Altisource Asset Management (AAMC) Is A Great Short

Altisource Asset Management (NYSEMKT:AAMC) has been one of the best performing stocks in the last 12 months, even though it has yet to show any positive operational results. Traders, enamored by Bill Erbey's sales pitch, have neglected to see that the model is fundamentally flawed, and it is possible that no significant income ever flows to AAMC's shareholders.

AAMC is the general partner of RESI, a REIT formed to acquire and rent out single family homes. Because of AAMC's affiliation with Ocwen and Altisource, it can buy pools of non-performing loans (NPLs) and "cure" them into rented single-family homes without having any of its own operations. Since Altisource has a national network of subcontractors and home property managers,...

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