Title insurer, First American Financial Corporation (NYSE:FAF) also weighed on quarterly performance, falling -11.22%. FAF reported mixed results for the seasonally unimportant quarter relative to Wall Street expectations as strong purchase and commercial revenues were not enough to neutralize the headwind from the decline in re-finances. Nonetheless, management remained optimistic about the outlook for the spring selling season and full year 2018. FAF expects the ongoing economic expansion and current trends in the housing market to yield further growth in new home sales and noted that the commercial business has a healthy pipeline of activity and should continue to benefit from rising investment income. Looking forward, we believe the market continues to underappreciate FAF’s scale and operating leverage and think there continues to be a long runway for earnings and intrinsic value growth.
From John Rogers (Trades, Portfolio)' Ariel Fund second quarter 2018 shareholder letter.
