ACT - Enact Holdings: Defensive Play In A Corner Of The Housing Market

2024-07-21 04:32:02 ET

Summary

• Enact Holdings, a mortgage insurance company, has outperformed the S&P 500 index over a two-year period in spite of low mortgage originations.
• However, the pace of gains has slowed, and the companies competing in the mortgage insurance sector all appear fairly valued at this time.
• Enact has shareholder-friendly management with a growing dividend and share repurchases, however opportunity for organic appreciation in the shares may be limited in the near term.

One of the most eye-watering charts I've seen in a while is the one showing the rise in median prices of homes in the United States over the last ten years, recently touching nearly $435,000. As a parent of children not far off from being on their own, I can certainly sympathize with the frustrations of those who are priced out of the housing market, and I confess that I wonder about whether my children will be able to buy their own homes....

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