MGIC Investment Shares Plunged: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mortgage insurer MGIC Investment (NYS: MTG) are fresh out of pixie dust today, crashing as much as 27.7% (so far) on heavy volume.

So what: The stock plunged more than 20% last week as head-to-head rival PMI Group (NYS: PMI) said it might have to stop signing new policies. Today, MGIC threw gasoline on the fire by reporting another month of delinquency claims rising faster than cures.

Now what: MGIC has a somewhat more stable balance sheet than PMI Group, but nowhere near the cash reserves of third musketeer Radian Group (NYS: RDN) . If the dominoes start to fall, MGIC would go out of business in short order, and with only one solvent mortgage insurer on the market, the already-stalled real estate market would go into a deep freeze. Please don't tell me you're shocked to see homebuilders such as Pulte (NYS: PHM) and KB Home (NYS: KBH) falling almost as steeply as the mortgage insurance providers under these circumstances. These stocks might still bounce, but right now they all look like they're heading for the edge of a cliff called zero.

Interested in more info on MGIC Investment? Add it to your watchlist.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. 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 Motley Fool is investors writing for investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners