Here’s Why FPA Queens Road Increased its MGIC Investment Corp. (MTG) Stake

FPA Queens Road, an investment management firm, published its “FPA Queens Road Small Cap Value Fund” fourth-quarter 2021 investor letter – a copy of which can be downloaded here. FPA Queens Road Small Cap Value Fund (“Fund”) returned 23.2% in 2021. This compares to a 28.3% return for the Russell 2000 Value Index during the year. During the fourth quarter, the Russell 2000 Value Index rallied sharply early, fell off sharply from early November through mid-December, and then rallied during the last two weeks of the year to finish up 4.4%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

FPA Queens Road Small Cap Value Fund, in its Q4 2021 investor letter, mentioned MGIC Investment Corporation (NYSE: MTG) and discussed its stance on the firm. MGIC Investment Corporation is a Milwaukee, Wisconsin-based insurance company with a $4.6 billion market capitalization. MTG delivered a 1.39% return since the beginning of the year, while its 12-month returns are up by 17.90%. The stock closed at $14.62 per share on March 04, 2022.

Here is what FPA Queens Road Small Cap Value Fund has to say about MGIC Investment Corporation in its Q4 2021 investor letter:

“We continued to add to mortgage insurer MGIC Investment Corp. The much-maligned private mortgage insurance market is not without its risks, most notably regulatory risk. The risks are real, but we think they are overblown and not existential. The company trades at close to our estimate of adjusted net tangible assets, which protects our downside. The company has $2.5 billion in excess capital, some of which will be used to accelerate its share buybacks. We generally aren’t supportive of large buyback programs, but we believe it’s a smart move in this situation. The company’s tangible net value and attractive valuation more than offset our concerns of increased competition and regulatory risk.”

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Our calculations show that MGIC Investment Corporation (NYSE: MTG) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. MTG was in 32 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 27 funds in the previous quarter. MGIC Investment Corporation (NYSE: MTG) delivered a 3.61% return in the past 3 months.

In October 2021, we published an article that includes MTG in the 10 Stocks to Buy Under $50 According to Brian Higgins’ King Street Capital. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.