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 29, 2001

RDN shares delivered another nice rally on Thursday, gaining 3.37% to close at $66.00. Today’s breakout also came with good volume of 598,600 shares, which topped the three-month average. This is further indication that the stock is attracting more traders with each leg higher. Even more significant, the stock was able to break above stiff resistance at the intermediate high of $64.80 and hold ground above the 100-dma of $64.31. This certainly confirms a breakout and could result in a rally to $65 or $70. The short-term technical picture also looks promising, with bullish crossovers in both the MACD and stochastic. Traders should consider entries when the stock breaks through resistance or bounces from support at the 100-dma on good volume of 250,000 shares traded by midday. We’ll suggest moving stops to $62.50 to help limit our downside risk.

Picked on March 18th @ $61.00
Change since picked +5.00
Stop Loss @ 62.50

March 27, 2001

Aside from the all the negative news about a slowing economy, the interest rate environment for homebuyers remains strong and continues to keep shares of RDN poised for more gains. Checking out the chart, RDN delivered a nice rally on Monday, gaining 3% to close at $63.52. More importantly, the stock was able to break above stiff resistance at the previous high of $63.75 and hold ground above the 200-dma of $62.98. Monday’s volume did top the three-month average, as 497,800 shares crossed the tape. In today’s trading session, however, the stock did give back some of its gains, slipping $0.49 or 0.77% to close at $63.03. The good news is that RDN was able to hold above the 200-dma. Granted, the 200-dma resides just below this level, but it also positions the stock for a sharp bounce as early as tomorrow. The short-term technical picture also looks promising, with both the MACD and stochastic indicators issuing buy signals. Bearing this in mind, we’ll now look for an upside move to encounter resistance at the 100-dma of $64.42 and then at the $65 mark. Support will come in at the 200-dma. Consider entries when the stock breaks above resistance or bounces from support on good volume of 250,000 shares traded by noon. Continue to hold a firm stop at the $59.00 mark.

Picked on March 18th @ $61.00
Change since picked +2.03
Stop Loss @ $59.00

March 25, 2001

Through a less restrictive loan qualification process, RDN has been able to gain more share of its niche market and increase its annual revenues by 30% over each of the past 5 years. On Friday, shares of RDN bounced sharply from an intraday low of $60.68 and finished the day higher by 1.50% to close at $61.90. We would have liked to see volume come in above the 3-month average, but RDN fell shy of this mark, as 354,000 crossed the tape. However, should the stock continue to make more gains in the upcoming week, then we’ll expect buying interest to improve and generate more volume. In the meantime, we’ll continue to look for support at Friday’s intra-day low, with stronger support at the $60 mark. Initial resistance has moved up to Friday’s intra-day high of $62.08 and then the 200-dma of $62.92. A bounce off of support or a move above $62.08 on midday volume greater than 250,000 shares may be possible entry points. Additional support from the Dow Jones Industrial Average (INDU) and the NYSE Financial Index (NF.X) would be helpful as well. Our stops will remain firm at $59.00.

Picked on March 18th @ $61.00
Change since picked +0.90
Stop Loss @ $59.00