Never before has a mortgage channel player received so much mainstream media coverage. This is what the major outlets are saying.
With a pending OSC hearing about allegations that Home Capital misled investors following the suspension of a number of its brokers in 2015, columnists have been busy churning out copy about the future – and, indeed, past – of the channel lender.
Potential buyers emerge
Five firms are currently vying for purchased of the embattled lender, according to a recent Reuters report
. Those include; Apollo Global Management LLC, Blackstone Group LP and Centerbridge Partners LP, Brookfield Asset Management, and Fairfax Financial Holdings Ltd.
For its part, Home has hired BMO Capital Markets and RBC Capital Markets to advise on its future options.
Home Capital ‘pushed off cliff’
National Post Columnist Terence Corcoran alleges
in an opinion piece that the OSC is to blame for Home Capital’s current position – which has seen its shares drop from $22 to $6 in a matter of days.
“So who’s really killing Home Capital? The answer, Dr. Watson, is to be found in knowing who alone was standing on the edge of the cliff when the company began its unexpected plunge in value: The Ontario Securities Commission,” he wrote in his column. “By also playing into the hands of some U.S. short-sellers, the OSC has turned a minor and legally debatable issue of corporate disclosure into the potentially catastrophic destruction of a 30-year Canadian corporate success.”
Investors jump in
With Home Capital shares dropping by as much as 60% over the past week, some investors see it as an opportunity.
David Taylor, a portfolio manager with Taylor Asset Management, is confident money can be made.
“I think people are being overly negative on the nature of the business and the fundamentals of the business,” he told the Globe and Mail
. “If you’re willing to stomach the risk, I think you are being more than compensated for the rewards.
“The asset quality is very strong here. The only thing that has been damaged here is the confidence in the company.”
Ripples to be felt throughout the industry
A Bloomberg News report
covered industry fears that Home Capital’s woes could create a housing crisis.
“’Canada’s reputation as a boring-but-stable financial system took a bit of a hit this week,’” Alex Bellefleur, head of global macro research and strategy at Pavilion Global Markets Ltd. in Montreal, wrote in a note Friday, per Bloomberg. “He predicts lending will slow across the industry, hurting cash flow into housing, and weakening inflation and the Canadian dollar.”