Monthly Archives: July 2021

First American Title

Ticker: FAF, Buy below $70.

First American Financial Corporation provides comprehensive title insurance protection and professional settlement services for homebuyers and sellers.

Why I Would Buy

  1. Dividend – ~3% yield, <30% payout ratio.   
  2. Low Debt –Debt to equity 0.4.
  3. Cheap – Forward P/E <10x, trailing < 9x.  
  4. Return on Equity – In the teens for most of past decade.
  5. Oligopoly – Massive database of title records, competitive advantage.

What Could Go Wrong

  1. Regulatory Risk  – Could face change on state regulations, some states even insure titles themselves.
  2. Short-Term Earnings Spike – Temporary boost from refinancing and new home buying resulting from low interest rates. Earning likely to decline/normalize.

Disclosure: I am long FAF, please read additional disclosures here before taking any action based on this post.