Mea Culpa - HLSS, OCN, ASPS

If it wasn't clear already, I was wrong, very wrong on Erbey's mortgage servicing companies. The analysis can go on for pages, but the key is this: Erbey's companies relied on cutting corners on costs to make their competitive advantage. As a result, they deliver an inferior product (mortgage servicing) that matters to both consumers & regulators.The MSR transfers etc. that were part of the original thesis does not work if they cannot service mortgages effectively.

Buffett once said:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

In this case, I'm actually not sure if management is that skilled. Anyone can cut costs by partially ignoring the rules of the industry. Then, ASPS took on debt to buy back shares & 30x+ ttm p/e.

I actually feel like it is value-trap now, though have no position in the shares after selling them mid-year 2014.