What's Behind Radian Group's Big Swings in 2012
Jun 20th 2012 10:18AM
Updated Jun 20th 2012 10:20AM
As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.
Today, let's take a look at Radian Group (NYS: RDN) . The mortgage-insurance company got crushed during the housing bust, and since then, it has struggled to hold its own in a continually tough economic environment. Let's take a quick look at how Radian is doing so far this year.
Radian Group Stats:
|2012 YTD Return||25.3%|
|Market Cap||$389 million|
|Total Revenue, Most Recent Quarter||$165.2 million|
|Year-Over-Year Revenue Growth, Most Recent Quarter||(72.7%)|
|Net Loss, Most Recent Quarter||($169.2 million)|
Source: S&P Capital IQ.
What's happened with Radian Group in 2012?
Radian's stock performance may look promising, but the stock has taken investors on a huge roller coaster ride. Shares rose above $4.50 as recently as late March, only to give back all their gains for the year by mid-May. Since then, shares have bounced off their lows.
Radian's experience isn't unusual among companies in the financial insurance industry. MBIA (NYS: MBI) , MGIC Investment (NYS: MTG) , and Assured Guaranty (NYS: AGO) have all seen similar rises and falls in their stock prices in response to key news events in both mortgage insurance and municipal-bond insurance.
As you'd expect, the news has been mixed. Early in the year, it appeared that the housing market was starting to rebound, supporting the insurers. But defaults by municipal governments in Stockton, Calif., and Harrisburg, Pa., raised concerns that a slew of additional muni-bond defaults might ensue, throwing the entire industry for a loop. In particular, Radian's relatively weak credit rating compared to Assured Guaranty and MBIA singled it out for extreme share-price volatility.
More recently, conditions have improved in the mortgage area. In April, Radian, MGIC, and Genworth Financial (NYS: GNW) all saw higher volume in insurance policies, almost doubling their premiums from last year to $7.1 billion. Yet Radian still has huge losses to overcome.
One of Radian's largest shareholders isn't waiting for a rebound. Major investor Clinton Group has argued that the company should seek a bidder and said it knew of at least one potential buyer. So far, that speculation hasn't led to a firm offer, but the rebound in Radian shares indicates how hopeful investors are that such a buyout bid occurs.
At least so far in 2012, Radian Group hasn't lived up to all of the hopes shareholders had for it. But we've got some ideas you may like better. Let me invite you to learn about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.
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The article What's Behind Radian Group's Big Swings in 2012 originally appeared on Fool.com.Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.
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