01.09.08
Old Republic Stock drop is sign of the times
It is a sign of the times. As are going all Real Estate related stocks, it appears Investors are dumping Old Republic International Stock. In my opinion, it is likely with two significant concerns.
First, the mortgage market is nil, nada, zilch, meaning the expensive cost of all those bricks and mortar offices with heavy staffing costs makes Old Republic National Title losses obvious problems in the near to not-so-near future. You just can’t dump expenses fast enough in a market like this.
And, second, ORI recently bought significant stakes in private mortgage insurer stocks MGIC and the PMI Group, Inc. to complement its own PMI subsidiary, Republic Mortgage Insurance Company. MGIC and PMI being two of RMIC’s principle competitors. But, the record numbers of sub-prime mortgage foreclosures are expected to wipe out any profit in the near future for its recently acquired PMI Companies.
At the time it seemed a good buy for ORI, due to the significant drop in stock price of the two PMI Cos., but now, with heavily hit losses and a bleak future for MGIC and PMI, Old Republic International Stock has dropped from a 52 week high of $23.28 down to $13.96 as of this writing. Will the stock value come back, yes, the magic question is when.
For more detailed info, see Bloomberg at http://www.bloomberg.com/apps/news?pid=20601213&sid=a6XpBWWdHTfU&refer=home