Should you sell Radian Group Inc (NYSE:RDN), MBIA Inc. (NYSE:MBI)

Posted by Michael Korte May 8, 2013 0 Comment 3639 views


Hartford, CT 05/08/2013 (GDPInsider) – MBIA Inc. (NYSE:MBI) shares remained flat to close at $14.39. With a market capitalization worth $2.77 billion, MBIA Inc. is a provider of asset management advisory services. The company announced settlement with Bank of America Corporation to resolve all claims. MBIA filed a lawsuit against Bank of America for improper lending practices related to its acquisition of Countrywide Financial.

Under the settlement, Bank of America will pay $1.6 billion to MBIA. In addition, Bank of America will end all of its outstanding credit default swap protection agreements it bought from MBIA on commercial mortgage-backed securities, as well as close certain other trades.

On the other hand, MBIA will issue to Bank of America warrants to purchase 4.9% of its currently outstanding shares, or 9.94 million shares of MBIA, at $9.59 price per share. In addition, Bank of America will provide a senior secured credit facility of $500 million to MBIA Insurance Corp.

Also, MBIA entered into an agreement with Flagstar Bank. The agreement has been reached to settle down the suit filed against Flagstar on January 11, 2013. The lawsuit is related to $1.1 billion of securitization transactions on second lien mortgages, insured by MBIA in 2006 and 2007. Under the agreement, MBIA will get $110 million from Flagstar Bank in exchange for withdrawing the case.

MBIA’s first quarter earnings are expected to be announced soon.

Is MBI a solid investment at these levels? Get valuable updates and exclusive insights here.

MBIA’s Q1 earnings yet to come, RDN gets “sell” rating on stocks

Radian Group Inc (NYSE:RDN) shares remained flat to close at $13.03. The credit enhancement company has a market cap of $1.74 billion. For the first quarter of 2013, Radian Group reported a net loss of $187.5 million, or $1.30 EPS, compared to a net loss of $169.2 million, or $1.28 EPS for the same quarter last year.

“We took the opportunity this quarter to significantly improve our capital and liquidity positions, providing a competitive advantage for Radian in an extremely attractive business environment,” said Chief Executive Officer S.A. Ibrahim. “Building on our momentum with a strong risk-to-capital ratio, financial flexibility at the holding company, and the number one mortgage insurance market share position in the fourth quarter of last year, we kicked off 2013 with a 69% jump in new mortgage insurance business written year-over-year.”

“As our strong new business volume continues, our delinquency inventory decreases and the mix of profitable new business begins to outweigh our legacy mortgage insurance book, we are positioning Radian for a return to operating profitability.”

Post the company’s first quarterly results, Radian Group’s stock was given “sell” rating by The Street, citing Radian’s deteriorating income and disappointing results as reasons behind the rating. RDN has been on an uptrend which began on 11th Feb and since then the stock has doubled making it one of the favorite stocks for investors. Despite bad results declared by the company the uptrend is still intact and the stock is a hold with a stop loss of $10.88 in short term.

How Should Investors Trade RDN Now? Get the latest trends and data here.

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About Michael Korte

Michael Korte an investigative reporter at GDP Insider and is a breaking news reporter. Michael work includes investigations of misconduct by federal prosecutors and industrial air pollution around the nation's schools. His reporting has been recognized with the Hillman Prize for Newspaper Journalism, the Grantham Prize for Excellence in Reporting on the Environment, and the Philip Meyer Journalism Award for reporting that incorporates social science methods.

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