First American Corp (FAF)

Fantastic business selling at a bargain price, can't do any better than that! PE ratio is 8.3. Market is punishing it because of housing slowdown. Title insurance, information provider FAF has a great competitive advantage with all of its data. This is a great company to own for the long term...

With a PE less than 9, significant insider ownership, a relatively unknown business that is a quasi monopoly (title insurance, only competitor Fidelity Title Insurance) this company has a huge moat and is underpriced. Everyone has to have title insurance afterall to buy or sell a house. Weakness in the housing market has hurt earning less than what was expected. Houses will always be bought and sold. I'll happily take this company, its almost 2% a year dividend and completely free DRIP program to the bank.

This is another investment that Philip at IV highlighted. Again, a good conservative management team highlights a businesses that consistently grows over time.

If one is looking for a sound, safe investment that grows more rapidly that S&P, FAF would be a wise selection.

The First American Corporation, a Fortune 500 company that traces its history to 1889, is America’s largest provider of business information. First American combines advanced analytics with its vast data resources to supply businesses and consumers with valuable information products to support the major economic events of peoples’ lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and opening or buying a business. The company operates in five primary business segments, to include Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, and Risk Mitigation and Business Solutions

The company is very bullish on its title business where it is the market leader with 28% market share. Endorsing the same it has installed TitleSmart, which delivers insured title commitments in less than 60 seconds along with a robust technology platform called Fast Transaction System. However, the performance of the unit is greatly tied to the real estate and competes on volumes rather than margins. Though 72% of the revenues come from title insurance it contributes only half of the net earnings, to mean its earning mix is balanced across all business segments.

Data business is an area of concern where scalability in volumes is possible with ease and has strong barriers to entry. Fundamental analytics is of importance as it provides meaning to the data for which it has acquired UK Valuation, which specializes in automated valuation model. Mortgage services ranging from origination to quality control seems to have growth prospects due to the positive outlook of the favorable interest rate movements

The company has been much disciplined in cutting expenses and reduced headcount by an additional 600 people in the recent quarter. Moreover it has started shifting of functions offshore for cost effectiveness. In line with this it has opened its third operations office in Mangalore, India. Majority of the business conducted have a huge chunk of fixed expenses already incurred and would benefit when the revenues rise in the next year.

FAF might see short-term volatility in tandem with the real estate market, and a larger-than-expected housing market downturn could negatively impact FAF in the mid-term. Its information database and other services should mitigate this somewhat. Free cash flow remains robust. Ancillary services (such as servicing for foreclosures) would also offset weaker results from a hard housing landing.

Stock price has suffered unduly with the subprime crisis
Company has been around over 100 yrs, and will likely be around 100 more

Limited real estate market, more advanced automation on title process will create low profit margin and lots more competition, no vertical integration for FAF available

if you can get it @33.12

Financial sector s--t has to work iits way through the whole goose!

Title Insurance tag has been going down.

This company is going down like a ton of bricks.

a solid company that is undervalued. I am looking for it to be a long term part of my portfolio.

First American has a huge market share in the title insurance business. They are also quickly diversifying into business/loan intelligence. This should make their income less dependent on the housing market. Should be a good long-term bet.

financial services

HOUSING MARKET WILL FLATTEN

insurer

mortgage title insurance

good stock see lfg about my positive thoughts regarding title companies

Priced to succeed, by DCF this company is underpriced even if it never grows. It may be hurt a bit more in short term, but it'll be back, and it's also consolidating a solid competitive advantage with its database.