NEW YORK (Bloomberg) — David Booth's Dimensional Fund Advisors reaped gains of more than 100 percent this year by investing in mortgage insurers that rallied on speculation that home-loan delinquencies would subside.

Dimensional, which manages more than $160 billion, restored holdings in MGIC Investment Corp., the biggest US mortgage insurer, No. 2 Radian Group Inc. and No. 3 PMI Group Inc. last year after slashing the stakes in 2007 when the industry's losses began. MGIC is the best performer in the 24-stock KBW Insurance Index this year, and all three companies rose more than fivefold in the last 12 months.

"There is a growing sentiment the industry is going to survive this credit crisis," said Matthew Howlett, an analyst at Macquarie Group Ltd. Insurance policies over the next two years "will be the most profitable book of business the mortgage industry has ever seen".

Mortgage insurers are facing fewer claims as the economy recovers and the Obama administration works with the nation's biggest banks to prevent foreclosures. Industry data for the month of February indicated that for the first time in almost four years, borrowers caught up on overdue mortgages faster than new delinquencies were reported. The insurers pay lenders when foreclosure fails to recoup costs.

"It's a trend reversal," said Aldo Zucaro of Old Republic International Corp., a mortgage insurer and the biggest shareholder in MGIC and PMI. "After so many months and quarters of negative news it's good to see some positive come out of it" Zucaro, Old Republic's chief executive officer, said in an interview.

Booth's funds makes investments by identifying so-called dimensions such as company size and the price of securities. The firm often prefers smaller companies and lower priced shares, according to the fund's website. Dimensional was among the top six investors in MGIC, PMI and Radian, according to Bloomberg data. All three companies traded for less than $20 a share today and have market valuations below $2 billion.

Dimensional's stakes in MGIC, Radian and Walnut Creek, California-based PMI are valued at about $157 million as of yesterday, up from about $69 million at year-end. The holdings had slipped to as low as $1.25 million on March 31, 2008, because of sales and declines in market prices.

Mortgage guarantors were hobbled by a wave of claims as homeowners struggled to pay debts or find additional financing. Default or auction notices and bank repossessions were reported on about 1.3 million properties in 2007, and about 2.82 million in 2009, according to RealtyTrac Inc. As losses accumulated, capital in the industry slid and the top carriers appealed to regulators for relief.

Booth built Dimensional with the help of University of Chicago professor Eugene Fama and other academics including Robert Merton and Myron Scholes, winners of the 1997 Nobel Prize for economics. The company manages more than 100 funds on behalf of clients including Pfizer Inc. and the California Public Employees' Retirement System and owned more than 3,000 stocks at the end of November.

Booth, 63, declined to comment through Dimensional spokeswoman Darla Hastings. His strategies are passive, said Fama, a Dimensional director and Booth's teacher at the University of Chicago. That technique involves investing in securities or indexes to track market moves rather than pick individual stocks.