Firm cuts stake in Downey Financial

Hilltop Holdings Inc., an investment firm led by billionaire Gerald J. Ford, reduced its stake in Newport Beach-based Downey Financial Corp. to 4.9%, less than a month after saying it wanted to discuss a sale of the money-losing savings and loan.

Hilltop, which reported a 6.8% stake in Downey last month, didn’t say in a regulatory filing Tuesday whether it was still interested in talking with Downey. Ford broke off talks in October to invest in Santa Monica-based Fremont General Corp., another loss-plagued lender.

Ford, listed by Forbes magazine as one of the world’s richest men, may already have realized a profit on his investment in Downey. Hilltop disclosed Nov. 19 that it paid $63.4 million for 1.89 million Downey shares, or an average of $33.54 a share. Its filing Tuesday said it sold stock Monday for prices ranging from $40 to $41.14 a share.

Hilltop made the filing after the stock market closed Tuesday. In regular trading, Downey shares tumbled $3.20, or 8%, to $36.91 during a broad retreat of financial stocks. Downey is down 49% this year.

Downey executives couldn’t be reached for comment. The company lost $23 million, or 84 cents a share, in the third quarter of this year -- its first quarterly loss since 1996. Downey originated or bought $694 million of loans in the third quarter, down 57% from a year earlier.