Mortgage insurance stocks look more appetizing

Investors foresee profitable futures

Hedge fund investors are betting on the mortgage insurance business, estimating that it will be a good investment for the foreseeable future, The Wall Street Journal reports.

The turnaround has fueled a strong rally in the stocks of MGIC Investment Corp. and Radian Group Inc. The shares are up 189% and 133%, respectively, this year.

Bulls include Paulson, the hedge fund that prospered on a well-timed bearish bet on the housing market in the early stages of the financial crisis. "We think the mortgage insurers should continue to be a good investment" for the foreseeable future, Charles Murphy, a Paulson partner, said of the firm's stakes in Genworth Financial Inc., MGIC and Radian. Genworth shares are up 62% in 2013.

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