Ocwen Financial (OCN) - When Stop Losses Are Fruitless
Let me reiterate I am thrilled we exited Ocwen Financial (
) at just under $14 immediately after they announced a secondary offering diluting shareholders by 25%. (
Aug 14, 2009: Ocwen Financial Beats on Earnings, but Issues $250M of Shares - Exiting for Now) I am still amazed the stock did not react at first.
Today Ocwen Financial (OCN) beat the analyst estimates as I imagined but announced a massive offering relative to their size ($250M shares for a $1B company). When I saw that news this AM my heart jumped to my throat and I assumed the stock would be down 20%. Instead it's down less than 2% as I type this. I just throw up my hands right now - even when these things are working in our favor. Some things simply make little sense.
First rule of making money is ... don't lose money. While I tend to head for the exits prematurely from time to time, it also saves us from a situation like this. Where a stop loss would be completely useless. This was our largest position at times during the past 9-12 months, and one of our longest held stocks - but there is no room for feelings in the stock market. It was time for her to be shown the door.
That said, down here at these prices - especially at $9 I like the value as the dilution is now "in" the stock. At $9 the stock had a 35% discount to $14 - hence attractive. With the stock below the 200 day moving average we'll see if Ocwen can start the long slog back.
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