Apr 20, 2017
BNN's Daily Chase: OSC singles out Home Capital as Canadian housing concerns grow
By Andrew Bell
Housing: It’s the magic lamp turning Canadian home owners into millionaires (on paper, anyway) or an economic iceberg. And it’s topping the agenda on BNN again today.
Mortgage lender Home Capital Group (HCG.TO) is in the spotlight after the Ontario Securities Commission said the company and former executives including ex-CEO Gerald Soloway “made materially misleading statements” after discovering that loan brokers were cheating on applications.
Home Capital says the allegations “will be vigorously defended.” We presume the company means it plans to defend itself.
We heard this morning from University of Toronto governance specialist Anita Anand on the implications for Home Capital.
CROSS-CANADA PERSONAL FINANCE UPDATE
HOME CAPITAL BOARD
Those allegations must be weighed by the company’s board, which includes Soloway himself. Home Capital says he built the organization’s assets from $51 million to $27.3 billion and was “credited with pioneering the provision of first residential mortgages to self-employed people and those with limited credit history.”
Other directors include Brenda Eprile, a former chief accountant at the OSC and James Keohane, CEO of Healthcare of the Ontario Pension Plan.
Home Capital stock has dropped 41 per cent in the past year to trade at $22.32. National Bank cut its target on the shares this morning to $23 from $27, with an unchanged rating of Underperform, warning that risks include a rating downgrade to junk by Standard & Poor’s.
Long-time Home Capital critic and short-seller Marc Cohodes joins us as 10:10 a.m. ET. He tells Amber Kanwar and producer Ian Vandaelle that the company “is worth less than a ham sandwich”
PROVINCIAL PLANS
At 9 a.m. ET, we’ll hear from Ontario Premier Kathleen Wynne, Finance Minister Charles Sousa, and Housing Minister Chris Ballard how they plan to cool overheated housing prices, after a 33-per-cent one-year surge in the Greater Toronto Area. The province is expected to take aim at speculators.
“It's really gotten to the point where it is out of control and we need to do something,” Wynne said.
Peter Norman, chief economist at real estate adviser Altus Group Ltd (AIF.TO), joins us for the announcement.
And we’ll get reaction to the plan at 2:10 pm. ET from condo builder Barry Fenton, CEO of Lanterra Developments.
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CANNABIS CONFERENCE
At 11 a.m. ET, we’ll be talking marijuana on Commodities with guests from the GMP Securities 2017 Cannabis Conference. Guests include Michael Gorenstein, CEO of Cronos Group Inc (MJN.V), which has changed its strategy from investing in marijuana growers to owning its own production.
At 11:20 a.m. ET, there’s perspective from Tracy Ryan, CEO of CannaKids, which produces marijuana oil for treating pediatric and adult patients.
Doctors found a tumor in her baby daughter’s brain, which reportedly shrank after chemotherapy combined with cannabis oil, made mostly of non-psychoactive cannabidiol.
We’ll also hear from Gordon Fox, CEO of producer Emblem Corp (EMC.V). Commodities producer Mike Attenborough wants to hear whether investors have raised concerns about the senior role at the company played by John Stewart, a former top pharma executive who helped launched the controversial pain killer OxyContin.
Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.