High Growth Likely For These Real Estate Stocks: Altisource Portfolio Solutions S.A. (ASPS)

Page 1 of 2

On December 21, 2012, Luxembourg-based property management company Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) completed the spin-off of two of its former subsidiaries: Altisource Residential Corporation Class B (NYSE:RESI) and Altisource Asset (PINK:AAMC). The deal unlocks a tremendous amount of value in ASPS’s former subsidiaries and has already provided solid returns for investors who have continued to hold AAMC stock. In the coming months, this complex yet low-key spin-off may yet produce even greater returns for savvy investors.
The terms of this deal were rather complex. According to the agreement, all Altisource Portfolio Solutions shareholders of record on December 17, 2012 received one share of Altisource Residential for every three shares of Altisource Portfolio that they owned. In addition, Altisource Portfolio shareholders of record were to receive one share of Altisource Asset Management for every 10 shares of ASPS that they owned. The Altisource Asset Management shares were not assigned to a particular stock exchange and currently trade on the over-the-counter markets.

Spin-Off Performance
Since the finalization of the deal, the two spun-off stocks have behaved very differently. Altisource Residential Class B shares began trading at $18 per share on December 21 and have since fallen slightly. As of the close of trading on January 16, Altisource Residential shares were worth $16.63. This represents a one-month negative return of approximately 7.6 percent.

By contrast, Altisource Asset Management has outperformed the broader market. Since beginning life as a publicly-traded entity at $80 per share on December 21, the company’s stock has risen by nearly 31 percent in the span of a month. As of the close of trading on January 16, AAMC stock was worth $104.70 per share. During the month of January, the stock has traded as high as $120 per share. Investors who sold the stock at this short-term high realized a gain of 50 percent in just over three weeks.

Unfortunately, the premiums from the three-way spin-off may be reduced by the transaction’s classification as a taxable distribution. Altisource Portfolio Solutions shareholders of record on December 17 will be required to pay taxes on the new shares that they receive. These levies will be assessed in relation to the initial trading prices of the two new equities.

Fortunately, there may be considerable upside to AAMC’s current stock price. If the promise of further gains in the coming months and years was not enough to encourage AAMC shareholders to maintain their positions, this penalty might make them think twice about dumping their shares anytime soon. Altisource Residential is a different story. Although it has the potential to begin returning capital to shareholders through a revenue-sharing partnership with private title insurance issuer NewSource, no announcement to this effect has yet been made. Industry observers are estimating that any eventual Altisource Residential dividend could amount to 7 percent or more. If this does not come to pass within the next two or three quarters, investors might be wise to ease up on their RESI holdings and increase their stakes in AAMC.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!