Why Ocwen Financial, Deutsche Bank, and Three Other Stocks Are Trending Today

It’s been a relatively quiet day on Wall Street so far as the S&P 500 has opened in the green and has stayed flat in morning trading. Some traders are unwilling to make any moves until the outcome of tomorrow’s Brexit vote is certain.

In this article, we take a look at the reasons why five stocks, Ocwen Financial Corp (NYSE:OCN), Paratek Pharmaceuticals Inc (NASDAQ:PRTK), Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH), First Bancorp (NASDAQ:FBNC), and Deutsche Bank AG (USA) (NYSE:DB), are in the spotlight and see how hedge funds and other investors we track are positioned towards them.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

Ocwen Rises on Fitch Affirmation

Ocwen Financial Corp (NYSE:OCN) shares are more than 2% higher after credit ratings agency Fitch affirmed Ocwen’s long-term issuer default ratings as ‘B-‘. The ratings agency also affirmed Ocwen’s senior unsecured notes at ‘CC/RR6’ and said its ratings outlook is stable. Ocwen is expected to cut $300 million in operational costs this year and has $280.5 million in unrestricted cash as of March 31, 2016. Shares of Ocwen are nevertheless down 76% year-to-date as the company struggles to remain profitable. A total of 19 funds from our database had a long position in Ocwen Financial Corp (NYSE:OCN) at the end of March.

Paratek Down on Offering

Paratek Pharmaceuticals Inc (NASDAQ:PRTK) shares are 1.5% in the red this morning after the company priced its previously announced public offering of 4.25 million shares of common stock at $13 per share before underwriting discounts and commissions. Paratek has also granted underwriters the 30-day option to buy up to 637,500 additional shares of common stock. Net proceeds from the offering is expected to amount to around $51.4 million. Of the 766 elite funds we track, 10 funds owned $64.8 million worth of Paratek Pharmaceuticals Inc (NASDAQ:PRTK)’s stock, which accounted for 24.40% of the float on March 31, versus 11 funds and $71.01 million, respectively, on December 31.

On the next page, we examine Carolina Bank Holding, First Bancorp, and Deutsche Bank AG.
M&A in the Banking Sector

First Bancorp (NASDAQ:FBNC) is buying Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) in a cash and stock transaction for either $20 in cash per share or 1.002 shares of First Bancorp’s common stock for each share of Carolina Bank stock. The cash element will be capped at 25% of the deal, which had a total current value of around $97.3 million based on yesterday’s closing prices. Carolina Bank shares have rocketed 15% on the news while shares of First Bank have retreated 3.11%. The deal is expected to close in the fourth quarter of 2016 or first quarter of 2017. Four funds from our database owned shares of Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) and seven funds were long First Bancorp (NASDAQ:FBNC) at the end of the first quarter.

Deutsche Bank to Cut Branches

According to Reuters, Deutsche Bank AG (USA) (NYSE:DB) has won approval from the German works council to close around 200 of its 723 branches in its home country. The branch cuts are part of Deutsche Bank’s strategic overhaul initiative to boost profits and improve return on capital. Shares of the bank have fallen by 30% year-to-date due to various concerns including a slow-growing European economy and a potential ‘Brexit’. At the end of March, 10 funds tracked by us were long Deutsche Bank AG (USA) (NYSE:DB) at the end of March, up by one from the previous quarter.

Disclosure: none