I was thinking today a little bit about GNW, which is my second largest position. Here is some quick back of the envelope thoughts. First, they have a market cap of about $7.6 billion. They own (from what I could find) a 57% stake in Genworth Financial Canada (MIC on Toronto exchange). GFC is worth about $3.5b, so GNWs stake is $1.9b. Now GNW also owns 100% of Genworth Australia. Comparing the income steam of Genworth Australia to GFC implies GA is worth about $2.0b.
GNW has stated their desire to IPO 40% of Genworth Australia in 2014, should the market be favorable. That would monetize about $800 m to GNW. Now what does GNW do with $800 million??? I see a substantial stock buy-back, and perhaps the starting of a dividend. Since GNW trades substantially under BV, a stock buy-back will be immediately accretive and would put a floor under the share price. I do not think it is far-fetched for GNW to move relatively quickly to $20 a share should the IPO go well and they announce a buy-back.
Stay tuned.
Surreal Day
It was a strange day for my portfolio. I was actually up slightly at the closing bell. Others seemed to share my early morning enthusiasm for GTAT. But I had some other nice winners as well (MBUU, FGL, CYOU! and RIOM for starters). I did put in a but for C about 5% lower than current price. We will see if it fills.
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