Topic: How To Invest

The Successful Investor Hotline – Friday, September 15, 2017

Article Excerpt

HOME CAPITAL GROUP INC., $13.89, 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. Due to its recent liquidity problems, Home Capital sold $153.2 million worth of common shares at $9.55 a share to billionaire investor Warren Buffett’s Berkshire Hathaway Inc. (New York symbol BRK.A). Berkshire now owns 19.99% of the company, which has a market cap (the total value of all outstanding shares) of $1.1 billion. Under the terms of that first investment, Home Capital also agreed to sell a second tranche of shares to Berkshire at $10.30 a share for a total of $246.8 million. That would raise Berkshire’s total stake to 38.39%. This week, shareholders (excluding Berkshire) voted against that second tranche. That’s mainly because the extra shares would dilute the holding of existing shareholders. Berkshire said it does not plan to sell its current stake in the company. OUR RECOMMENDATION: Home Capital Group is…