Turnaround Potential Materializing Again for Lender Processing Services

This is an excerpt from an article I originally published on Seeking Alpha on October 30, 2011. Click here to read the entire piece.)

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Today, I am going to try again to make the case that LPS is potentially turning around. Here are the main points and observations:

  1. Short interest is down 34% from the all-time on August 15, 2011.
  2. The market responded well after LPS raised earnings guidance on October 25.
  3. That response sent LPS above its primary downtrend marked by the 50-day moving average (DMA) for the first time since March, 2011.
  4. On Thursday, November 3, the stock gained 11% on high buying volume in what looks like convincing follow-through to the break in trend.
  5. An energetic new CEO who is a 30-year veteran in the mortgage industry.
  6. Thomas Schilling, CFO and former interim CEO, has made spent $459,050 buying LPS shares from November 10, 2010 to August 8, 2011.

The graphs below show the history of short interest in LPS and its recent price history.


LPS short interest remains high but is well off the all-time highs
LPS short interest remains high but is well off the all-time highs

Source: NASDAQ

LPS finally breaks its downtrend and follows-through with strong buying interest
LPS finally breaks its downtrend and follows-through with strong buying interest

Source: FreeStockCharts.com

{snip}…new CEO Hugh Harris…{snip}…staked his claim to three top priorities for the next 90 days (all quotes and material from the Seeking Alpha transcript of the earnings call):

  1. Review and assess business operations and structure, making whatever adjustments in business focus and hiring/roles to improve performance.
  2. Focus on regulatory and legal issues.
  3. Tell LPS’s “positive story” (aka public relations)

LPS explained that the quarter’s revenue and earnings were better than expected…

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I have long stopped buying and selling puts on LPS and am now just sitting on my small amount of shares. {snip}

Be careful out there!

(Click here for an archive of my previous posts on Lender Processing Services).

This is an excerpt from an article I originally published on Seeking Alpha on October 30, 2011. Click here to read the entire piece.)

Full disclosure: long LPS

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