Why Ocwen Financial Corp. Dropped 11% Today

By Jordan Wathen Markets Fool.com

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What happened

Shares of Ocwen Financial Corp. (NYSE: OCN) are trading down by about 11% at 11:45 a.m. EST on Thursday after a downgrade by Compass Point Research.

So what

A sharp price decline at Ocwen appears to be the result of a simple ratings change by research group Compass Point Research.Market news site thefly.com reported that Compass Point Research downgraded Ocwen from buy to neutral on Thursday, reversing a September 2016 upgrade.

The research outfit also downgraded Nationstar Mortgage Holdings (NYSE: NSM), which has ties to Ocwen, to a sell recommendation from a neutral one, resulting in a 6% share-price slide on Thursday.

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Now what

With a 10-to-1 levered balance sheet, and few concentrated stock owners, it doesn't take much more than a sneeze to send Ocwen's share price flying higher or plunging lower. Selling may have been magnified by investors seeking to protect their gains after shares rallied by nearly 400% from the stock's July 2016 lows.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Ocwen Financial. The Motley Fool has a disclosure policy.