I invested in a company MGIC Investment Corp ticker symbol (MTG) in 2008 after it got knocked down to what I thought was at a bargain basement price in the wake of that year’s financial hurricane. It was trading near $63 per share. I bought it at $7.62. The market is giving away companies for free, I thought. The premise of the investment was solid. Most Americans would find it difficult to save for the required 20% down payment for mortgages, and since Americans loved their homes, they would do anything to get that home, including paying for what I thought was an obscene premium for mortgage insurance, MTG’s main revenue source. (This is the insurance premiums buyers of homes have to pay if they do not have enough skin in the game. It insures the mortgage companies in case buyers were to default on their loans, usually a premium of $150-200 per month added to the loan, depending on the loan size.) The stock got knocked down to 87.9% of its high water mark value, and I thought I was buying into a company that was under appreciated by the market. Housing collapsed even more, and I remember seeing my value stock go down another 50%. The premise of investing in this company still rang true, in my mind, even at the heels of such a horrific decline in market cap. MTG had only one other competitor and the barriers to entry were significant. I decided to stay put, and now today 8-30-14 have made net gains. And upon hearing that the mortgage industry along with government decided that they were no longer lifting this premium that homeowners pay, even after breaching that magical, coveted 20/80 equity to debt ratio, I should have piled in, but instead, I behaved like most other investors, afraid and unsure. My convictions failed me, and that “would’ve, could’ve, should’ve” game haunts me. Today, I am still invested in the company because my original idea is still intact. But I’m afraid; the opportunity of a lifetime may have fled. I am still looking for that allusive 10 bagger.
Posted on: Sat, 30 Aug 2014 15:10:08 +0000
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