Genworth Buzz

As my twenty faithful readers know, I have been long on Genworth for over a year. I was definitely initially early to the party and I bought some shares around in February at 8.50, but I actually stuck to my guns and added shares as the price dropped (5.35 was my lowest price). Today GNW announced a decoupling of their troubled mortgage component from the rest of the company (primarily life insurance). This caused the stock to spike and trade briefly above nine dollars before settling down to 8.85. Sill a very nice day for my portfolio.

I have no plans to sell. I think there are three major catalysts on the horizon. First, if they re announce their Australian IPO, that could drive the price up significantly as they were above nine dollars last year when it was shelved (they recently re affirmed their plan to go through with it). Second, I believe if and when they go over ten dollars a share, that will open them up to many mutual funds who are required to Bly buys stocks in double digits (seems a silly rule). Third, if they continue to post positive earning, especially if housing prices pick up and the cloud over their PMI business abates they could begin a steady march back towards book value (33.39).

It does take some courage not to sell as I have some decent gains. But I am a believer that there is still a lot of unlocked value here.  Of course, all twenty of you should do your own due diligence!