Activist Gets More Active Against Genworth Mortgage Insurance Operations

GENWORTH FINANCIAL, INC. (NYSE: GNW) has been battered as far as its stock is concerned and shares matched a 52-week low this morning of $4.80.  At least that was the case until an activist investor Highfields Capital Management LP under Jonathon S. Jacobson showed in a filing that it has taken a larger stake and is going to pursue dialogue with Genworth.  The target is regarding the mortgage insurance operations as well as and Genworth’s retirement and protection businesses.

The filing shows that some 25,360,440 shares are now under the ‘sole dispositive power’ section, which comes to a stake of some 5.2% of Genworth. More recent data in the filing noted that more than 6.5 million shares were purchased in June and May in VWAP share prices ranging from $5.11 to $5.76. This shows the following:

• The aggregate purchase price of the 1,319,833 Shares owned by Highfields I was $7,253,365, inclusive of brokerage commissions.
• The aggregate purchase price of the 4,384,722 Shares owned by Highfields II was $24,088,678, inclusive of brokerage commissions.
• The aggregate purchase price of the 19,655,885 Shares owned by Highfields III was $142,884,464, inclusive of brokerage commissions.

Today’s filing noted, “The Reporting Persons have maintained an ongoing dialogue with the Issuer’s management regarding performance, allocation of capital and structural issues. The Reporting Persons expect to continue such dialogue with the Issuer, and with other interested persons, and in particular to address options available to the Issuer related to its global mortgage insurance assets, its U.S. mortgage insurance assets and its retirement and protection businesses. The Reporting Persons expect such discussions will address risk mitigation strategies, possible sale or spin of assets, and similar matters… Depending on such discussions, market conditions and further developments or actions of the Issuer, the Reporting Persons may change their intentions or Share ownership stated herein, or propose actions that may affect the capital structure, management or ownership or control of the Issuer.”

After having matched the 52-week low of $4.80 today, Genworth shares are up 5.3% at $5.17 on more than 7.5 million shares. If Highfields can get the mortgage insurance outfit off the Genworth books, maybe this turnaround which will not turn around can finally turn.

JON C. OGG