Smith Financial Corp., the family holding company of First National Financial Corp. co-founder Stephen Smith, is offering $44 a share for Canadian mortgage lender Home Capital Group Inc. The bid came after a 40 per cent tumble in Home Capital’s shares as rising interest rates sent Canadian housing prices down 10 per cent from their peak, souring investors on mortgage lenders.Smith’s offer is slightly below where Home Capital was trading a year ago.
Smith said he started buying Home Capital shares -- with a view to a possible takeover -- around January and February, when the stock had already begun sliding from its peak as global central banks signaled a turn toward tighter policy. Smith is betting that the market’s turn against mortgage companies is overdone. The health of lenders is more closely correlated to unemployment levels, which determine consumers’ ability to continue paying for their homes, and those remain at historical lows, he said.
Those troubles are “absolutely” behind Home Capital, Smith said, adding that his firm did “extensive” due diligence prior to the purchase.
This will prove to be one of the dumbest acquisitions ever in Canada. To be buying an alternative resodential mortgage lender at a time when the home price bubble is just beginning to burst.
Real estate market in canada norms approaching just edge of cliff and 2023 will be history in Canadian real estate market, I never owned bank stocks and will never own except one bank CWB, I have more trust than any other financial institution