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Tough Times for Banks; Altisource the 'Uninvestable': Best of Kass By Doug Kass | Aug 14, 2015 | 09:38 PM EDT

NEW YORK (Real Money) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

This past week, Kass discussed staying out of real estate investment firm Altisource Residential and shorting insurer MetLife and bank Lincoln Financial.

Don't Move In to Altisource Residential

I've made two good investments and one fine trade in Altisource Residential (RESI - Get Report) over the last few years, and I've repeatedly gotten emails from subscribers about whether I recommend "bottom fishing" on struggling RESI today.

Unfortunately, I think the stock is currently uninvestable despite a 35% discount-to-book value. I believe that RESI's business and profit model, liquidity, access to capital and regulatory considerations are all simply too challenging.

RESI yesterday reported a rather large shortfall of $0.15 a share during the second quarter after adjusting for nonrecurring gains. This confirms my concerns.

Specifically, the company failed to buy any nonperforming loans, while loan resolutions remain soft due to servicing transfers from former parent Ocwen Financial (OCN - Get Report).

Although RESI announced a share buyback today, I suspect the company will do very few actual purchases and that the announcement was probably "cosmetic" instead. The move seems like management's attempt to stem a share-price drop that's taken RESI to around $14.50 today from the mid-$30s 18 months ago and the low-$20s late last year.

Click here for a transcript of RESI's latest earnings call.

Position: None

Tough Times for Banks and Insurers

Originally published Aug. 11 at 12:02 p.m. EDT

Given the bond market's recent strength and the yield curve's flattening, I continue to foresee profit-taking in regional and money-center banks and an outright decline in life-insurance stocks. (Short positions of Lincoln National (LNC - Get Report) and MetLife (MET - Get Report) are on my Best Ideas list.)


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What Did Yesterday's Reversal Mean?
Originally published on Aug. 13, 2015 at 8:11 a.m. EDT

"I don't know."

-- Jeff Spicoli (played by Sean Penn), Fast Times at Ridgemont High

What did yesterday's reversal in the major indices mean?

The simplest answer is "I don't know" (at least...


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