On Friday, Ocwen Financial (OCN) took a nose-dive of 8.93% as they lost the loan deal with Wells Fargo.  They have dropped from a high of $60 to reaching $20 in one years time.  I would not have expected this company to continue to drop so much but with a price of $20 there is much pessimism priced into the stock.  They are going to do buybacks and they also have Seth Klarman who has bought large purchases in the third quarter.  Leon Cooperman sold out of his position though.

What are the risk?

They had a huge miss on earnings the past quarter and they also have substantial misses on the past 3 earning releases.  The company has fallen dramatically since the second quarter earnings.  The management repurchased 5.3 million shares at an average price of $29.92.  This is 50% higher than the current price of the stock. They also purchased 2 million additional stock at $23.63.  Management thinks their stock is too cheap and I wouldn’t doubt that they repurchase more in the future.

Why should I buy?

William Erbey is a really good CEO.  There is a lot of negative news priced into the stock right now.  If the company settles with regulations, there is a good chance that the price will rise significantly.  Also, if they continue to go the course, their stock should just go up because its priced as if its going to go to worse climate.

This is actually pretty risky but if there is a bottoming it might be a good play to make!  I would recommend watching for now!