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Radian Group Inc. Message Board

  • moobyet moobyet Jun 7, 2011 3:07 PM Flag

    What a joke

    What kind of game these scum bags are playing? We get an upgrade and then Bam, they flushed it down the toilet.

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    • These stocks trade a lot on sentiment. Right now is "housing is getting worse, the MIs are exposed to housing, short them into the ground", a year ago it was "housing is improving, the MIs are exposed to housing, let's pile into them."

      The reality of RDN's situation is quite different. It's financial situation changes slowly. Borrowers don't default just because the Case Shiller index dropped 2%, nor do delinquent borrowers cure because it rose 2%.

      What is clear is that RDN has ample financial flexibility for the next several years. They are not facing any debt maturity until 2/15/2013, and have plenty of holding company cash to pay that debt off when it matures, and service their other debt in the meantime. So any talk of bankruptcy is pure foolishness. Note that even TGIC, an MI that has been in runoff for 3 years, has never declared bankruptcy, because they no longer have any debt. ABK, in a related but different industry, did have debt obligations it could not meet. Neither RDN or any of the other MIs are in that situation for five years at a minimum.

      Meanwhile, RDN continues to write new business, and in fact has one of the largest market shares in the business.

      The legacy book will take time to work itself out, but it has been, slowly. RDN itself has estimated that over 20% of the existing book will turn into claims, but that still leaves the existing book with $1.5B in excess profits. And that is counting the more recent, well underwritten books of business.

      For all the saber rattling in Congress, the politicians will soon learn that extricating the government from the GSEs in any quick and sudden manner will lead us directly into a depression, something no one wants on their hands. More likely, as was indicated by the White House white paper on the GSEs, the MIs will be ask to take on more of the GSEs risk, resulting in even more future business for the industry.

      In the meantime the FHA has raised rates, again, so the benefit of that should start to flow through in the next few months. The last FHA rate raise was largely negated due to an increase in g-fees, but that was not repeated this time, so this time it will truly be a net benefit to new insurance writings.

      Someone is getting really wealthy manipulating these stocks, while others are going broke. Pre-capital raising, RDN was not worth $18, but neither is it worth only $4 a share today.

    • using PMI as excess to sell RDN off, IMO

 
RDN
12.35+0.030(+0.24%)May 26 4:01 PMEDT