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Kass Katch: Buy Ocwen Financial

I have been a longtime follower and admirer and sometime owner of Ocwen Financial (OCN - Get Report).

In 2009-2010 I purchased Ocwen around $10 a share and its spinoff, Altisource Portfolio Solutions (ASPS - Get Report), at approximately $17 a share. Subsequently, I bought Altisource Residential (RESI - Get Report) at $16 a share and Altisource Asset Management (AAMC - Get Report) at about $60 a share.

In late October 2013 Ocwen's shares rose to over $60 a share and currently stand at $37 a share.

Altisource Portfolio Solutions, adjusted for the spinoffs of Altisource Residential (one third of a share for every Altisource Portfolio Solutions) and Altisource Asset Management (one tenth of a share for every Altisource Portfolio Solutions), now trades for almost $230 a share (up from my original purchase price of $17a share). Altisource Residential traded as high as $34 a share (a gain of over 100% from my first purchase at $16 a share), and Altisource Asset Management, my stock of the decade, traded as high as $1,200 a share (from my initial purchase of $60 a share).

Suffice to say I know of no other group of related companies that have performed as well as these in the last few years.

I have for some time been searching for the next Ocwen Financial.

Perhaps, Ocwen Financial is the next Ocwen Financial.

My initial thesis on Ocwen was that the banking industry, forced to shed costly, noncore and capital-/labor-intensive assets (which carry regulatory risks), would likely dispose of their mortgage-servicing platforms.

That certainly proved accurate.

Also accelerating the disposition of mortgage-servicing businesses was the inherent and continued conflict between mortgage servicers and the mortgagees. Stated simply, the conflict was something that the banks, after the Great Decession, didn't need or want. These conflicts demonized the banks even further, and the banking industry's experience (read: billions of dollars of fines relating to mortgages) served to accelerate the desire to disaggregate the mortgage-servicing operations.

JPMorgan Chase's (JPM - Get Report) Jamie Dimon put it best when he said, "If I never see a loan 60 days delinquent, I would be very happy."

Ocwen filled the gap provided by these acquisition opportunities, which included, over the last few years, the acquisition of the mortgage servicing businesses of Bank of America (BAC), ResCap, Barclays (BCS), Goldman Sachs (GS), Lehman Brothers and the like.

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