MGIC Investment: A Junk Bond Earnings Yield With Growth

Core Insights - MGIC specializes in insuring low downpayment mortgages, defined as those with downpayments of less than 20% [1] - The primary risk of default is typically borne by Fannie Mae or Freddie Mac, who are the insured parties in these transactions [1] Company Overview - MGIC operates in the mortgage insurance sector, focusing on mitigating risks associated with low downpayment mortgages [1] - The company plays a crucial role in the housing finance system by providing insurance that allows borrowers to secure loans with lower initial payments [1] Industry Context - The mortgage insurance industry is significantly influenced by the policies and performance of government-sponsored enterprises like Fannie Mae and Freddie Mac, which take on the primary default risk [1] - The demand for low downpayment mortgages is likely to remain strong, given ongoing trends in housing affordability and access to homeownership [1]