Topic: How To Invest

The Successful Investor Hotline – Friday, November 25, 2022

Article Excerpt

HOME CAPITAL GROUP INC., $42.55, Toronto symbol HCG, remains a hold. The company 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 shot up 58% this week after the company accepted a friendly takeover offer of $44.00 a share from Smith Financial Corp. (SFC), a company controlled by Stephen Smith. Home Capital has until December 30, 2022, to seek out a better offer. If the company finds a new bidder, it would have to pay SFC a termination fee of up to $50 million. That’s equal to 3% of its $1.6 billion market cap (the total value of all outstanding shares). SFC has significant investments in other alternative lenders, such as Equitable Bank, so it may have to sell some of those holdings to win regulatory approval for the Home Capital purchase. If it is unable to complete the transaction, it will pay $60 million breakup fee to Home…