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Canadian Banks/HCG.TO: Buy High, Sell Low; What Passes as Prudent Capital Allocation and Risk Management in the...

November 19th, 2019

“I think it's -- the work that's being done in our underwriting team to accurately price for risk. There's a lot of work that's going into the evaluation of business for self...

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Canadian Banks: Earnings Season Was a Disappointment, It Could Have and Should Have Been Much Worse; Take a Gander at...

June 6th, 2019

Heading into earnings season for the Big 6 Canadian banks, we were almost certain that a great deal of the discussion on the analyst conference calls would be centered around loan performance in...

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HCG.TO: The IFRS-9 Accounting Shenanigans Continue

May 9th, 2019

“Yes, because of forward looking, some of the economic scenarios have moderated. So our residential, despite the growth in the portfolio, some of that provision was released” Bradley Kotush.  Home Capital Group CFO. 1Q19 Earnings Conf. Call....

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Where's the Bid? A New, More Troubling Era In Canadian Housing

April 10th, 2019

Over the past few weeks, we conducted a survey of more than 250 real estate agents across Canada. Click on the link below to view our presentation which outlines our research on the Canadian housing market at a high level and the critical findings from our...

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HCG.TO: With NIM Compression and Impaired Loans Up 65%+ YOY, HCG Played the IFRS-9 Remeasurement Game to Boost Earnings

February 22nd, 2019

“….right now, some of those predictive models are saying that there is going to be a more benign economic environment in the future, which would probably then lead to models to come up...

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HCG.TO: On a March to Nowhere, the Structural Flaws of the “New HCG” Have Started to Become Clear

August 14th, 2018

For several years now, we have wondered aloud what HCG’s financial profile would look like in a scenario in which the company was forced to introduce true underwriting rigor to its mortgage origination...

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Canadian Housing: Reflexivity Cuts Both Ways, Negative Feedback Loops Have Started to Emerge

March 29th, 2018

We hope you will consider this report for your weekend reading list. Over the past few weeks we surveyed more than 300 real estate agents in Canada. The attached presentation outlines the feedback we received from those agents...

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HCG.TO: Originate or Die, It’s That Simple, the “Devil” of Course Is in the Details

February 15th, 2018

“Against this backdrop, management and the Board are reassessing the corporate strategy and are focused on finalizing the Company’s long-term strategy during the first half of 2018 to help grow the business, create...

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HCG.TO: Credit Contraction? B-20 Impact? IFRS-9 Gambit? And the Big Question: What Business Is HCG Really in Now?

November 15th, 2017

Meet the new Boss, same as the old Boss?  When Yousry Bissada steps up to the mic today to discuss the performance of HCG during the first three months of his stewardship, we’re almost certain...

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HCG.TO: Is There a Plan to Create Sustainable Earnings as a Slowing GTA Housing Market, B-20 Guidelines, and IFRS-9...

August 3rd, 2017

Are HCG investors really better off than they were three months ago?  At that time, HCG faced a liquidity crisis that the company narrowly survived.  The stock price, which many would argue...

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HCG.TO: There’s Declining Book Value/Share and Not Much Else, Why Pay More than Warren? Moving Price Objective to $10

June 22nd, 2017

In what can only be described as a shocking development to most participants in the Canadian financial ecosystem, HCG announced late last night that Berkshire Hathaway will provide the company with a...

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HCG.TO: “Existence of Material Uncertainty – Future Funding Capabilities”, Reiterating $0 Price Objective

May 12th, 2017

HCG reported 1Q17 adjusted EPS of….. Just kidding.  Make no mistake the entity known as Home Capital Group and its primary lending subsidiary, Home Trust no longer exist.  As we argued a few...

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HCG.TO: Liquidation Looks Increasingly Likely, Reiterating $0 Price Objective

April 26th, 2017

               “If it keeps on rainin', levee's goin' to break If it keeps on rainin', levee's goin' to break When the levee breaks I'll have no place to...

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HCG.TO: Truthless, Rudderless, and Now Possibly Valueless, Taking Price Objective to $0

April 20th, 2017

“But I can't end the call without a little ditty that someone passed on to me of how people in the 19th century dealt with shorts. And the little ditty goes something like this. He who sells what isn't his'n, must...

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HCG.TO: Pondering the Existential Questions Facing HCG

February 7th, 2017

It’s been an interesting start to 2017 for HCG.  The stock is down a meager (-5.0%) YTD, which belies the drastic change in investor sentiment around the company.  Several major brokerage firms have downgraded HCG shares over the past 4-6...

