That was truly a wonderful analysis of the Title Insurance industry. You have found a unique way to play the recession in the Real Estate industry. LFG has fallen 75% from its 52 week high and may have hit Sir John Templeton’s point of maximum pessimism. The falling knife, which is the value investor’s greatest fear, may have hit the floor on those two stocks.

The story of the real estate industry still scares me as the stock market is still unable to quantify the total write offs that will still need to be taken by the major banks and other financial institutions globally. Also when the ARM’s start to adjust in 2008 and a major foreclosure wave hits the real estate market, I believe that housing prices may begin a free fall, especially in California and Florida.

I am still amazed that probably the best run homebuilder in the industry, NVR (symbol =NVR) has fallen so sharply. NVR fell from the high $900’s to the below $400 this year. NVR is probably one of the best performing stocks in the history of the stock market going from $9 ¾ in 1995 to $980 in 2007 for an annualized return for those years of 46.84%. My research tells me that the company would sell for $1200 to a private buyer on Main Street based on its free cash flow numbers, but I have no idea how low it will go, if I were to invest in it now based on these subprime fears. Would I be catching a falling knife?

If you are going to play the real estate market, I agree with you that title insurance is the way to go.

Good Luck,

Peter

Disclosure; Neither Peter George Psaras nor Psaras Partners holds any positions in the stocks listed above.