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Genworth Financial, Inc. Message Board

  • cedarvalleycapital cedarvalleycapital Aug 13, 2012 1:50 AM Flag

    My 10 thoughts on Genworth

    1) Many positive potential catalysts, from MI spinoff to complete sale of the company all looming. The CEO says they can't discuss it publicly, but the decisions have been made, so anticipate an announcement shortly.

    2) Book value is nearly 7 times the current share price. Huge value just in runoff alone. This intrinsic can't be ignored and barring disaster the share price will eventually move towards this number.

    3) Company is still very profitable. Will earn over $1 per share next year, and as high as $1.50 share. Absurd valuation at a forward PE of 3 or 4 when sales are still growing YOY.

    4) Heavy institutional ownership, including big hedge funds like Highfield owning a significant stake.

    5) Insider buying at higher levels throughout the last year. I imagine we aren't seeing any the past few weeks due to pending material news and the inability to trade on that.

    6) Macroeconomic trends surrounding the business are improving, and in some segments like MI, the improvements are dramatic.

    7) Diversified portfolio with significant Canadian and Australian assets. Just part of these could be sold to one of the big mega banks in either of those countries for more than the current market cap.

    8) Analysts are behind this company. No downgrades following the latest earnings and the lowest PT is still 15% above the current share price (UBS at $5.50).

    9) Rating agencies so far positive on GNW overall financial health. While they have significantly downgraded other MI companies like RDN and MTG, they have been bullish on GNW. Company seems to have close working relationship with Moodys and I expect them to work within their framework and avoid an impending downgrade that seems to be a topic of fear at the moment.

    10) Not normally one to read too much into technicals, but a strong 20% bounce off the lows and some obvious signs that capitulation is likely in following the drop on earnings and the day after to cement a near-term low. Not likely to retest or see $3s. Chatter is turning positive.

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GNW
13.19-0.07(-0.53%)Sep 19 4:03 PMEDT

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