Category Archives: $GNW

$GNW(Genworth) – recovery story turns sour….$Z and $FIT both down 10% post results

Genworth stock crashing after results – after good Q1 where the recovery seemed on track, it has never recovered following a Morgan Stanley downgrade.

Zillow and Fitbit both getting crushed even after good quarters.

Market is tough at the moment, stick to stops and stay on the sidelines, long CASH!
China story may not be over.

Commodities getting crushed.

2CentView – stopped out of $GNW and $AA. Still in $Z and $FIT (FitBit).

$GNW(GenWorth Financial) – Stock could double over next 12-18 months – here is why…

Trouble life and long term care insurance provider has apparently identified the issues in it’s accounting and will take the necessary steps to correct the problems this year.

This could be the opportunity to buy the stock for a trade or for long term, accounting issues meant it was to best to steer clear of the stock and until the issues were found and steps were taken to correct – this is happening now.

– The company said the errors do NOT mean a re-statement of Q4 results
– Credit default swaps have tightened aggressively over the past few days and over 100bp since January – quite often the credit markets will lead the equity market higher

– Recently a broker raised $GNW to a conviction buy…
– The stock jumped 6% on Friday

2CentView FV= $15 on GNW suggesting the current stock price is mis-pricing the future earnings impact of the accounting issues.

Suggested trade:
Buy here at 7.75 take profit target $13.75 stop $4.50

2CentView is considering switching from $RDN (Radian) FV=17 vs 16.9 [which has double over the past 18 months] to $GNW.

What do $RDN(radian), $MTG(MGIC Corp) and $MBI (MBIA) have in common…?

They all reached a peak of around $60 in 2007 at the height of the credit boom!Their business is mortgage and credit insurance, and is a very profitable business in boom times!

7 years on and the stocks are recovering gradually as the delinquent inventory drops and future EPS expectations rise.
Not sure if these stocks will get back to $60 again, but there is the potential for them to double over the next 2-3 years.

As EPS forecasts for MBI are not reliable, and it is more in the credit insurance business than mortgage insurance, added GNW (genworth) as a comparable, which is more diversified than $RDN and $MTG.

Radian (RDN) FV= $20, Px=15.25 2007 Peak = $60
MGIC Corp (MTG) FV= $12, Px=9.1 2007 Peak = $60
Genworth ($GNW) FV= $22, Px=$18 2007 Peak = $36

If you think the Mortgage Insurance will recover buy one of the above, take profit at Fair Value and ride profits in the hope they will recover over the long term for potential 100% gain over 3 years.
2CentView pick of the above 3 is $MTG, but is perhaps the most riskiest!

2CentView has a core position in $RDN, bought in 2013 at $9.