It Was a Great Run, But It's Time to Say Goodbye to These Bond Insurers (GNW, MTG, RDN)

Never let it be said I didn't follow up on my prior ideas and commentaries. In November of last year I said MGIC Investment Corp. (NYSE:MTG), Radian Group Inc. (NYSE:RDN), and Genworth Financial Inc. (NYSE:GNW) were budding bullish idea.

For those of you with good memories, you'll likely know why that sounds a little bit "off." Though GNW, MTG, and RDN had all three been quite bullish that particular day as well as flashed bursts of bullishness in the days leading up to that November 1st look, the market was still more than a little pessimistic on on insurers like Radian Group, MGIC Investment, and Genworth Financial. I'm sure glad I was willing to go out on a limb. All three stocks have gone on to make big - and surprising - gains.

So do I come here to pound my chest on RDN, GNW, and MTG? Nope - not at all. I'm chiming in again today to let you know if you got in on my advice, it's now time to lock in those gains and get out.

Just so there's no confusion, I don't see any particular overbearing problems hanging over the industry's head. It's just that these stocks have outlived their usefulness and opportunity for us.

Take MGIC Investment Corp. for instance. MTG has advances 340% since then, yet still isn't profitable on a net trailing basis. Positive earnings are sill in the cards. But, priced at 27.6 times 2014's projected income, the value argument is gone, as well as the technical one.

Ditto for Genworth Financial and Radian Group Inc. Both stocks have posted huge gains over the past ten months, and while their forward-looking ratios are more attractive, after a 118% and 200% runup, respectively - given the back stories and timing - you have to believe the best-case scenario has already been priced into RDN and GNW shares.

Just for the record, I would be more than willing to buy back into any and all of these names once we get a healthy pullback and start to see decent evidence of a bullish reversal. While we may not see triple-digit gains again, we could still say solid upside moves.

And on an even larger scale, let the last ten months from MGIC Investment, Radian Group, and Genworth Financial be a reminder that just because a trade isn't popular or seemingly plausible doesn't mean it isn't a good one. I caught all kinds of crap last November for being bullish on these names, but have been plenty vindicated in the meantime.

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