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Radian Group Inc. Message Board

  • cedarvalleycapital cedarvalleycapital Aug 24, 2011 9:17 PM Flag

    Why RDN will be $7 by December

    1) The moves up are on huge relative volume, the moves down are on light relative volume

    2) It just moved up 20% on a negative news day. Mortgage applications are down 9.7% this week and at the lowest level seen since 1996. The worst has been factored in.

    3) Best of the breed. RDN has the smartest risk management in the business. They also seem to find a way to make money when nobody else can. They are not pigs or gamblers like some of the other industry management and have always been very conservative and mathematical people.

    4) Insider buying. Take a look at the last time these insiders sold, it was over $60 a share. They sell at the peak and buy near the bottom. They are also all super conservative people by nature. Look into them, study their bios.

    5) QRM definitions will be changed. Too much opposition against it from too many people and politicians. Private MI works and will not be thrown under the bus.

    6) Peak delinquencies have been reached and the capital ratios reached a peak last quarter. It can't get any worse for RDN (even if it gets worse sector wide). Ratios will improve as the new business written is much more carefully contrived. Payout claims are also proactively being challenged and re-challenged for mortgage fraud.

    7) Every time in the past 3 years that RDN has reached this level it has bounced back 300%+ within a few months, sometimes less. History will repeat itself again.

    8) RDN is diversified and well capitalized and will benefit the most from PMI's (and maybe soon MTG's) lack of ability to write new business. Clearly the trend is up with regards to RDN writing new business month over month and they continue to be the most aggressive in the space.

    9) FHA loans will trend down and the conventional MI insured loans will naturally trend up. The trend will move away from government intervention. Long term RDN will get back over $20. I'd say by the end of 2013.

    10) Industry consolidation. S.A. sounds pretty confident during the last CC when the Goldman Sachs analyst asked about consolidation rumors: "Donna, as you know very well, I can't comment on anything in the way of discussions that may be occurring or not occurring. All I can tell you, that we at Radian have demonstrated in the past our open-mindedness, and we believe we are strongly positioned financially to participate in those opportunities as they may come up in the industry if they make sense for our shareholders."

    Strong buy at this level. Picking the bottom is as pointless as it was in March 2009 when it ran up 1500% in 6 months. Whether you are in at $1 or $2 or $3, the most important thing is that you are in. Sometimes having a smaller stake at a higher average makes you more money as you end up holding it longer, not tempted to cash the quick 50% move and missing the other 1000%. Feel free to add to this list of reasons. GLTA.

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12.90+0.18(+1.42%)Jul 29 4:03 PMEDT