Altisource Residential Activist Group Ratchets Up Board Fightby
Activist group has nominated three dissident directors
Shareholders now own more than 4 percent of Altisource shares
Activists seeking control of the board at Altisource Residential Corp. are ratcheting up their campaign, publicly calling on it to cease a strategic shift from acquiring distressed mortgages to buying houses until after a proxy fight vote.
“The board’s inexperience has rendered it unqualified to fix the problem of its own creation,” the activist group wrote in a letter Thursday to Altisource’s board of directors. “We believe that an independent and capable board is required to review all potential strategic alternatives to deliver full value for shareholders.”
The dissident shareholder group, which includes Oliver Press Partners LLC and Bradley L. Radoff, said it now owns more 4 percent of Altisource. It went public with a proxy fight on Jan. 20, nominating three directors seeking to wrest control of the company’s five-member board at the annual meeting in May.
Altisource Residential’s shares have plunged since it last raised equity, and trade at less than half book value because of “the abrupt and ill-considered shift in strategy from being a buyer of distressed mortgage loans to the outright purchase of single-family rental homes,” the activists claim in their latest letter to the board.
A representative for Altisource declined to comment. In January, the company said in a statement that it seeks to maintain open communications with its stockholders to enhance value for all shareholders, adding that the board was comprised of highly-qualified and proven leaders.
Ocwen Financial Corp., the mortgage servicing giant, spun off Altisource in 2009 and other affiliates were subsequently separated. The dissident shareholders also criticized conflicts of interest between the company and former affiliates Altisource Asset Management Corp. and the Altisource Portfolio Solutions SA, which are paid fees from Altisource Residential to manage and service the rental homes.
Buying homes instead of foreclosing on some of the non-performing loans in its portfolio and converting them into single-family rentals at a discount is “economic insanity” that rewards the fee takers at the expense of its own shareholders, the activist group wrote.
The activists said that they’ve sought talks with management and the board since they originally notified them of the dissident director nominees -- Andrew L. Platt, Clifford Press, and Joshua E. Schechter. Thursday’s letter refers to conversations in which it was indicated that the company “may be contemplating a large acquisition of single-family homes.”