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Mortgage Insurance Stocks: Beneficiaries of Increasing Home Prices


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Mortgage Insurance Stocks:

Beneficiaries of Increasing Home Prices

One interesting way to play a rebound in the housing market is through the mortgage insurance stocks. These companies provide insurance against defaults by borrowers who take out mortgages to buy homes. When defaults and foreclosures skyrocketed, beginning around 2006, these companies suffered huge losses and some of them went out of business. Needless to say, their stocks got crushed, and most of them have yet to really rebound.

All of the surviving mortgage insurers have been much more conservative since 2008, with the result that the new business they are writing is very profitable. The problem is that they are still trying to get out from under the poor risks that they took on prior to the 2008 financial collapse.

Rising home prices help the insurers get out from under these legacy problems. As home prices begin to recover, fewer homeowners are likely to default because they can now hope to rebuild their equity in their homes. In addition, the losses on defaulted mortgages should be smaller as the homes fetch higher prices in foreclosure sales. This February 2013 Turnaround Letter article names four potential turnaround opportunities in mortgage insurers' industry.



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Identify & Profit from Distressed Investing

Free Report: Distressed Investing

Turnaround Investing Blog

Turnaround Investing Blog

Return of Volatility? No, Return of "Normal"

Sizeable market moves can increase the temptation to sell on downdrafts and buy on upswings; however, we strongly advise against attempting to do that. The chances of getting out at the right time and then back in again before the market rebounds are extremely slim. Read More.

Harnessing Activists to Help Find Turnaround Stocks

Activist investors often produce attractive returns for their clients; and you can still use their influence to help your position as a turnaround investor in two ways: Buy a position in a stock with the expectation that an activist will soon follow or buy after an activist takes a stake.


Value Investing


While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.

Turnaround Letter Stock Pick Named Top Performer of 2017


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What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."