HCG, Home Capital Group update

hcg dec 20 2012 bhcg dec 20 2012 b2

We thought the trek north was over but did allow for a deep rebound. Now that we seem to have double topped and then some , that is no longer possible. Perhaps this bank is just very good at what it does. It has 35 million shares which puts its capitalisation at just over 2 bln. The p/e is just under 10 and the dividend yield is about 1.74% on an EPS of about $6/share. The company was founded in 1977, has almost 700 employees and assets of around 8 bln. Their main business is mortgage lending, taking what the big boys cannot be bothered with without compromising underwriting standards. Of course, in Canada, the last time the housing market got under serious pressure was back in 1989 at which time HCG was barely on the radar screen. Since then it has been blue skies all the time so we simple do not know how this company would hold up under stress, should that occur. From the detailed chart below,

hcg dec 20 2012 s

, without being able to assign a proper count other than the one already mentioned, we would still be inclined to step aside at these double-top levels, the RSI and MACD decidedly toppish and the proximity to the $61 Fibo level.

Apart from Canadian Western Bank , HCG is one of the few examples of an equity based financial institution that has successfully navigated the Canadian banking waters. It is the example to emulate for a whole host of financial companies that are trying to extract themselves from previous lives as co-operative or mutual entities. For the moment it is not yet clear that that is desirable considering that in the “great recession”this stock dropped by 60%..