed under an…