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The most vocal opponent of Home Capital Group Inc. has revealed the extent of his bet against the alternative Canadian mortgage lender.
Marc Cohodes, the fund manager-turned-chicken farmer who has been betting Home Capital will fall since November 2014 -- when the stock was near its peak -- said his short position is now bigger than the total number of shares owned by almost all of Home Capital's insiders. These exclude founder Gerald Soloway and board members John Marsh and Dinah Henderson, but include the rest of Home Capital's directors and former CEO Martin Reid.
Shares of Home Capital have plunged since April 19 following the Ontario Securities Commission's allegation that the company misled investors. A run on deposits ensued, prompting the company to take an expensive line of credit to ensure its ability to service near-term obligations.
"All these heavy hitters," Mr. Cohodes said in a phone interview. "They have such little faith in the company that a private individual in California is short more than all of them hold."
A position of this size would amount to over 121,000 shares or 4.5 per cent of the total short interest in the firm as of the end of April. Based on Wednesday's closing price, Cohodes stands to gain $1-million if the stock fell to zero. He did not provide documentation to support his claim.
Home Capital declined to comment on Mr. Cohodes's claims. Interim CEO Bonita Then however said the company is taking steps to regain confidence of its stakeholders, and pointed to recent board changes and a new funding plan. "So it's working. We are making progress," she said in an emailed reply.
Mr. Cohodes has slammed Home Capital's business model, transparency and management, both through his Twitter feed and in public interviews. The latest disclosure on the size of his position was motivated by Canadian newspaper commentators critical of his public battle against Home Capital, he said. It comes on the day Home Capital is scheduled to announce first-quarter earnings.
Home Capital has taken a costly rescue loan and is exploring options including a potential sale. Much of its board has only been added in recent weeks as part of a "governance renewal" in the wake of the allegations.
The most recent filings from Home Capital insiders are from the end of February. The group -- which includes Then, former Chairman Kevin Smith, interim Chief Financial Officer Robert Blowes, and Mr. Reid -- own some 0.25 per cent of Home Capital's outstanding shares.
The stock has rebounded 69 per cent over the past five sessions amid news that CIBC Asset Management more than tripled its holdings during the month of April to own 15 per cent of the company. Top shareholder Turtle Creek Investment Management Inc. boosted its stake to 19 per cent. Shares are however still down some 60 per cent over the past month.