RE:Outside observerfishca wrote:
4) One thing the bulls on this company don't get is that the company borrows short and lends long. What I mean is that they mostly have brokered deposits (GICs, etc...) through investment advisors, and not "sticky" loans via retail customer deposits like the larger banks do. What this means is that HCG constantly has to roll over its capital by issuing new GICs every year or two, but loans out the money to mortgage borrowers for a five-year terms. If for some reason HCG cannot issue new GICs at a relatively competitive rate (say - BMO and Cannacord were to ban Home Trust GIs from being sold to their customers), HCG could find itself facing an immediately capital shortage, and that would create BIG problems. This is knows as a "run on the bank", and happens when you don't match up the duration of your assets with your liabilities. All that needs to happen is a loss of confidence in the company. Thank you fishca for the great post!
EQB & HCG earlier in the week.
That's all you need to know. Think ABCP in 07,
ask yourselves why are they paying quadruple other? I am sure this does not get better for them anytime soon. Come clean fellas!
LOL