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Bloomberg
It took two years, but Home Capital Group Inc shares have regained all their lost ground since the Canadian alternative mortgage lender almost collapsed in 2017.
Home Capital has doubled this year to become the sixth-best performing stock on Canada’s benchmark S&P/TSX Composite Index. The Toronto-based lender closed at C$29 on the Toronto Stock Exchange for a market value of C$1.7 billion ($1.2 billion).
The run up has taken the stock to levels last seen in February 2017, when it plunged after Ontario’s securities regulator accused the company of misleading shareholders over falsified mortgage applications.
Alternative lenders including Home Capital and Equitable Group Inc have seen their stocks surge this year as the pace of mortgage growth picked up during the spring home-buying season, and home sales recovered in major cities including Toronto and Vancouver.
The “significant†share price appreciation of the alternative lenders is reflective of improving housing conditions — particularly in Greater Toronto — as well as a benign credit environment and robust mortgage growth outlook, CIBC analyst Marco Giurleo said in a November 1 note to clients. He upgraded Home Capital to “outperformer†based on the company’s “path to double-digit profitabilityâ€, a strong mortgage growth outlook and attractive valuation.
Home Capital’s stock went into a free-fall in the weeks after the regulator’s allegations, fuelled by short-selling and a run on deposits.