Nearly four years ago Dallas-based Hayman Capital Management’s portfolio manager Kyle Bass profited big time on his bets against the sub-prime mortgage market. Now it appears he’s looking slightly more bullish on the mortgage market.
The Texan hedge fund manager recently disclosed in an SEC filing that Hayman snapped up a 4.9% stake MGIC Investment Corp — the largest mortgage insurance company in the U.S., (via the Wall Street Journal).
MGIC’s business focuses on private mortgage insurance, particularly residential mortgages. The firm serves more than 3,000 lenders in the U.S. and Puerto Rico, according to the company’s website.
Bass told the WSJ that he thinks the housing market losses have been largely absorbed. What’s more is unlike MGIC’s competitors, he thinks the mortgage insurer has a “pretty big positive equity position” and that he thinks it will be “one of the last ones standing” adding that he’s in it “for the long haul.”
He’s not the first investor who profited on his timely bet before the housing market imploded to move into investing in mortgage companies.
The Motley Fool points out that hedge fund billionaire John Paulson, who also profited from his bets against sub-prime, invested in MGIC’s competitor PMI Group and investors quickly jumped back in the stock.
That didn’t work out so well.
Last month, PMI was seized by Arizona regulators and is not currently writing new commitments, the company’s website said.
Shares of Milwaukee-based MGIC spiked more than 14% in after-hours trading yesterday. Shares were last up nearly 3.7% higher in pre-market trading.