Shares of Ocwen Financial Corporation (NYSE:OCN) jumped more than 10% on Tuesday after hedge fund manager Leon Cooperman recommended the mortgage servicing company. The stock is down 20% over the past year, and Cooperman believes it is oversold.
Ocwen is a non-bank financial company that handles the administrative tasks associated with a loan, including sending statements and receiving payments. The company acquired PHH Corporation in October 2018 to expand its operations, but the purchase saddled Ocwen with significant debt and has weighed on operations.
Speaking on CNBC on Tuesday, Cooperman said that investors are not paying attention to Ocwen. He said the company has a book value of $3.50 per share, well in excess of its $1.40 per share trading price at the time he spoke.
Ocwen announced a $5 million share buyback plan earlier this month and said it is on track to return to profitability by the second half of 2020. The company also boosted its full-year 2020 origination volume target to at least $15 billion, from a prior target of $10 billion. Housing demand has held up well, and should help Ocwen to grow its business in the quarters to come.
The company still has a long road ahead of it, but for patient investors, Cooperman sees an opportunity in shares of Ocwen Financial.