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Buy MGIC: Capital-Light Strategy Meets A Housing-Light USA

Nov. 08, 2022 1:56 AM ETMGIC Investment Corporation (MTG)11 Comments
Gary J. Gordon profile picture
Gary J. Gordon


  • MGIC just delivered a terrific Q3.
  • MGIC is well protected against a recession by excellent underwriting standards, active use of reinsurance and a US housing shortage.
  • MGIC's capital-light operating strategy has allowed the company to reward shareholders with lots of cash - dividends and buybacks.
  • At only a 6 P/E and 88% of book, this stock is very cheap outside of a major recession.

Stock buyback sign on graph and coins background.

Maria Vonotna

MGIC’s knock-it-out-of-the-park Q3.

The Houston Astro’s Yordan Alvarez was not the only one to hit a homer last week; I think MGIC’s Q3 qualifies, in many ways:

  • MGIC reported Q3 EPS of $0.86, beating the average Wall Street analyst
Underwriting standard comparison

MGIC financial statements

Single family home vacancy rate

Census Bureau

Housing shortgage/excess versus home price changes

Census Bureau, Federal Housing Finance Administration

MGIC ratio of regulatory capital required to insurance in force

MGIC financial statements

This article was written by

Gary J. Gordon profile picture
Gary Gordon’s career was on Wall Street, where he was a stock analyst covering the housing, mortgage and consumer finance industries. He also served as a U.S. investment strategist and as a portfolio manager. The bulk of his work career was at PaineWebber and UBS. He is now retired. Mr. Gordon is an adjunct professor at Mercy College in New York. He teaches economics on campus and math at prisons (Sing Sing and Taconic in New York). He also presents financial literacy seminars to adults and students. He is on the Board of Hudson Link (college education for incarcerated men and women) and the Baron de Hirsch Fund. Mr. Gordon is married with two young adult children. He has degrees from Colgate University (BA '74, philosophy) and The Wharton School (MBA '77, finance).

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MTG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I also own peer companies RDN, NMIH, ESNT and ACT.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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