Buffett buys MGIC?
Anyone agree or disagree? I dont know how bad it gets for them but at 0.4x book value, they can write off a lot of mortgages and still be selling at a discount. I was thinking about this for the PA along side the homebuilder bet I have not yet acted upon.
posted by Odoacer at
3:42 PM
17 Comments:
Not related to the post...
Have any of you tried Joost?
Totally related to the post. You are crazy if you buy a homebuilder. Period.
We aren't even close to having seen this played out. We won't be close in 12 months.
Prefer not to talk specifics on the boards, but give me a call and I'll let you know what I've heard.
related to fresh's comment...MGIC isn't a homebuilder....it is a company with the number one ranked CEO golfer though.
I am aware of exactly what MGIC does. I've been long before. I told Paul that they were a better short than FNM and FRE when he was considering going short the housing markets about a year and a half to two years ago. That trade would've worked out nicely... too bad I lacked the testicular fortitude to actually put it on. That said, MTG still scares me quite a bit right now.
I was commenting on this portion of the original post: "I was thinking about this for the PA along side the homebuilder bet I have not yet acted upon."
I would love to see some analysis on this company.
Hard to know. Maybe Buffett would buy these guys, because you would need his brain to figure it out. If you like this you may as well buy Radian bonds.
Would you buy insurance from MGIC if the credit rating drops, which is exactly what the agencies are threatening? These guys live by their credit ratings. The problem with correlation in the marketplace is such that when someone needs "insurance", everyone needs real insurance. Hence MGIC and other fake companies go BK. It is a first loss piece for real estate loss. Have fun with that one Curt, back to flopping butter burgers.
Every time someone says book value I think of Alan Iverson. "Book Value? We are talking about book value? Book Value? We are talking about Book Value?"
Book Value is likely negative if you used real accounting.
I have not tried Joost, but it looks interesting?
Natalie Portman likes boosts
Along the same lines as this post. Would anyone lend google money at 12% for the entire price of their market cap?
I am really curious. Would you do that? Maybe their WAAC is 8%. Would you lend money to Google at 8% for their entire market cap. What about Apple? What about RIMM? Could an LBO work for these companies?
Whatever happened to the lack of tech jobs and scalability of the Google model? Would a real required return crush the prospects of Google.
Things are not good. Countrywide just broke 14. Cyclical businesses due contribute to ad spending. Hard to believe isnt it. Guess what fuels the internet. Ad spending. Demand goes down, supply is going up? Should the internet trade different than newspapers?
The answer in my opinion is no.
The funny thing is historically Ad spending is the first thing that gets cut during a economic slowdown. What does that imply? I not saying I buy this argument but someone tried saying that those companies will cut or pull their print ads far before the internet ads. I haven't done the work on the difference in pricing and return on investment but just thinking in simple terms one would conclude that internet ad spending should fall next yr. My thoughts from 15,000 feet.
I have been having a shitty day, really questioning things. Then I get home pop open the mail box and my FREE Trader Monthly is in their. So I go to the couch pop it open look to page 72 and come across the quote which turned my whole outlook around. It made me laugh, feel better, and just love life. So here it is:
"October 19, 1987 was the best birthday I ever had. I covered all my shorts that day except one. I was short a lot of financial stocks - they were investment banks, nearly all of them. I wish I remembered better; I've been short a lot of things since, and I've been long a lot of things since."
- Jim Rogers
God bless you J.R. and happy birthday.
My favorite Jim Rogers quote of all time?
"Sometimes I wonder if our central bank is just going to print money until we run out of trees."
Thanks for the thoughts on MGIC. Fresh, I might give you a ring but not this week. earnings are too crazy. On that note, I am rapidly losing any optimism I previously articulated. Look at MINI - priced for recession. MLHR, one of my favorite stocks, also priced for recession. CAT - good international results but not good enough to make up for the US. Same as MMM. MSM and FAST both had mediocre results. UPS lowered guidance and cut cap ex. Industrials are falling to the wayside.
I firmly believe that MINI is the worst idea to come out of ASAP.
and it is likely a zero.
What's the scrap metal worth? We did a 2 second analysis of this the other day and I think it covers the debt.
Matt,
We had plenty of bad ideas. HD in the mid 40s, BMET and TEVA (although the bmet for ZMH swap worked well until today), Levitt, and Orezone (bad when you consider what a lot of other natural resource stocks have done). In spite of them all, we still beat the market cuz we're all genius warlords.
I work with a guy that used Joost quite a bit. He lived in Burmuda at the time and the high speed internet is unreliable, so he was not a big fan.
On the internet ads:
Maybe. Or the reverse may be true...because you actually know your ROI on Search Ads, you may decide to move more $$$ there. Tough to know. People forget about the back-end tools that exist and how valuable those are... it results in search just being different - it's closer to the point of sale than anything else, and it's a really good deal right now. My stepmom could advertise to anyone in the local area searching for daycare centers in her town for probably $100 bucks a year (maybe less). And she'd have a good chance of landing the searcher as a customer at day care rates for a few years. There are other sites that have very high conversion rates, too. Take theknot.com for example (conversion is actually much higher on theknot than via google). Plus, search inventory isn't going up. The other stuff is going up exponentially though.
At this point in the lifecycle of internet ads, it's hard to know the cyclicality. In later years, yeah, the whole internet ad basket will probably be just like the newspapers.
On Joost: I tried it the other night. It's ok...still not much content but you can see the potential. Plus it would help if I was using a pc different than the one ASAP gave me 2 years ago.
Anyways....good to be back in the country...
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