NMI Holdings, Inc. (NMIH): A Bull Case Theory

We came across a bullish thesis on NMI Holdings, Inc. on Capital Curiosity’s Substack by Taylor Nichols. In this article, we will summarize the bulls’ thesis on NMIH. NMI Holdings, Inc.'s share was trading at $37.96 as of July 29^th. NMIH’s trailing and forward P/E were 8.20 and 7.94, respectively according to Yahoo Finance.

NMI Holdings (NMIH) has emerged as one of the most efficient and consistently profitable insurance businesses in the U.S., delivering 55% net margins, 18% ROE, and a sub-25% combined ratio—placing it far ahead of traditional insurers like Allstate and Progressive. Despite these stellar fundamentals, the stock trades at just 8x earnings, reflecting investor anxiety around potential regulatory headwinds from Basel IV. NMIH plays a vital role in enabling homeownership for buyers with less than 20% down by offering private mortgage insurance (PMI), a niche but essential service that supports middle-class access to housing.

Since launching in 2012, NMI has grown to $210 billion in insurance-in-force, with strong relationships across nearly 2,000 lenders. The company’s industry-leading default rate of 1.01%, disciplined underwriting, and proprietary tech platforms like Rate GPS® have driven both profitability and customer stickiness. However, looming Basel IV regulations threaten to strip banks of the capital relief currently tied to PMI, potentially undermining the business model. Yet such a move could severely restrict housing access, prompting likely political resistance.

While the regulatory timeline remains unclear, market fears have kept valuations depressed, despite a fair value estimate of $96 per share—over 150% above current levels. Financially, NMIH boasts a clean balance sheet, minimal leverage, and operating margins near 80%, alongside aggressive capital returns, including $245M in share buybacks in 2024 and a new $250M authorization for 2025. Whether or not Basel IV is implemented in full, NMIH offers a compelling, asymmetric opportunity grounded in operational excellence and significant upside potential.

Previously, we covered a bullish thesis on Hamilton Insurance Group, Ltd. (HG) by Karst Research in May 2025, which highlighted the company’s turnaround in underwriting, growing Lloyd’s syndicate capacity, and strong capital allocation. The company’s stock price has appreciated by approximately 1.7% since our coverage. The thesis still stands as HG continues scaling profitably. Taylor Nichols shares a similar view but emphasizes regulatory risk as a rerating trigger for NMIH.

NMI Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held NMIH at the end of the first quarter which was 30 in the previous quarter. While we acknowledge the potential of NMIH as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.