Are Short Sellers Right About Home Capital Group Inc.?
Nelson Smith, 25 August 2016
Tuesday was not a good day for Home Capital Group Inc. (TSX:HCG) shares. An anonymous author identifying as “The Friendly Bear” wrote a scathing piece about the company on the investing website “Seeking Alpha.” The article investigated the company’s relationship with a mortgage brokerage called Re-Charge Corp.
Essentially, the dirt goes something like this.
Home Capital sold mortgages to Re-Charge in the autumn of 2015 on at least 14 different occasions. Many of these mortgages were on real estate in Brampton, Ontario, which insiders view as a place where mortgage fraud is common. Thus, the author of the article hinted that the reason why many of these loans were sold is because borrowers were either behind or in default.
Additionally, one of the principals of Re-Charge Corp is William J. Walker, a lawyer who was named to Home Capital’s board of directors in November 2015. This relationship between Walker and Re-Charge was never disclosed to shareholders. In fact, the relationship with Re-Charge was never disclosed.
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Home Capital stock in turmoil after anonymous short seller’s post
TAMSIN MCMAHON, 24 August 2016
Shares of Home Capital Group Inc. were on a roller coaster this week after a popular investor website accused the company of hiding losses by selling bad mortgages to a firm run by one of its board members.
A report posted by someone identifying as a Home Capital short seller called “The Friendly Bear” on the website Seeking Alpha on Tuesday highlighted more than a dozen mortgages that Home Capital transferred last year to a mortgage brokerage called Re-Charge Corp, based in Ancaster, Ont. One of Re-Charge’s directors is William J. Walker, a partner in the Hamilton office of law firm Gowling WLG. Home Capital appointed Mr. Walker to its board as an independent director last November.
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Home Capital Group: Time To ‘Re-Charge’ Your Loan Loss Provisions
The Friendly Bear, 23 August 2016
In today’s report, The Friendly Bear goes “global”. We recently found out the hard way that making it through a TSA screen as a Bear is quite challenging, but particularly for a Bear that seeks to raise questions about a publicly traded Canadian company. Today’s report focuses on Home Capital Group (OTCPK:HMCBF)- a company that has been on the radar of numerous celebrity US short sellers (including Steve Eisman of “Big Short” fame). Some view the company as one of the best ways to play the Canadian ‘Housing Bubble’. More recently, we have watched from afar and admired the work and insight that has come out of firms such as PAA Research on the name. Given our experience in forensic due diligence into suspect US financial institutions, we thought we may be able to bring something to the table on the topic of Home Capital Group. The stock fits squarely inside the screens that we look for – commodity financial service products with too good to be true stories and alarmingly low reserves.
It also fits within our absolute favorite bucket of shorts – companies that publicly blame short sellers for their woes.
On a May 5, 2015 earnings call, Gerry Soloway, the Chairman and CEO of Home Capital Group, gave his final parting words to the investment community before riding off into retirement. After founding HCG over 30 years prior, he had grown the company into Canada’s largest “alternative lender”. He had a lot to be proud of as his accomplishments are undeniable as evidenced by the tremendous shareholder value created under his watch. We can imagine that in such circumstances, it would be hard to find just the right last words to say to stakeholders. One could reasonably expect a heartfelt speech thanking shareholders, colleagues, and family for their support over the years. Instead, Mr. Soloway provided the following quip:
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Deutsche Bank’s $10-Billion Scandal
Ed Caesar, 22 August 2016
Almost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank’s Moscow headquarters. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Usually, the order was for about ten million dollars’ worth of the stock. In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself. Continue reading “Article: Deutsche Bank’s $10-Billion Scandal”
Hearing StreetSweeper Will Issue Negative Report on Northern Dynasty Minerals
Paul Quintaro, 16 August 2016
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Northern Dynasty Minerals (NAK): Looming Dilution Potential, 6 More Downside Risks
The Street Sweeper’s Blog, 16 August 2016
Northern Dynasty Minerals (NYSEMKT:NAK) proposes to build a massive copper and gold mine in Alaska’s Bristol Bay headwaters. But opposition has stretched over the past decade to block any advancement. Meanwhile the downside risks are piling up, including:
*Momentum trading influences the stock price in this company with “going concern” issues.
*A major investor has recently sold 4 million shares.
*The same investor recently promoted the stock on TV.
*Low cash, high burn are forcing NAK to issue stock. More dilutive shares will be ready for sale in October.
*Local opposition is stronger than ever, according to one observer.
*Copper prices are low amid oversupply concerns.
After a decade of controversy over its proposed Pebble mine, Northern Dynasty Minerals (NAK) is still absolutely nowhere. At first glimpse, unwary investors might expect significant news because the stock has practically doubled over a month to unsustainable levels.
The Pebble property covers 153 square miles of land in Alaska, taking in at least 15 square miles for the proposed mine operation and tailings ponds. The project would place one of the world’s largest copper and gold mine against the world’s largest salmon fishery and environmental concerns.The project has not yet entered the permitting phase.
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Nymox Pharmaceutical Corporation Investigated For Securities Fraud By Block & Leviton After Report Reveals Pervasive Misconduct By The Company
PRNewswire, 11 August 2016
Block & Leviton LLP (www.blockesq.com), a securities litigation firm representing investors nationwide, is investigating whether Nymox Pharmaceutical Corporation (“Nymox” or the “Company”) (NASDAQ: NYMX) and certain of its officers and directors violated federal securities laws.
Nymox shares plummeted nearly 41% on August 10, 2016, after an article titled “Nymox: This Offshore ‘Biotech’ Promotion Will Go To Zero (Yes, Zero)” was published on the investment research site Seeking Alpha, reporting that Nymox has and continues to mislead shareholders about the Company’s prospects, while “dumping millions in stock without making timely SEC disclosures.” The revelation of Nymox’s fraudulent conduct has caused tens of millions in losses to Nymox investors.
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Raging Capital Reveals New Long Position (CAVM) and Discusses 3 Short Positions (VRX, LC, PMTS) in Q2 Letter to Investors
GENE GUZUN, 08 August 2016
Hedge funds’ quarterly 13F filings are quite useful for retail investors seeking to invest like wealthy and successful money managers, but their quarterly letters to investors are even more informative and useful. Raging Capital Management LLC, an investment firm launched by William C. Martin in April 2006 with capital from friends and family, recently sent a quarterly letter to investors discussing the firm’s performance and its biggest contributors to that performance.
New Jersey-based Raging Capital Management, mostly known for its activist investment strategy, invests in both emerging growth stocks and deep-value investments. The activist asset manager generated a net-of-fees return of 5.1% in the second quarter of 2016, bringing tits return for the first half of the year to an impressive 14.0%. Mr. Martin’s investment firm delivered a compound annual growth rate of 21.2% since inception through the end of the second quarter, approximately three-times the 7.1% return generated by the S&P 500 Index over the same time span.
Continue reading “Article: Raging Capital Reveals New Long Position (CAVM) and Discusses 3 Short Positions (VRX, LC, PMTS) in Q2 Letter to Investors”
Robot Funds and Bank Regulation
Matt Levine, 04 August 2016
What’s Steve Cohen up to? Stamford Harbor Capital, the new firm started by Steven Cohen and led by a longtime deputy, is working with a third-party marketing company that’s meeting with potential clients to gauge interest in investment vehicles that could be started as soon as 2018. Continue reading “Article: Robot Funds and Bank Regulation”