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Canadian Housing: Losses on the Ground Are Real; When Will the Banks Start Taking Provisions On Their Credit Exposure...

November 23rd, 2016

“As cooler weather starts driving up heating costs, Calgary distress centres are finding more people who once earned steady incomes are now struggling to pay their bills and seeking relief with...

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PAA Research's 2016 Canadian Mortgage Broker Survey: A New Era in the Canadian Housing Market

November 2nd, 2016

We recently conducted a survey of 148 mortgage brokers located across Canada. The key findings from our survey include: Home price weaknes is becoming more broad based The underlying bid for housing remains...

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Canadian Housing: The Wind of Change

October 4th, 2016

Will Monday, October 3, 2016 be remembered as the day that the housing market in Ontario peaked?  Maybe.  In a move that appears to have shaken the Canadian housing market to its core (or at least rattled a few branches), Minister of Finance, Bill Morneau announced a...

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HCG.TO: Can You See It Now? HCG Is a Shrinking Lender with Declining Margins, Enormous Credit Risk, and Potential...

July 28th, 2016

To anyone (ourselves included) that has followed the publicly available financial data on Home Trust from OSFI over the past few months, it is not a surprise that the company once again missed...

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HCG.TO: In the Biggest Housing Bull Market in the History of Canada, HCG Still Can’t Grow Their Loan Book –...

July 20th, 2016

HCG is desperate. How do we know this? Well certainly in this case actions speak louder than words.  Consider the following steps the company has taken over the past 6-12 months to shore up...

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Canadian Housing: A Tale of Four Markets, Foreign Buyers, and Fraud

May 24th, 2016

We recently conducted a survey of approximately 230 real estate agents in Canada.  The attached presentation summarizes our key findings from the survey.

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HCG.TO: Every Arrow In the Quiver Has Been Fired and Earnings are Still Declining Leaving Bulls With a Chilling...

May 5th, 2016

In the strongest housing market in the history of Ontario while taking provisions for credit losses as close to zero as possible, HCG still missed consensus 1Q16 earnings expectations....

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HCG.TO: Without Any More “Cookies in the Closet” at CFF Bank, It Appears HCG is On Track to Miss Earnings Yet Again

March 14th, 2016

On some level you have to simply admire the recklessness of HCG’s management team.  After all, over the past three months, the company: 1) reported earnings that fell well short of...

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HCG.TO: Earnings Have Nowhere to Go but Down, Even with “Profits Before Expenses” Accounting HCG’s Core EPS Power...

February 11th, 2016

In case you were wondering what business looks like on the ground, or in this particular case the “air” in Alberta, here’s an important comment from the CEO of Westjet (Canada’s second...

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HCG.TO: OSFI Data Suggests Origination Weakness Continued in 4Q15, EPS Could Miss Consensus, Lowering Target to $16

January 20th, 2016

Well, now we know why Martin Reid abruptly changed HCG’s outlook for loan originations in 4Q15. As a reminder, just five weeks after HCG’s CEO insinuated that the company could generate origination...

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NA.TO/HCG.TO: Four Things I Learned in the Past Week about Canadian Financial Institutions – Rhetoric vs. Reality

December 7th, 2015

We spent much of last week reading, listening, and analyzing the slew of earnings releases, financial supplements, and conference calls from the largest banks across Canada.  Had we known the results and...

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HCG.TO: Purposeful Obfuscation Continues, While Core Earnings Power Evaporates and Allowances Remain at Irresponsible...

November 5th, 2015

A company has finally surpassed the Maple Leafs as the worst run organization in Toronto… The latest development in the mortgage origination fraud scandal at HCG is both remarkable and...

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HCG.TO: OSFI Data Suggests HCG Earnings Could Fall Short for 3Q15; Five Key Questions That Need to Be Answered

October 21st, 2015

A few things have become clear about HCG over the past several months: Management refuses to “clear the air” surrounding the extent of the company’s involvement in and potential exposure to mortgages...

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Canadian Housing: The Demographic Crisis No One Seems to Talk About

October 5th, 2015

Let’s play a little game called “guess the country with a pending demographic crisis”. Here are some hints to start out with, for this country:   1) the median age has increased from 32.9 in 1990 to 40.5 in 2015, 2) the percentage of population...

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HCG.TO: Amidst a Web of Deception Two Facts Are Now Clear: There Was Fraud and HCG Is Drastically Over-Earning,...

July 30th, 2015

“My pain…. Is self chosen At least so the prophet saysI could either burnOr cut off my pride and buy some timeA head full of lies is the weightTied to my waistThe river of deceit pulls downThe...

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