Globe says Home Capital pays off for manager Chou I wonder how many other fund managers feel the same way which is probably why the stock is not trading at $44.00 per share. Hopefully, there is a higher offer or the vote exceeds the required 66-2/3rds %.
Globe says Home Capital pays off for manager Chou
2022-11-23 09:05 ET - In the News
The Globe and Mail reports in its Wednesday edition that value investing requires a strong stomach, says Francis Chou, who has been proving that for 40-plus years as chief executive officer of Chou Associates Management in Toronto. In a Globe special, Mary Gooderham quotes Mr. Chou saying that the recent market volatility shows the benefits of holding your ground when it comes to a security's intrinsic value. One of his recent picks was Home Capital Group Inc., which was recently trading at about 70 per cent of its tangible book value. On Monday, billionaire Stephen Smith announced a $1.7-billion deal for the alternative mortgage lender. The cash offer of $44 a share would see a subsidiary of Smith Financial Corp. The offer represents a 63-percent premium to the mortgage lender's closing stock price last Friday. "Stephen Smith is a smart cookie," Mr. Chou said in an e-mail Tuesday. "The price he is paying for getting 100 per cent of Home Capital Group is a steal in broad daylight. Home Capital Group is estimated to earn at least $5 per share in 2023 – the purchase price is only 8.8 earnings for a high-quality company." Mr. Chou, whose RRSP Fund owns 25,000 shares in Home Capital, said he is not voting for the deal.
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