Radian Group, Inc., through its wholly owned subsidiaries, Radian Guaranty Inc. and Amerin Guaranty Corporation, provides private mortgage insurance coverage in the United States on residential mortgage loans. For the FY ended 12/31/00, total revenues increased 11% to $615.4M. Net income applic. to Common rose 70% to $245.6M. Results reflect strong new insurance volume, a reduced provision for losses and the absence of merger expenses.

March 18, 2001

The Radian Group (RDN) provides private mortgage insurance and risk management services to residential mortgage lenders, commercial banks and savings institutions. The company’s niche market in private mortgage insurance protects lenders from default on home buyers who make down payments of less than 20% of a home's purchase price. Focusing on this niche market has paid off tremendously for the company. RDN grew annual EPS by a staggering 68% last year. Wall Street has also taken notice of the company’s performance, as all nine firms covering RDN presently hold a “Buy” rating on shares. Currently, RDN has 80.0 million shares authorized and 46.25 million shares issued, with the last recorded split having taken place on December 2nd, 1996 at $76. Although the BoD will need to authorize more shares before a 2:1 stock split can take place, we certainly feel this is a possibility. As for the stock, we feel RDN may be forming a bottom. The technical indicators certainly suggest this, with both the MACD and stochastic on the verge of bullish crossovers. In addition, the $60 level has held as support a staggering eight times over just the past month and a half. With that said, should shares trend higher in the upcoming week, we’ll look for resistance to occur at the 50-dma of $61.78, followed by a stiffer challenge at $65. Support will come at the $60 mark. Look to time entries when RDN shares bounce off support or break above the 50-dma on volume of at least 225,000 shares traded by midday. We’ll set our initial stop at $59, to limit our downside risk.

Picked on March 18th @ $61.00
Change since picked 0.00
Stop Loss @ $59.00

March 22, 2001

Benefiting from highly competitive mortgage rates and a less demanding approval process, Radian Group is looking to improve its annual earnings growth by 15% this year. What’s more, interest rates now match their lowest levels since mid-1999 and could create more immediate interest in the stock. On the day, RDN shares were pressured by sector related weakness, which caused the NYSE Financial Index (NF) to fall 11.29 points, or 2.03%, to close at $542.16. The broad industry decline swayed RDN to finish lower by $1.41 and close at $52.94. We need to point out that today’s decline was accompanied by volume of 521,900 shares, which is slightly more than the three-month average. This indicates that there is ample selling at present levels and could result in further weakness. Still, the MACD is on the verge of a bullish crossover, which tells us that the recent bump and run off $60 could still be possible. So, with that said, should shares trend higher later in the week, we’ll look for resistance to emerge at the 200-dma of $62.91, followed by a harder challenge at the $65 mark. Support will come at $60. Look for entry points when shares bounce off support or break above the 200-dma on volume of at least 250,000 shares traded by midday.

Picked on March 18th @ $61.00
Change since picked –0.02
Stop Loss @ $59.00

March 20, 2001

To assist low and middle income families with a first mortgage, Radian Group has established a low down payment structure on its home loans. This greatly improves the chances of its customer’s qualifying for a home and consequently provides RDN with a steady flow of business. Looking at the chart, RDN shares rallied higher on Tuesday, advancing 1.12% by the closing bell. The stock did flirt with higher levels on an intra-day basis, but found a stiff barrier at the 200-dma of $62.87. Still, today’s 1.12% move put RDN nicely above the 10 and 50-dmas of $62.07 and $61.56, respectively. The short-term technical indicators also look strong, with the stochastic now headed higher and the MACD on the verge of a bullish crossover. So, with this in mind, we’ll look for an entry point to come should RDN break sharply through the 200-dma on good volume of 250,000 shares traded by noon. Support will come at the 50-dma and just below at the $60 mark. We’ll continue to keep firm stops at the $59 mark to restrict our downside risk.

Picked on March 18th @ $61.00
Change since picked +0.99
Stop Loss @ $59.00