The company predicted good times to
come, as well. In Q2 and in July, demand
increased for all of HCG’s products.
Fortunately, none of the prominent disasters – acts of god and of man –
will materially affect the firm. The
company's loans in Quebec are only advanced in the major centers, so the train
that exploded didn't damage any of its customers' property; there was little
lasting damage from floods in Toronto; and few, if any, houses in Alberta were
abandoned, despite heavy damage to household items (in total, about 20 people
asked for a one month deferment on mortgage payments). Home Capital Group won’t even have to set
aside any additional reserves due to the calamities.
On its conference call, management
addressed the short position that was initiated on HCG’s stock in May, largely as
macroeconomic bet against Canadian housing.
Over many years, shorts sellers have held an average of 800 000 shares
(out of 45 million), but the total recently jumped sharply to 5.5 million. The CEO expressed hope that it was the firm's
solid fundamentals that has pushed up the stock in recent weeks, but suggested
that the wild rise in volume over the past few days may have been short-sellers
covering their positions before month end (management cautioned that they
merely have anecdotal evidence that the increase in volume is the result of a
short squeeze; their theory is not based on the more solid stuff of regulatory
filings). In any case, the stock is now
at an all-time high.
CEO Gerald Soloway is one of
Canada's finest executives, but he is now well into his seventies, leaving
investors to wonder how long he'll lead Home Capital Group. In response to that very question from a
private investor - it's not surprising that this all-important question was posed
not by a near-sighted analyst, but by a far-seeing shareholder of the business
- Soloway said that he'll “probably be around a few more years.” In fact, he noted that his mother is still in
good health at 98, leaving greedy stockholders to hope for more than just a few
more years from the genetically fortunate chief executive. If not, he also shed light on what will
happen when he's gone: President Martin Reid will become CEO. Indeed, he is already deeply familiar with
all aspects of the company, in case he's required to step in on short
notice.
Overall, the company logged another
fine quarter, and is very likely to do well in the near - and in the more
distant - future.
