Below we take a look at The 5 Stocks Billionaire Louis Bacon Can’t Stop Buying. For our methodology and a more comprehensive list of the billionaire money manager’s highest conviction stock holdings, please see The 10 Stocks Billionaire Louis Bacon Can’t Stop Buying.
5. MGIC Investment Corporation (NYSE:MTG)
Value of Moore Capital Management‘s 13F Position: $38.2 million
Number of Hedge Fund Shareholders: 34
Louis Bacon’s Moore Capital Management took a large new stake in mortgage insurance provider MGIC Investment Corporation (NYSE:MTG) in the fourth quarter. The billionaire money manager pared back the size of the position slightly in Q1, ending the quarter with 2.82 million shares of MTG in his fund’s 13F portfolio. Arrowstreet Capital owns the largest MTG position among the funds tracked by Insider Monkey, being long 5.79 million shares on March 31.
MGIC Investment Corporation (NYSE:MTG) shares have sunk well below their book value, losing 11% this year, with the market fearful of how mortgage insurers will fare with a recession looming in addition to a housing slowdown. That prompted RBC Capital analyst Mark Dwelle to upgrade MTG shares to ‘Outperform’ from ‘Sector Perform’ last month, in the belief that they will eventually retrace towards their book value of $14.75.
The FPA Queens Road Small Cap Value Fund believes MGIC Investment Corporation (NYSE:MTG)‘s valuation is attractive enough to offset some of the aforementioned risks, saying this about the company in its Q4 2021 investor letter:
“We continued to add to mortgage insurer MGIC Investment Corp. The much-maligned private mortgage insurance market is not without its risks, most notably regulatory risk. The risks are real, but we think they are overblown and not existential. The company trades at close to our estimate of adjusted net tangible assets, which protects our downside. The company has $2.5 billion in excess capital, some of which will be used to accelerate its share buybacks. We generally aren’t supportive of large buyback programs, but we believe it’s a smart move in this situation. The company’s tangible net value and attractive valuation more than offset our concerns of increased competition and regulatory risk.”