Baskin Wealth Management, which has owned HCG stocks for its clients since 2003, announced that it has liquidated its position in the alternative lender amid the latter’s recent troubles.
“Our clients realized about $18.11 per share. At the time of sale, our position in Home Capital represented about 0.7% of our clients’ total holdings with us,” president David P. Baskin wrote in the client note.
Baskin Wealth said that the allegations raised by the Ontario Securities Commission against HGC—which included failures of disclosure on the lender’s part—are sufficiently grave to have motivated the firm’s move.
“Our primary reasons for this decision are our new lack of confidence in the integrity and effectiveness of company management and the possibility of a lack of confidence in the company's viability on the part of key financial industry players, and importantly, retail purchasers of company issued savings instruments,” Baskin Wealth stated.
“If the OSC allegations are true, the company was engaged in an active campaign over a period of months to deceive the investing public as to the true state of affairs at the firm,” the firm added. “HCG denies these allegations, but to us, they have the ring of possible truth and are consistent with the facts as we understand them. Certainly, if the allegations are true, we were actively misled by management.”
Baskin noted that HCG will have more struggles coming its way in the near future, and that the inherent unpredictability of the situation has made the liquidation of its holdings in the lender the best course of action.
“We always tell our clients that before purchasing a security, we form a mental picture of our company name on that firm’s head office. If that picture makes us queasy, we do not proceed with the investment. Sadly, as a result of the new information disclosed in the past few days, we no longer have the necessary comfort level to remain invested in this company,” Baskin concluded.
In its latest memo to clients, an independent investment and wealth management firm declared that it has terminated its 14-year relationship with Home Capital Group.