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Why Altisource Portfolio Solutions S.A. (ASPS) Fell More Than 40%

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) fell by 42% on Thursday mainly due to the news that North Carolina issued a cease and desist order preventing Ocwen Financial Corp (NYSE:OCN) from originating new mortgages to be serviced or buying new MSRs until the company showed that its financial condition was strong enough, among other asks. North Carolina regulators also noted that if Ocwen were to redress its operational deficiencies and pay its known and potential penalties, that ‘it would indicate that Ocwen continuing as a going concern would be in doubt’. In addition, there are reports that multiple other state mortgage regulators have joined in on the action. Adding salt to the wound, the CFPB has also sued Ocwen for making various mistakes. Given the relationship between the two (Ocwen is Altisource’s biggest customer), some traders evidently sold both Ocwen and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) at the same time. Ocwen shares fell by 53% versus Altisource’s 42% retreat.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

The smart money wasn’t too bullish on Altisource. Our data shows the number of elite funds with holdings in Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) fell by 5 quarter-over-quarter to 12 at the end of Q4.

The Bottom Line

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) shares have declined sharply due to news of Ocwen’s state/federal regulator troubles. For those of you interested, read ‘11 Most Ridiculous Lawsuits Settlements and Victories of All Time‘.

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