Blackstone-Backed Senator Investment Takes 6.3% Radian Stake

Aug 14, 2014 5:20 pm ET

(Updates share price in the sixth paragraph.)

Aug. 14 (Bloomberg) -- Senator Investment Group LP, the hedge-fund firm backed by Blackstone Group LP, disclosed a 6.3 percent holding in Radian Group Inc., becoming the latest asset manager to wager on a housing recovery by taking a stake in the mortgage insurer.

Senator has 12 million shares in Radian, the New York-based firm said today in a regulatory filing. That’s the second- largest holding in the Philadelphia-based insurer, trailing a 9 percent stake held by Fidelity Investments, according to data compiled by Bloomberg.

Hedge funds led by Paulson & Co. and Maverick Capital have bet that the recovery in the U.S. housing market will bolster the mortgage insurer as it recovers from claims tied to the financial crisis. Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs.

“As we face the opportunities and challenges that lie ahead, we do so with the benefit of the growing positive impact from our large, profitable post-downturn mortgage-insurance book,” Radian Chief Executive Officer Sanford Ibrahim said in a call with investors last week.

Radian’s second-quarter net income climbed to $174.8 million, or 78 cents a share, compared with a loss of $33.2 million, or 19 cents a share a year earlier as provisions for losses fell by about half, the company said Aug. 7.

The insurer advanced 3.1 percent to $14.12 at 4:15 p.m. in New York. The stock is unchanged this year, after doubling in 2013.

Blackstone acquired a minority stake in Senator, the firm said in a February letter to investors that didn’t disclose terms. Senator received startup capital from the asset manager in 2008, giving Blackstone rights to a portion of the hedge fund’s revenue.