Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is MGIC Investment Corp. (MTG) A Good Stock To Buy Right Now?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

MGIC Investment Corp. (NYSE:MTG) has seen a decrease in hedge fund interest lately. MTG was in 36 hedge funds’ portfolios at the end of September. There were 46 hedge funds in our database with MTG positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Glacier Bancorp, Inc. (NASDAQ:GBCI), Hancock Holding Company (NASDAQ:HBHC), and Trinseo S.A. (NYSE:TSE) to gather more data points.

Follow Mgic Investment Corp (NYSE:MTG)
Trade (NYSE:MTG) Now!

MGIC Investment Corp is a private mortgage insurer. Hedge funds like the stock because MTG is a play on the housing recovery. MTG’s earnings rise as delinquencies and claim payments fall due to lower unemployment and rising home prices. The smart money also likes MTG because its shares have considerable upside in the long term if the government decides to whittle the FHA’s presence in the housing insurance market.

Home expenses or investing concept., home, loan, wealth, financing, buy, save, business, income, property, estate, possession, household, retirement, real, ownership, moneybox, invest, house, costs

Aleksandr Bagri/

MTG shares fell sharply earlier in the year after the company announced that it would raise rates on new insurance to earn acceptable returns on capital in January 2016. Many investors worried that the price hikes would cause MTG’s new insurance written to shrink. Less insurance written would eventually lead to lower profits and slower book value growth.

It turned out that the fears were unsubstantiated. For its third quarter, MTG reported earnings of $0.25 per share versus the Street’s estimate of $0.19 per share. New insurance written rose 14.4% year-over-year to $14.2 billion while insurance in force rose to inched up 4.3% to $180.1 billion. Book value increased to $7.48 per share and delinquencies fell 20.4%.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.