Oliver Davies
Long only, deep value, contrarian

Buy MGIC Instead Of Radian's Overpriced Stock Offering

Fair play to Radian (NYSE:RDN) management. A couple of years ago, staring down the barrel of a liquidity and capital crisis, they must have outlined a strategy with two ends:

  1. Slow down cash burn at their operating company (using denials and single premium business).
  2. Find a way to convince auditors and regulators to allow them to use inadequate loss reserves to artificially boost capital (by slowing down claims process to make it look like loss frequency is less than it is).

The plan has worked. Despite telling investors on its 4th quarter 2012 conference call that a 2013 return to profitability meant risk-to-capital would remain below 25 to 1, the level required by regulators, they have now decided...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details