Tricon Capital Group (TCN) - $6.21 - An Attractive Way To Play A Recovery In US Housing

Outperform, Above Average Risk, Price Target: $8.00

RBC CM believes TCN represents an attractive opportunity for investors to gain significant exposure to a recovery in U.S. housing (65% of TCN’s assets under management (AUM) are in the U.S.). RBC CM sees the following catalysts for TCN shares in the next 12 months: (1) increased earnings from the U.S. rental housing strategy, which is not dependent on a further housing recovery; (2) realizations of previous investments which should start to increase performance fee generation; and (3) a continued gradual Improvement in U.S. housing. Furthermore, with only 35% of AUM in Canada, a potential Canadian housing downturn should be manageable for TCN, in RBC CM’s view.