Ocwen Financial Corporation (OCN): Insiders Aren’t Crazy About It But Hedge Funds Love It

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In the eyes of many investors, hedge funds are assumed to be useless, old financial tools of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, this site focuses on the crème de la crème of this club, about 525 funds. It is widely held that this group controls the majority of the smart money’s total assets, and by keeping an eye on their highest performing equity investments, we’ve brought to light a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as crucial, bullish insider trading sentiment is another way to look at the financial markets. There are a number of reasons for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).

Now that that’s out of the way, it’s important to study the newest info surrounding Ocwen Financial Corporation (NYSE:OCN).

How have hedgies been trading Ocwen Financial Corporation (NYSE:OCN)?

Heading into Q3, a total of 41 of the hedge funds we track were long in this stock, a change of 11% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.

Ocwen Financial Corporation (NYSE:OCN)According to our 13F database, Stephen Mandel’s Lone Pine Capital had the largest position in Ocwen Financial Corporation (NYSE:OCN), worth close to $224.6 million, comprising 1.1% of its total 13F portfolio. On Lone Pine Capital’s heels is Pine River Capital Management, managed by Brian Taylor, which held a $151.2 million position; 2.3% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Peter Adam Hochfelder’s Brahman Capital, Matthew Iorio’s White Elm Capital and Paul Ruddock and Steve Heinz’s Lansdowne Partners.

With a general bullishness amongst the titans, certain money managers were leading the bulls’ herd. Lone Pine Capital, managed by Stephen Mandel, created the biggest position in Ocwen Financial Corporation (NYSE:OCN). Lone Pine Capital had 224.6 million invested in the company at the end of the quarter. Brian Taylor’s Pine River Capital Management also initiated a $151.2 million position during the quarter. The other funds with brand new OCN positions are Peter Adam Hochfelder’s Brahman Capital, Matthew Iorio’s White Elm Capital, and Paul Ruddock and Steve Heinz’s Lansdowne Partners.

What have insiders been doing with Ocwen Financial Corporation (NYSE:OCN)?

Legal insider trading, particularly when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Ocwen Financial Corporation (NYSE:OCN) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Ocwen Financial Corporation (NYSE:OCN). These stocks are Investors Bancorp, Inc. (NASDAQ:ISBC), First Niagara Financial Group Inc. (NASDAQ:FNFG), New York Community Bancorp, Inc. (NYSE:NYCB), People’s United Financial, Inc. (NASDAQ:PBCT), and Hudson City Bancorp, Inc. (NASDAQ:HCBK). This group of stocks are the members of the savings & loans industry and their market caps are similar to OCN’s market cap.

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