Pitch:
– Mortgage insurer at 86% of TBV with pending large capital releases that will significantly increase TBV/share.
– The company is scheduled to start releasing contingency reserves that it had to hold for 10 years.
– Starting in 2024 $400m+ will be released annually and could be used for dividends buybacks without any further approval from regulators.
– Scheduled releases over 10 years equate to 115% of $RDN’s market cap.
– On top of that, the company is set to generate $600m/year from operations (17% yield).
Valuation: Assuming investors are willing to pay a 12-month-out-book value taking into account reserve leases and earnings from operations, RDN is worth $30/share of fwd TBV.
Exp. gain: +50% to $30/share.
Full $RDN write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/RADIAN_GROUP_INC/9222582742