Late last week, Genworth MI Canada Inc.'s third-quarter earnings beat analyst expectations by a long shot on the back of strong gross premium underwriting and declining delinquency rates.
Strong earnings have done wonders for the stock. Since going public in June, 2009, Genworth Canada's shares are up 43 per cent. Last week the firm also bumped its dividend by 20 per cent to $1.04 per share annualized.
Now some analysts are raising their expectations. Geoff Kwan, analyst at RBC Dominion Securities, raised his 12-month target price to $35 and his earnings per share forecasts by 8 per cent.
South of the border its a completely different story for the U.S. operation, Genworth Financial Inc. Although the stock has seen 10 per cent growth in the past 12 months, things are looking rocky. On Friday, hedge fund manager Steve Eisman, who holds a position in Genworth Financial, announced he plans to wage a proxy battle to replace management if they follow through on their wealth management acquisition plans when the stock is trading for less than 40 per cent of book value, Reuters reported.
Instead, Mr. Eisman thinks the firm should buy shares back with its excess capital. As Reuters noted, for those unfamiliar with Mr. Eisman, he is one of the investors profiled in Michael Lewis' book "The Big Short" about the few people who made millions betting that the mortgage market would collapse.
The threat of a proxy war is the last thing Genworth Financial needs right now. Late last week the firm posted a $152-million net operating loss on its U.S. mortgage insurance business.
Despite the shared name, Genworth Canada and Genworth Financial have operated independently of one another since the Canadian operation's 2009 IPO. However, Brookfield Life Assurance Co Ltd., a subsidiary of Genworth Financial, holds approximately 57.5 per cent of Genworth Canada's common shares.