Clayton Holdings LLC, a wholly owned subsidiary of Radian Group Inc. RDN, has acquired Salt Lake City based Red Bell Real Estate, LLC and its sister company Main Street Valuation, LLC .
The news which came out on Mar 30 sent the shares of Radian up 2%, when it closed at $16.79 on Mar 31.
The buyout of Red Bell, which offers superior technology-based valuation solutions, serves as a perfect complement to Clayton’s existing business. Clayton provides information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities.
Red Bell is licensed to sell real estate in all the 50 states in the U.S.
The acquisition is consistent with Radian’s growth and diversification strategy to pursue alternatives for an array of services to the mortgage finance market. The buyout comes almost a year after which it was acquired by Radian.
Looking back, Radian had purchased Clayton in May 2014 for $312 million in a bid to expand outsourcing services for the home-lending industry.
The financial consideration for the acquisition was not disclosed. Red Bell will continue to operate under its current brand and remain stationed in Salt Lake City. Jeffrey Jonas, Red Bell's co-founder, and his senior management team will continue to hold their positions.
The company is seeking to diversify its revenue sources by pursuing other opportunities for providing credit-related and other services to the mortgage finance market. It is also growing its fee-based revenues as a percentage of total revenues, primarily by expanding Clayton’s presence in the real estate and mortgage finance industries.
However, we do not expect to see any other acquisition by the company over the next few months, since it will be busy in accumulating capital to meet the capital requirements as suggested by the Federal Housing Finance Agency.
Radian Group carries a Zacks Rank #4 (Sell). Some better-ranked stocks are Cigna Corp. CI, FBL Financial Group Inc. FFG and James River Group Holdings, Ltd. JRVR. All these stocks carry a Zacks Rank # 2(Buy).
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