Home Capital Group Shares Freefall Last Week – Why?

Last week, Home Capital Group shares plunged 65% in one day as the company revealed it was securing a $2 billion line of credit to secure its finances after depositors rushed to pull money from their savings accounts.

Home Capital’s subsidiary, Home Trust, is Canada’s largest alternative lender, providing subprime loans to people who don’t qualify for traditional bank mortgages. So when the news broke; clients, friends and family bombarded me with questions asking ‘what does this mean?’ Since these question were more from an investor’s angle rather than a mortgage, I enlisted a colleague’s help on this one for deeper insight. Here’s his/her view as a Investment Associate for a private capital group… Leave us a comment with your thoughts!

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