market folly

Michael Blitzer's hedge fund firm Kingstown Capital has filed an amended 13D with the SEC regarding its position in Ocwen Financial (OCN).  Per the filing, Kingstown now owns 9.97% of Ocwen with over 12.5 million shares (though they have an aggregate economic exposure to 14 million shares due to cash-settled total return swaps).

This is up from the 12 million shares they owned at the end of the first quarter. The filing was made due to activity on August 4th.  The return swaps were purchased on August 4th and 5th at prices of $8.0053, $7.6299, and $7.7450.

The 13D contains the standard activist boilerplate that they may meet with management etc.  Kingstown was the largest reported institutional shareholder of OCN shares as of the end of Q1.

Shares of OCN were hit pretty much all throughout 2014 as regulator Benjamin Lawsky came down hard on the company, forcing its Chairman Bill Erbey to resign, among other changes.  OCN fell from $55 to $15 in 2014 and has continued to fall in 2015 down to current levels of $8.11.  Kingstown initiated their position in the first quarter of this year and has just recently bought more.

As we've highlighted earlier this year, Kingstown was also involved in shares of Home Loan Servicing Solutions (HLSS), another one of the companies that was in Bill Erbey's previous empire.

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company through its subsidiaries is engaged in the servicing and origination of mortgage loans. The Company operates in three segments such as, servicing, lending, and corporate items and other. The Company develops programs, such as Shared Appreciation Modification (SAM) which incorporates principal reductions and lower payments for borrowers while providing a net present value positive loss mitigation outcome for investors, including the ability to recoup losses if property values increase over time."