Two top proxy advisory service firms aren’t seeing eye-to-eye on Berkshire Hathaway’s investment in Home Capital Group.

Institutional Shareholder Services came out against the arrangement on Tuesday, noting Home Capital (HCG.TO) has made "substantial progress" since the full-blown crisis earlier this year that saw depositors flee after the Ontario Securities Commission alleged the company and three former executives misled investors in 2015.

"On a cost-benefit analysis, the proposed Berkshire second tranche appears to offer nominal additional reputational and strategic benefits to those already established under the Berkshire first tranche, while dilution cost of the discounted second tranche is substantial," ISS told investors in its recommendation released late Tuesday.

Home Capital stunned the market on June 21 by announcing it brought the world's most famous investor into its corner. Warren Buffett's Berkshire Hathaway unexpectedly agreed to provide the lender a replacement $2-billion credit line, along with a significant investment spread across two tranches.

In the first, Berkshire's Columbia Insurance Company took up a 19.99 per cent stake in the company by picking up more than 16 million shares at a discounted price of $9.55 each.

In the second tranche, the plan is for Berkshire to invest an additional $246.8 million by picking up almost 24 million shares at $10.30 each.

There was a wave of investor enthusiasm after Home Capital announced its pact with Berkshire, with its stock touching a high of $20.75 on June 23. Since then, the stock has lost 36 per cent of its value, closing Tuesday at $13.24.

While the Buffett halo effect has faded for investors, the company has sought other methods to restore confidence. It appointed mortgage industry veteran Yousry Bissada as chief executive officer last month, and named former Canaccord executive Brad Kotush as its new CFO on Tuesday. It also recently finalized settlements with the OSC and a class action.

"The company's operating results and its financial strength do not point to substantial threats to a 'standalone' option,” ISS added. “On balance, a vote AGAINST the proposed second tranche of the Berkshire equity investment is warranted."

Meanwhile, rival proxy advisor Glass Lewis is recommending shareholders vote in favour of the second tranche, noting that decisions on financings should be judged by the board unless there’s “a showing of egregious conduct or self-dealing that might threaten shareholder value.”

“Given the Company's intended use of the proceeds, which we consider reasonable, we are inclined to support the terms of the placement,” Glass Lewis added in its report, dated August 23. “We believe the additional capital provided by the private placement will provide the Company with sufficient flexibility to pursue its strategy, which we believe is in the best interests of shareholders.”

Home Capital Group told BNN the second tranche would “further establish Berkshire as a cornerstone investment.”

“The Board believes that this level of ownership will lead to a stronger commitment from Berkshire to the long-term success of Home Capital and greater alignment generally between Berkshire and the Company,” Home Capital added in its emailed statement. “This creates strong sponsorship to withstand regulatory, policy and economic changes.”