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Home Capital’s second biggest shareholder beefs up holdings

Signage is displayed outside the Home Capital Group Inc. headquarters office in Toronto, Ontario in this file photo.

Cole Burston/Bloomberg

A Toronto-based investment management firm has increased its share ownership in Home Capital Group Inc., not long after famed investor Warren Buffett offered a financial lifeline to the alternative mortgage lender.

Turtle Creek Asset Management Inc., which was already one of Home Capital's largest investors, recently acquired more than two million shares to bring its total holdings to a little over 14.2 million shares, according to a regulatory filing on Thursday.

For a long period, Turtle Creek was Home Capital's largest shareholder. But it was recently superseded by Berkshire Hathaway Inc., which announced an investment of around $400-million into the firm in June. Mr. Buffett's investment firm currently owns just under 20 per cent of the equity in Home Capital, according to Bloomberg data.

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Even though Turtle Creek increased its share ownership in Home Capital through its recent purchase, its percentage stake actually fell from a recent high of approximately 19 per cent to 17.8 per cent as of July 31, according to the filing. Turtle Creek incurred significant dilution after Berkshire Hathaway was issued millions of new shares as part of its June deal with Home Capital.

Turtle Creek, which has held shares in Home Capital over a number of years, held firm in the midst of a run on the lender's deposits this spring, and even added to its position at certain times, as uncertainty swirled over the firm's future. Chief executive officer Andrew Brenton did not immediately respond to a request for comment late Thursday.

In April and May, Home Capital endured a crisis of confidence, including a run on its deposits, in the wake of an Ontario Securities Commission probe into the company's disclosures about its mortgage business. Earlier this week, the Ontario Securities Commission approved an $11-million settlement with Home Capital and three former senior executives in which the parties accepted responsibility for making misleading disclosures to investors.

Since the investment by Berkshire Hathaway, which restored a measure of financial stability to the lender, Home Capital has seen new deposits once again flow into its guaranteed investment certificates, which are a key source of funding for the firm.

Shares in Home Capital closed at $13.10 apiece Thursday on the Toronto Stock Exchange.

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