This content is from: Portfolio
The Morning Brief: Robert Chapman Bets on Ocwen
Robert Chapman says his Manhattan Beach, California-based Chapman Capital has been investing in embattled mortgage servicer Ocwen Financial Corp., believing the stock could double, according to a Bloomberg BusinessWeek report. The activist hedge fund manager says he is buying shares of stock as well as call options.
“It’s going to stabilize,” he said, according to the report. “Ocwen easily could double from here.”
The stock rebounded about 11.6 percent Thursday on the news after plummeting about 87 percent since the beginning of 2014. California is seeking to suspend the company’s mortgage license after the Georgia-based company in late December agreed to a settlement with New York regulators that calls for the resignation of its founder and the payment of a $100 million penalty and another $50 million as restitution to current and former customers whose properties were in foreclosure.
Meanwhile, Moody’s downgraded its debt ratings on some of the debt of Ocwen and Altisource Solutions, one of a number of companies created by Ocwen founder William Erbey and spun off from Ocwen, and which does business with Ocwen.
Hedge fund favorite Dollar General warned its investors that it is still engaged in discussions with the Federal Trade Commission over its bid to acquire Family Dollar Stores and made it clear it is not confident when it will receive approval from the anti-trust review.
“This engagement is ongoing, and the FTC has reached no final conclusion regarding the number of divestitures that would be required by a Dollar General/Family Dollar combination,” the discount retailer stated. It added that it has had discussions with a number of potential buyers interested in acquiring stores that may be required to be divested. Dollar General stressed that it is working toward certifying compliance with the FTC’s second request by February 10. It added that the FTC will then have 30 days to decide whether to allow the transaction to close or sue to stop the deal. Dollar General added it is “prepared to defend litigation.”
The latest developments have led some observers to speculate that Family Dollar shareholders may choose to accept a competing bid from Dollar Tree, a deal that the influential governance firm ISS endorses. Earlier on Thursday, Deutsche Bank raised its price target on Dollar Tree by $2, to $74, stressing that with just one week until Family Dollar shareholders vote on the deal, “odds continue to tilt strongly in favor” of Dollar Tree.
Thomas Gilbert Jr., accused of killing his hedge fund manager father Thomas Gilbert Sr., stands to inherit a portion of his father’s estate worth roughly $1.6 million, according to the New York Post. He would share it with his mother and sister. However, the most shocking part of the story is that the father was only worth $1.6 million. This includes $50,000 in bank accounts, $477,000 in hedge funds, $1 million in private equity shares and $100,000 in tangible personal property. That’s basically chump change by the standards of the managers on Alpha’s Rich List ranking.
Several high-profile hedge funds that have not previously reported have finished the year in the red. Richard Perry’s New York-based Perry Partners International, run by his New York-based firm Perry Capital, lost 3.37 percent after posting double-digit gains the two prior years. Jeffrey Altman’s New York-based Owl Creek Overseas Fund, managed by New York-based Owl Creek Asset Management, lost 8 percent or so after racking up a 48.6 percent gain in 2014, when he qualified for the Rich List’s Second Team, making $125 million.