The mortgage insurers have certainly all been given hair cuts, kind of like the first one they gave me at Fort Dix.
Here are the current Price/Book ratios of a few:
MBI 0.83
PMI 0.37
MTG 0.39
RDN 0.24
I listened to the RDN conference call this a.m. and RDN's CEO, S.A. Ibrahim, declared that even after a 3Q loss of $740MM, the company's stated book value is $42/shr. RDN shares closed today at $10.88. Actually, there were pieces of the losses that the company took which might still have value and which they might be able to recapture later on. Effectively, they put a worst-case look on the quarter's results, although they don't expect profitability until 2009.
Marty Whitman, an old fashioned balance sheet guy, recently bought nearly 11% of the company at a time when he calculated book at $50. Whitman doesn't think that book is likely to drop below $40, even with the huge losses.
With positions in USG and finance company CSE, and buys both yesterday and today in DFC, I'm reluctant to also jump into a mortgage insurer, but these look like bargains (or they might in 3-5 years). I would find RDN hard to resist in single digits. I decided to join Mohnish in DFC after spending about 5 hours the other night reading their financials, just about the entire web site, and anything else I could find on the company. The Patels Dhandho is in motels, but the Pabrai Dhandho is in a finance company.
Here are a few articles on RDN and the sector:
Don't Bet the Ranch (Radian Group, MGIC) | SmartMoney.com
SNL Interactive: Article
The Business Journal of Milwaukee: Radian Group, Inc. Company Profile
Marty Whitman's bargain stocks for a turbulent market - Oct. 23, 2007