GNW Analysis – Genworth Financial Revisted

GNW AnalysisOne stock idea you may want to revisit is Genworth Financial (NYSE:GNW). So if you haven’t been paying attention, this GNW Analysis will bring you up to speed…

But before you read my analysis of Genworth, you should know my bias… Here’s my position in the stock:

I’ve been long GNW for awhile. But I’m a modest guy. And I like to take profits where possible. So at this point, I’m clutching a meagre 1/4 position of Genworth stock that I dare not sell. Got it?

The point is…

I have some exposure to Genworth, but I’d love the opportunity to buy GNW on the dip. Now, let me tell you why. Here’s my GNW Analysis:

GNW Analysis:

I believe the bull case for GNW is strong. On paper, the company has a solid book value. Even after subtracting intangibles and goodwill, the stock is still trading at about half of tangible book value. Not bad, right?

And I’m not the only one clued into this value discrepancy. Recently the Globe Investor featured well known value investor Seth Klarman, who wrote about the hidden value in Mortgage Insurer Genworth Financial.

“So Why is GNW Stock Priced So Low?”

Well, last year’s grim decline in GNW stock was in large part due to poor executive management. Since the new CEO Thomas J McInerney has taken the helm at Genworth, the company appears to be righting it’s course…

For example: The Genworth Australia IPO is expected later this year. And management spun off another business unit with the recent sale of the wealth management business. This allows Genworth to keep focusing on it’s core business.

Speaking of which…

While recent headlines indicate the housing market recovery might be slowing down, Genworth’s Mortgage Insurance business stands to benefit, as long as the FED keeps buying real estate assets from the primary dealers. And… If you look at the BOJ’s latest policy action as the writing on the wall: Monetary policy should continue to be a significant tailwind for GNW shareholders.

It’s the analysis of these fundamental factors that compels me to be long term bullish on Genworth. I believe GNW stock can eventually get to $14 before the risk reward ratio becomes unfavorable.

And hey, this GNW analysis is not to say the road to higher Genworth share prices isn’t without speed bumps and unexpected turns. This is why I manage my position size and take profits where I can. But as an intelligent and opportunistic investor you must be wondering…

Is Genworth Financial (GNW) A Buy Right Now?

It’s hard to say if GNW will go up or down tomorrow. But since I’m only holding a 1/4 position of Genworth Stock, I would welcome the opportunity to buy more shares at a lower price. And…

Even though I’m not an expert technical analyst, it’s my opinion that GNW stock will see lower prices sometime in the next couple weeks. Market breadth has been weak. And GNW has been sliding down.

Given my current exposure to GNW, and the chart above, I will look for further stabilization, or lower prices. Specifically…

My entry targets, based on my pre-determined stock idea assessments, would be to buy another 1/4 position around $8.70. and another tranche of GNW stock at $7.95.

Make sense? Great.

How was that for a GNW analysis?

By the way, if you liked this GNW analysis you can see yesterday’s IQNT video analysis for more actionable stock ideas.

 

Leave a Reply