My answer to 'Question for the Board'

Investment Analysis Clubs Saul’s Investing Discussions
21

Hi Jason,
NMI Holdings stands for National Mortgage Insurance Holding Company. I agree that its growth has been extraordinary and it must be a well managed company. However mortgage insurance, per se, is not at all a growth industry, and mortgage insurance is bound to be a very cyclical industry. I wish you well with your investment, but I have no personal interest in investing in a mortgage insurance holding company.
Best,
Saul

8 Likes
22

Hi Saul,

That’s great to hear.

I am assuming you only invest in technology companies? Thank you.

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23

Not “only” but “mostly” in technology companies, but that’s just me and you should make your own decisions.
Saul

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24

Yes of course. But how do you determine your price target? I have a full detailed analysis discounted cash flow spreadsheet to predict price targets. But this discounted cash flow method does not take into account any negative EPS.

Since NMI holding is in a really cynical industry, do you believe that such huge growth in revenue along with gross profit margin cannot increase into the future? I have invested 20% of my saving into the company and now I am quite skeptical about it. Thank you.

25

Jason, I don’t know anything about the mortgage insurance business, and I can’t advise you intelligently.
Saul

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26

Hi Saul,

Thank you so much.

I kind understand your amazing concept now. However, there’s one key question left which is how do I calculate the clients/dollar retention rate. I don’t seem to find any related information from the financial statements and at what percentage are the retention rate acceptable?