Author Topic: GNW - Genworth Financial  (Read 34070 times)

Olmsted

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Re: GNW - Genworth Financial
« Reply #10 on: June 28, 2012, 02:34:49 PM »
Highfields talking to Genworth about spinning off units.  Spinning mortgage insurance seems the natural option - as long as it's capitalized not to fail too quickly.  Could get interesting...

http://www.bloomberg.com/news/2012-06-28/genworth-rallies-as-highfields-discloses-talks.html?cmpid=yhoo


Olmsted

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Re: GNW - Genworth Financial
« Reply #11 on: August 01, 2012, 07:51:46 AM »
Klein saying the right things about simplifying the business:

We need to address the complexity of our business portfolio so it is simpler for investors to understand and more attractive for them,” Klein said today in a conference call discussing second-quarter results at the Richmond, Virginia- based company. He said the company’s share price and bond spreads are “unacceptable.”

http://www.bloomberg.com/news/2012-08-01/genworth-seeks-to-limit-complexity-as-share-price-unacceptable-.html?cmpid=yhoo


But he seems to say they don't have many good options to actually simplify the company.  For example, he admits the reality of spinning of mortgage insurance might be difficult than investors anticipate:

"The cost of winning bondholder approval may be high and a spinoff may not be viable, Klein said in a conference call today. The unit posted a $25 million operating loss in the second quarter, the Richmond, Virginia-based company said yesterday.

The insurer plunged 8.1 percent to $4.63 at 9:58 a.m. in New York and is the biggest decliner this year in the 81-company Standard and Poor’s 500 Financials Index. Moody’s Investors Service said in June it may cut the company’s debt from the lowest investment-grade level after losses tied to U.S. home loans drained capital. "

http://www.bloomberg.com/news/2012-08-01/genworth-plunges-as-ceo-cites-spinoff-obstacles-new-york-mover.html?cmpid=yhoo


So much for the 20% pop it got when Highfields went active to get it to spin off mortgage insurance.  It's now lower than before their 13D.

At some point this has to become a buy, but in the meantime it just seems like GNW is one never-ending clusterf__k. 
« Last Edit: August 01, 2012, 07:55:55 AM by Olmsted »

link01

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Re: GNW - Genworth Financial
« Reply #12 on: August 01, 2012, 12:04:41 PM »
i have a question that maybe someone here can answer:

what happens to the various genworth mutual funds (for example, they own altegris & some others) if parent co, genworth, goes bankrupt?

are holders of genworth mutual funds protected, or their money locked up during bankruptcy?

Olmsted

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Re: GNW - Genworth Financial
« Reply #13 on: August 02, 2012, 06:36:50 AM »
Should be completely segregated, barring something illegal like at MF Global.

Olmsted

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Re: GNW - Genworth Financial
« Reply #14 on: August 02, 2012, 07:20:38 AM »
Earning from GNW, MTG, and RDN are out now.  GNW and MTG are losing share - NIW at GNW was slow and they are already at a risk-capital of 33, MTG needs to pump capital into its MI unit (dropping the stock >40%).  RDN's NIW numbers were killer - they're winning the race there.  I have a hard time with their reserving, though.  They have more optimistic reserving assumptions than GNW - more dependant on denying claims.  Losing that battle is why MTG needs to pump capital into MI, and why they cannot write as many new policies.

Things are looking good for AIG on this front - two of the biggest competitors are crippled.  Should be interesting to see United Guaranty's numbers this afternoon.

link01

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Re: GNW - Genworth Financial
« Reply #15 on: August 02, 2012, 11:08:19 AM »
Should be completely segregated, barring something illegal like at MF Global.

thx, olmsted. thats what i thought too, but when you have actual $ committed doubts come knocking at the door

Buddy0807

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Re: GNW - Genworth Financial
« Reply #16 on: August 13, 2012, 01:32:46 PM »
fwiw, looks like baupost has taken a stake in gnw...they may like the spin angle...

PlanMaestro

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Re: GNW - Genworth Financial
« Reply #17 on: August 13, 2012, 02:52:29 PM »
fwiw, looks like baupost has taken a stake in gnw...they may like the spin angle...

I am still on phase I, we are still buying cigar butts ... I think that Buffett is a better investor than me because he has a better eye towards what makes a great business - Seth Klarman


Genworth is one of those picks that I scratch my head. It is cheap but not good quality. Genworth is a composite of all the crappy insurance businesses that GE did not want: MI USA, MI Canada, MI Australia, variable annuities, long term care, you name it. And most Genworth investors until now have been under the illusion that MI was ring fenced and that is no longer true.

To retreat from the MI spinoff is a strong signal that regulators were not keen on it ... and regulators always win. Old Republic, that is a stronger and better insurer, also was stopped from spinning off their MI division. And there are reasons for it, PMI already cracked and MTG is on the verge of collapse. AIG and RDN seem to be the only ones navigating the issues.

And after a long twitter chat with David Merkel, it seems they Genworth has all the signals of an insurance company testing the limits of regulatory constrains. His words: "Underreserving, capital stacking, capital interlacing, intercompany reinsurance, intercompany surplus notes and preferred stock too". In other words, similar signs as AIG's pre-crisis of pushing the limits.

So Genworth is capital constrained but at the same time I am not saying it WILL collapse, it is just crappy.

One thing of US insurance accounting is that it worked wonderfully the last crisis, w/ AIG the notable exception finding a crack for the parent company. After learning the lessons of the early 2000s I think the accounting can be trusted. 

BUT ... Genworth doesn't have a lot of degrees of flexibility if things go sour: Australia, Canada, variable annuities, long term care, Europe. The company also has considered "attracting outside capital to the business,"  It is a cigar butt but don't go crazy with it


« Last Edit: April 26, 2013, 02:44:53 PM by PlanMaestro »

Buddy0807

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Re: GNW - Genworth Financial
« Reply #18 on: August 13, 2012, 03:19:31 PM »
baupost's gnw investment looks to be around $90mm.  15mm shares times assumed $6 price per share.  maybe they got in lower, who knows.  for perspective, on a $20bn fund, that's 50 basis points.  unless they have continued to acquire shares, they could be looking at it as an "option value" situation.  the bonds probably look uninteresting to them at these levels, but a moody's downgrade may change that.  fwiw, some of the crappier MI companies (MTG, GNW, etc.) are so cheap (notwithstanding the quality, market share loss, etc. issues that plan and others have pointed out), looking at these names like asymmetric options seems interesting provided you size it right in the portfolio. 

snowball82

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Re: GNW - Genworth Financial
« Reply #19 on: November 18, 2012, 05:03:03 PM »
Well, i would have you're advice about this investment idea. The stock price is 5 $ and the company has 12 $ cash per share. The book value is 33 $. The company has alot of issues. Do you think the margin of safety is real ?

http://www.reuters.com/article/2012/11/16/idUSWNA965720121116?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43
« Last Edit: November 18, 2012, 05:10:05 PM by snowball82 »