I think I have figured out the reason for this really steep fall for MTG. It actually doesn't really have anything to do with MTG. I look around and of course energy stocks are destroyed due to the price of oil but then also all insurers are getting hammered. RDN, GNW, etc etc are getting crushed now. Then banks are also getting crushed.
This has to do with the bubble pop of oil. Naturally the fall in oil prices effected oil stocks, no brainer there. We are seeing contagion to other sectors. If people in the energy sector loose their jobs can they keep up with their mortgages? That is why insurers are getting hit also why banks are getting hit. The contagion is spreading. Also the broad market is looking bad. Which is partly do to the crash in oil but also do to the FED interest rate hike as liquidity tightens.
Fear runs wild and people remember the housing bubble pop in 2008 and how it brought down the US economy. This company barely survived through that as did the few insurers that did make it as well as banks. People have that fear all over again.
The difference though is that even though the energy sector in the US is big and provides a lot of jobs it isn't housing. The housing sector is the real giant. The fears are that oil's crash will infect the housing sector so naturally here we are. I personally think it is overboard and too much panic. I don't think the energy sector can take down the US economy. The housing sector absolutely can but I also don't think the oil sector will take down the housing sector either. It can do some damage due to people loosing jobs etc, but not take it down. Oil sector is in regions, not nation-wide.
That's the best reason I can come up with. The bottom line is that contagion fears about oil have spread. The housing market however is doing OK and MTG is doing fine. Fears about oil have crossed over to this sector but fundamentals have not. Not yet anyway and if the oil bust does start to effect insurers/housing/banks it wouldn't be as damaging as what the current fear is predicting to be. We'll see though. It all revolves around how much the oil bust is going to effect US housing and financial markets. As of now to me MTG is down too far too fast. I get the fall but not at this rate of decline especially since the actual company's fundamentals haven't really changed to this point.
Knowledge + risk taking = prosperity
