Genworth MI Canada Inc. (MIC.TO)

If the housing market got really bad (dropped 20-30%) here this company would go to zero. This is unlikely, however. This is a very binary type of situation. It is like picking up nickels in front of a bulldozer.

Would be really cautious on this. Had a very good run. The story has been leveraged on the government’s CMHC program clawing back and allowing them to really prosper, which he thinks it can do. But, at the end of the day, you’re taking consumer credit risks. From the macro numbers he sees, that gives him pause. Also, it is a little on the expensive side.

This tends to increase dividends in the 3^rd quarter, so you should look for one in August. Anything related to the mortgage business is tied to interest rates. Although interest rates have come off currently, he believes their ultimate direction is up. That will put pressure on anybody who is related to that business. He would be little bit cautious. Prefers Canadian banks.

Private mortgage insurance. Finally broke out and did well. You have had most of the catch up in valuation. He would be nervous going forward with the Canadian real estate market continuing.

(A Top Pick Dec 28/12. Down 65.71%.) 3 Shorts. He is now layering this trade back on now because the spike in rates in May through August pulled forward demand in the housing market.

There is a new player in the space right now, but he believes the Canadian dollar will improve as well as the economy. You will see greater employment down the road and this company will benefit. They have done an excellent job, dividend increase, share buyback. People expected the Canadian market to collapse. 4.1% dividend.

Thinks you will see buybacks. Good company, but a couple of other names he puts ahead of it.

(A Top Pick June 11/12. Up 41.74%.) The private mortgage insurer that has 30% of the insured mortgage market. Really cheap stock.

Part of a duopoly, CMHC and itself. Supply about 95% of the insurance market for the mortgage insurance market. Has had very little respect. Trading well below Book of about $28.50. Down partly because its US parent was having some tough times and, also, people are still bothered by the Canadian real estate market. If you own, you could consider taking some money off the table on its recent move up. Company has over $200 million of excess cash.

Mortgage insurance. Sold off. The Canadian housing market has not sold off as everyone expected. Dividend is safe and will grow and if he didn’t already own a lot of Home Capital he would own this one.

Shorting Canadian housing with Home Capital Group (HCG-T) and MCAN Mortgage (MKP-T). Is a little bit early but he has seen the housing bubble build and believes it has now peaked and is now on the downside. If right and Canadian housing prices fall 20%-30% over the next 2 years, then these companies are not going to just be at risk of earnings but also at risk of solvency.

(A Top Pick Dec 28/11. Up 12.42%.) Private provider are of mortgage insurance and is a duopoly with CMHC. CMHC is now capped at $600 billion so this should gain market share. 6% dividend. Have had a special dividend and has raised the dividend.

(Market Call Minute.) Good company but because everybody believes real estate is going to crash he would be a seller.

Just increased dividend. 6.4%. Below book value. 30% market share of mortgage insurance business. Parent is not in the best shape. He is going to hold and collect the dividend.

2^nd biggest mortgage insurer and have a very profitable business. Competing with CMHC. Pays good dividends and are trading pretty cheaply at about .7X Book Value. The issue, of course, is the overall Canadian housing market, which is due for a correction. If it’s a US style correction, you don’t want to own it but he feels they will do okay even at a 10% or 20% correction in real estate. Dividend is safe and feels they have room to increase it even more. Attractive below $20.