Super Stock Blog

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Tag: ocn

Ocwen Steady Climber Up

Technically, Ocwen is looking bullish.  It has shown a nice bottoming pattern and a nice slow step back up finally.  This is after a huge drop at the end of 2014 from $58 to $6.  YTD that is a huge drop of 70.9% and YTD drop of 32.1%.  Even with these poor technical formations, there has been widespread activity purchasing the stock.

Seth Klarman has been buying since 3rd quarter of 2014.  He was buying when the stock was averaging $30.  He also bought 4th quarter 2014 and 1st quarter of 2015.  He’s continues to accumulate as it goes down in price.  This is a true value investment and I have to believe when a guru like Seth is putting millions of his money and having this stock as a majority in his portfolio that he really believes it will do well in the future.

Ocwen is a Deep Value Play

On Friday, Ocwen Financial (OCN) took a nose-dive of 8.93% as they lost the loan deal with Wells Fargo.  They have dropped from a high of $60 to reaching $20 in one years time.  I would not have expected this company to continue to drop so much but with a price of $20 there is much pessimism priced into the stock.  They are going to do buybacks and they also have Seth Klarman who has bought large purchases in the third quarter.  Leon Cooperman sold out of his position though.

What are the risk?

They had a huge miss on earnings the past quarter and they also have substantial misses on the past 3 earning releases.  The company has fallen dramatically since the second quarter earnings.  The management repurchased 5.3 million shares at an average price of $29.92.  This is 50% higher than the current price of the stock. They also purchased 2 million additional stock at $23.63.  Management thinks their stock is too cheap and I wouldn’t doubt that they repurchase more in the future.

Why should I buy?

William Erbey is a really good CEO.  There is a lot of negative news priced into the stock right now.  If the company settles with regulations, there is a good chance that the price will rise significantly.  Also, if they continue to go the course, their stock should just go up because its priced as if its going to go to worse climate.

This is actually pretty risky but if there is a bottoming it might be a good play to make!  I would recommend watching for now!