Home Capital: great turnaround for deep value

I’ve enjoyed the discussions about growth stocks here for some time, but my biggest position of the year was a stock I bought at 0.55x book value! At this point I’m up by over 13% since the start of September.

It’s a small company but it caught my attention this year when it was all over the news for about two months in Canada. There were real threats to the company but the causes didn’t make much sense to me. The board and managers acted fast and resolved the main issues during Q2 (which is also when the bad news came out).

The latest quarterly report came out this week, and adding it to last quarter’s report they have made amazing progress in reversing the risks. The stock price is still just gradually recovering.

I don’t know if we can expect a 100% gain at this point but it is hard to see the stock going much lower at this kind of discount to book value. And best of all the reports show that they’re set up to keep reducing their risk every quarter. They may be in a position to resume paying a dividend within a year.

They still have some work to do but it’s impressive that they managed to contain a crisis within just one quarter and then show such good progress with each announcement since then.

The stock is definitely worth a look - I just published some more details here: https://seekingalpha.com/article/4126110-home-capital-recove…

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