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Altisource Rising; Volcker's View: Best of Kass

NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among the posts this past week were entries about Altisource Portfolio Solutions and former Fed Chair Paul Volcker.

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Altisource Portfolio Solutions Still Soars
Originally published on Friday, Oct. 25 at 10:06 a.m. EDT.

I wanted to update Altisource Portfolio Solutions (ASPS - Get Report) for those who are fortunate enough to still own this monster! (As I have often reminded myself, I mistakenly failed to re-establish my long position when the shares traded down to $70 months ago.)

Altisource reported a huge beat in revenue ($211 million, up 46% year over year) and profits (GAAP $1.42 a share, cash EPS $1.80 a share). Pretax margins leaped to 27%, leading to the earnings breakout, which was well above consensus).
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12083748/1/what-is-apples-implied-move-post-earnings.html"><em>What Is Apple's Implied Move Post Earnings?</em></a>]

The company repurchased 265,000 shares during the third quarter.

Over the next two quarters Altisource expects to board about 1,550 loans from Ocwen (OCN - Get Report), mostly government-sponsored agency loans. The incremental fees earned on this (at a near-50% default servicing margin) coupled with other growth initiatives within the company and at Ocwen should produce revenue of $775 million in 2013 and $1.05 billion next year.

This will translate into approximately $6.20 a share in 2013 and over $10.25 a share in 2014.

The shares, which stood at around $15 a share in late 2009, now trade at near $150 -- adjusted for the Altisource Residential (RESI - Get Report) and Altisource Asset Management (AAMC - Get Report) spinouts, it trades over $200.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12082643/1/greenberg-whats-wrong-with-twitter.html"><em>Greenberg: What's Wrong With Twitter?</em></a>]

By any measure, the stock has been a home run, and I appropriately termed it the stock of the decade in my diary and in my annual surprise list.

Here is a segment from Mad Money in which Jim "El Capitan" Cramer endorsed the idea when the shares were in the low $20s. (Well done, Jimmy!)

At the time of original publication, Kass was long RESI.

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