Altisource is the actual service supplier for Ocwen. Ocwen just made an acquisition that will add 422,000 mortgages to their servicing portfolio, considering that Altisource serviced an average 745,000 mortgages for OCWEN during 2q12 , this means that as Ocwen closes the acquisition and transfers the servicing work to Altisource, this will add over 50% of mortgage servicing revenue to Altisource.
Note mortgage servicing in 2q12 was about 116 million of 144 million Altisource revenue. Other parts of Altisource is financial services about 16 million rev and technology services about 18 million. Operating margins for Altisource in 2q12 were mortgage services 31.8%, finance services 6% and technology services 15.9%. So you see they are about to grow their most profitable business by about 50%, once the Ocwen acquisition is closed.
What is not yet clear to me is whether Altisource and Ocwen will make as much money per mortgage loan on the new loans to be acquired since these appear to be higher quality loans while the loans they serviced up to now where mostly sub-prime and Alt-A mortgages.
So if you invest into Altisource you need to follow Ocwen.
Thanks Rosy. BTW, it is my belief that much of the gains in ASPS is due in most part by the argument that housing has bottomed. I do not buy in to this manufactured theory...At all! I'm a real estate investor, the whole "bottoming" argument is pure manufactured #$%$. What the Fed and Obama's white house did, was to stop the flow of foreclosures to the investing public...Thus, creating more demand than supply...And artificially raising value, in the short term. ASPS, the various homebuilders have greatly benefited from this covert operation. Nonetheless, you can bet that values will DEFINETLY drop again when the next flood of foreclosures (that are being held on the banks books) hit the investor market (courthouse steps). And that will create great volatility in ALL mortgage and housing stocks - Like ASPS. trading range from 70.00 to 120.00