Mortgage Rate News

The conventional wisdom in investing is “buy low, sell high.” And that is what Old Republic International (ORI) appears to be doing as it invests in to mortgage insurance companies.

ORI is the company led by Aldo Zucaro, an experienced and successful investor. He is evidently betting that this housing market downcycle will pass, and that mortgage lenders and mortgage insurance companies will eventually gain in value again. CNN Money reports on this investment news:

Zucaro has a reputation in the insurance industry as a conservative, long-term investor who has helped steer ORI through several cycles. As a result, his decision to buy stakes in PMI and MGIC could be seen as a vote of confidence in both companies. On the other hand, the down swing of this housing cycle may be much harsher and longer than past ones, so it could confound even the most experienced investors. …

“These two companies are here to stay,” says the CEO. “We bought them on the basis that recent market prices underestimate their long-term value.” At today’s prices, ORI’s PMI stake would be worth around $172 million, and the MGIC holding $177 million.

For the most part, the stock market grows over time, and many investors do well when they invest with long-term holdings in mind. This is especially true when it comes to novice investors looking the fundamentals of a company.

So, while some mortgage lenders and mortgage insurance companies are struggling right now, there are some that will still be here when the currency downcycle ends. Those are the companies that will grow again, and offer solid returns on your investment. But you have to be willing to wait 5 or 7 or 10 years for this to be realized. And you have to pick the right companies.

Tags: ORI, mortgage blog, home mortgage loan, mortgage lenders,
mortgage investment, investing, Aldo Zucaro