LPS: Letting the Dust Settle

I am rightfully getting a lot of questions about what is going on with LPS. To be frank, I don’t have much to add to what I wrote about LPS yesterday:

Q. What are your thoughts on LPS earnings report? I wasn’t impressed but the stock has gone up since they reported. Good time to buy or let it settle? Thanks
A. I assume you’re asking if it’s a good time to buy puts and/or short LPS, not buy the stock since you know I think it’s headed much lower over the next couple years. That said, as I’ve been saying since the stock started spiking off its lows, there’s been a marked turn in the regulatory/rule of law rumblings from the AGs and the Administration which, while it appears in every press release they issue that they’re still serious about going after LPS and its MERS technology, the backroom dealings and stock action seem to indicate otherwise. As I’d said last week, I didn’t think LPS’ earnings report would be a catalyst and it wasn’t — the stock action is all about whether this company gets busted for its misdeeds and destroyed for its fundamentally flawed title transferring business, and business for financial misdeeds and flawed titles is apparently booming for now. I think it’s time we let the dust settle and get more details about just how badly the AG/Administration is selling the homeowners and citizens of this country out.

I talked several subscribers out of shorting LPS calls because there has been too much upside risk as the settlement negotiations with the state AGs and the Administration. This is also why we have these puts for our primary vehicle to short LPS. We’ve had some huge gains with LPS up until this recent spike although we’ve had losses on the remaining puts. But our exposure is limited to the amount of capital that we allocate to these puts. I am letting the dust settle, as I said yesterday, for now.