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

April 5, 2001

Financial service stocks were brought back to life today, as buyers leaped back into the financial sector and pushed the NYSE Financial Index (NFX) to a 3.50% gain. The swift recovery helped RDN to reverse a two-day decline and post a 3.08% gain to close at $67.10. Today’s rally could be the first indication of the next leg up, but RDN will likely need to post heavier volume if it attempts to take out recent highs. On the day, Radian traded well below the 3-month ADV, with 269,300 shares changing hands. As for the technical indicators, RDN shares continue to look poised for higher levels. A positive MACD and a bullish crossover of the stochastic in today’s session could be just what we need for a follow through. That aside, volume will still be the big question as we head into next week, so we’ll look for a breakout to be accompanied by daily volume above the three-month average of 470,000 shares. Should this unfold, we’ll look for resistance to emerge at the recent high of $68.98 followed by more opposition at $70. The 10-dma of $65.25 will now hold key support. Entry points could come when shares bounce off support at the 10-dma or break through the previous top on volume of at least 225,000 shares traded at noon. We now recommend that stops be raised to $65.25.

Picked on March 18th @ $61.00
Change since picked +6.10
Stop Loss @ $65.25

April 3, 2001

If you are bullish and think the economy is headed for a rebound later this year, now could be a good time to shop for financial stocks. We certainly think so and continue to like the prospects for RDN going forward. On the day, RDN shares were pressured by sector related weakness, which caused the NYSE Financial Index (NF) to fall 16.28 points, or 2.77%, to close at $570.53. The broad industry decline pressured RDN to finish lower by $1.95 and close at $66.15. We do want to point out, however, that today’s decline was accompanied by volume of 368,300 shares, which came in 22% less than the three-month average daily volume. This indicates that there is light selling at present levels and could result in a quick turnaround if buyers come in. The technical picture also boosts our confidence for an extended rally and tells us that a run to $70 could still be in store. So, with that said, should shares trend higher later in the week, we’ll look for resistance to emerge at the recent high of $68.98, followed by a harder challenge at the $70 mark. Support will come at the 100-dma of $64.32. Look for entry points when shares bounce off support or break above the last high on volume of at least 225,000 shares traded by midday.

Picked on March 18th @ $61.00
Change since picked +5.15
Stop Loss @ $62.50

April 1, 2001

The Radian Group soared to higher levels on Friday and took out a tough barrier at the intermediate high of $67.60. Even more impressive was the fact that the breakout unfolded without the assistance of a news release. This could be an indication that momentum players are keeping a close watch on the stock and are jumping aboard when RDN breaks above resistance. The intraday chart confirms this possibility, as volume has been picking up when the stock ascends through previous highs. What’s more, we’re impressed with good technical readings in both the MACD and OBV indicators, which convey a continuation to the uptrend. All of these factors make the daily chart quite compelling and lead us to believe that a run to the $70 mark could lie in store. To get us there, we’ll look for daily volume to remain above the 3-month average of 461,500 shares when the stock moves higher. Should RDN encounter a couple of minor dips before its next leg up, we’ll expect to see support at the February 14th high of $67.60, and just below at $65, bolstered by the 100-dma of $64.31. Resistance will be at Friday’s intraday high of $68.39. Consider adding to positions if RDN breaks above resistance or rebounds off support on volume exceeding 230,000 shares traded by mid-day.

Picked on March 18th @ $61.00
Change since picked +6.75
Stop Loss @ $62.50