Earnings last week were literally nothing short of a total disaster. The stock fell from $2.40 before the report ultimately to under $1.00 per share again. Who cares if your book value is a lot higher if you are losing money with wider losses than expected.
A Moody’s credit rating downgrade is pressuring the stock. The downgrade was only to B2 from B1, but the risk here is that the rating may still be too high. Insuring mortgages is just a losing proposition here today due to how many underwater mortgages and delinquencies are still in the system even if the housing market has improved.
MGIC Investment released its monthly operating statistics earlier today and said that primary new insurance written in July 2012 was $2.4 billion and that its ending primary delinquent inventory was 153,137.
So what is that last risk? Shares are down about 2% at $1.05 right now, but shares did tick under the $1.00 mark earlier today. If things get any worse for MGIC and if they stay there, then the NYSE listing rules would come up again about the $1.00 minimum bid price. With a 52-week range of $0.66 to $5.15, the $1.00 minimum share price has been a risk before. There are no assurances that the NYSE would even bother delisting MGIC shares. Still, no one usually wants to be a stock if it is likely moving from the NYSE to the Pink Sheets.
JON C. OGG
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