May 14, 2009
– Comments (5) |
RELATED TICKERS: GNW
Seems more like a one day wonder,.
This 20% increase is nice but the ones driving up the price are going to take their profits and soon. By this Monday I would expect it to fall 15% after a sell off.
GNW is one interesting stock. Even at $5 its valuations are extremely low, but there's a non-zero possibility the shares wind up worth $0.
In my view, if someone could completely figure out the situation at GNW they could amke alot of money by selling that information to analysts and the BOD. lol
I'll bite on this. I'm long GNW and have done a lot of research. I'm planning on making this entry number 3 of my individual stock blog to be written this weekend. To put it simply, GNW has a binary outcome. $20+ based on its core earnings power, or $0. At $1, you don't have to be a rocket scientist to figure out the market was giving it a very low probability of survival. In my opinion the news that raised the survival probability was the spin off of 49% of the Canadian mortgage insurance unit, which will give GNW a much needed capital injection.
If you're interested in in-depth research, I'll be writing this one up on my blog this weekend.
hey peach. Binary outcome is an interesting comment. That also applies to a variety of BDCs including ACAS and ALD (in my view ACAS has considerably more upside potential, but also a less productive attitude towards necessary lender negotiations).
However, I have been wondering if there is a continuum of possible outcomes for both the troubled BDCs and the troubled insurers. They have plummeting values in their investment portfolios and leverage that makes book value really not stable, and its kind of a question about whether it all goes to zero or lower before things start improving and the companies get themselves cleaned up. I think a continuum exists for GNW between 0 and 20.
I'm looking forward to your blog I hope I don't forget to read it.
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