Topic: How To Invest

The Successful Investor Hotline – Friday, April 28, 2017

Article Excerpt

HOME CAPITAL GROUP INC., $8.04, symbol HCG on Toronto, 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 fell 60% this week after the company secured a new $2.0 billion line of credit from the Healthcare of Ontario Pension Plan. Home Capital has put up a portfolio of mortgage loans as collateral for that line of credit. Last week, the Ontario Securities Commission (OSC) formally charged the company with failing to disclose material information in a timely manner and making false and misleading statements. As a result, a large number of depositors have now removed their cash from Home Trust (Home Capital’s wholly owned banking subsidiary). Balances have declined 63%, to $521 million as of April 28, 2017, from $1.4 billion on March 28. The company needs those deposits to fund its lending activities. Another important source of funding—Home Trust’s GIC (Guaranteed Investment Certificates) balances—were largely unchanged…