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MGIC Investment Corp. Message Board

  • mortgageguy44 mortgageguy44 Jan 16, 2013 4:57 PM Flag

    decline in value due to concern that MGIC will need to issue more stock

    GNW down streamed $100 million to its mortgage subsidiary and put its Non US MI company under its US MI company. Both help to decrease the risk to capital ratio.

    MGIC will need to have more capital at some point, I am hoping for proifts in 2013 so that the tax value of the net operating loss carry forward will be put back on the balance sheet.

    However, it is very possible that MGIC will need to issue more equity in 2013. This dilution would be painful.

    I believe this is what is causing the weakness in the price of MGIC.

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    • Listen to the last earnings call. They explicitly said the mortgage insurance company, even without the parent, could pay expected claims with cash on hand, even if they were in run off state, for the next FIVE YEARS! They do not need capital and the last thing they would do is go back to the market for the same.

      If they added some of the backup protection of the parent company, they would be well within the risk ratio tolerance levels.

      Lastly, the extremely profitable new business is generating lots of cash, and outpacing the new delinquencies as we will see on the 21st!

      Shorts are getting a bit piggy in here, you should be covering and booking the little profit you may have made on this text book correction.

      Sentiment: Strong Buy

    • I think Genworth's move, and the approval of the new company, puts tremendous pressure on both Radian and MGIC to raise new capital. Think of it this way - over $1B of new capital has entered the industry in the past week: the $550M in the new company, and over $500 that Genworth has committed or promised to commit in the future (including the European shares, future tax sharing, capital contributions planned and promised). I think the GSEs will have Radian and MGIC on a very tight leash. If they don't turn things around by the end of this year, they both could be cut off.

      Sentiment: Strong Sell

    • Mortgage Guy, indeed they will need to raise equity eventally. Timing is the key and to be done at much higher prices. We may all be surprised by the upcoming 4th qtr. results. They need to be received well strengthen the current change in sentiment. Any dilution in either RDN and MTG at these prices and the shorts will have no problems covering the millions of shares short. This is most likely the reason they have yet to cover knowing that they may have millions to buy with no problem. SHorts also tend to do their due diligence...

      Sentiment: Strong Buy

    • When MGIC is going to remove BoA dq from inventory? I think that is what we need to see now.

    • I am not sure that is the reason because RDN has been declining as well.

5.89-0.440(-6.95%)Jun 24 4:03 PMEDT