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Sydnee Gatewood
Sydnee Gatewood
Articles (426) 

Howard Marks’ Oaktree Invests in Struggling Mortgage Lender

Company emerged from bankruptcy in early February

Howard Marks (Trades, Portfolio)’ Oaktree Capital Management disclosed that it established a position in Ditech Holding Corp. (NYSE:DHCP) on Feb. 28, following the completion of the company’s restructuring plan.

According to GuruFocus Real-Time Picks, Oaktree invested in 962,455 shares of the Pennsylvania-based company, which was formerly known as Walter Investment Management, for an average price of $10.19 per share, giving it 0.23% portfolio space.

The mortgage banking company, which emerged from chapter 11 bankruptcy in early February and changed its name, has a market cap of $406.62 million; its shares were trading around $10.88 on Wednesday with a price-sales ratio of 0.49.

After filing for bankruptcy protection last November, the company vigorously worked to implement its restructuring plan, which included eliminating $800 million in debt and enhancing its financial flexibility.

Prior to filing, Ditech had several rough years. In 2016, it recorded a net loss of $529.2 million, or $14.71 per share, for the year, a significant decline from a net loss of $263.2 million, or $7 per share, in 2015.

The first three quarters of 2017 did not look much better as it posted a total net loss of $213.86 million.


Ditech’s leadership has also been rocky. Since October 2015, the company has had five different CEOs. Most recently, the company appointed Jeremy Baker as interim president and CEO, replacing Anthony Renzi.

Since resuming trading on Feb. 12, the stock has gained approximately 9%.

Guru Leon Cooperman (Trades, Portfolio) has also taken an interest in the stock, holding 0.84% of outstanding shares. Oaktree holds 2.58%.

The firm’s current portfolio of 72 holdings is largely composed of securities in the utilities and financial services sectors. Other financial service companies Oaktree is invested in currently are Ally Financial Inc. (NYSE:ALLY), Itau Unibanco Holding SA (NYSE:ITUB), NMI Holdings Inc. (NASDAQ:NMIH), ICICI Bank Ltd. (NYSE:IBN) and Altaba Inc. (NASDAQ:AABA).

Founded in 1995, the alternative investment management company says on its website it focuses on delivering superior results while observing its six-tenet investment philosophy: risk control, consistency, market inefficiency, specialization, bottom-up analysis and disavowal of market timing.

Disclosure: No positions.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneeg

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