Billionaire Texas investor Gerald J. Ford on Tuesday said he reduced his stake in Newport Beach-based thrift Downey Financial Corp. to 4.9% from 6.8%.
Downey’s shares were down 8% for the day with a market value of $1.8 billion. The news was released after the closing bell of trading.
Ford’s company, Dallas-based Hilltop Holdings Inc., said it dumped 510,000 shares of Downey at $40 to $41.14 per share, according to a Securities and Exchange Commission filing.
Hilltop initially bought 1.89 million shares of the company two weeks ago at $30.96 to $34.89 a share. Ford now has 1.38 million shares.
The shares were bought with the possibility of a takeover by Hilltop, according to an SEC filing.
Ford had reportedly met with Downey’s chairman, Maurice McAlister, and expressed interest in further discussing a buyout.
Earlier in the fall, Ford had expressed interest in acquiring Los Angeles-based Fremont General Corporation, but walked away from it.
Downey has been struggling with bad loans it made. In the third quarter it posted a $23 million loss.
Most of Downey’s loans are adjustable rate mortgages that are scheduled to reset at higher rates into next year, potentially causing their borrowers to default.
