This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Stocks Seth Klarman Loves

Stocks in this article: ORCL GNW HES HPQ BP

Genworth Financial

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Genworth Financial (GNW - Get Report) is another name that Klarman and company like right now. Baupost picked up 15 million shares of the mid-cap insurance firm, taking on just over 3% of Genworth's outstanding shares with an $84.9 million position in the stock. Genworth provides mortgage insurance, life insurance, and more nuanced products like long-term care insurance.

The firm was a unit of General Electric (GE) until 2004, when it was spun-off from the blue chip and sent on its own way. Since initially going public, GNW has seen its shares tumble 72%. (It was one of the 10 Worst-Performing S&P 500 Stocks in the Second Quarter.)

A lot of that poor performance has come from exposure to the worst parts of the market. As a major mortgage insurer, a wave of mortgage defaults meant big payouts and the need to raise capital through dilutive equity offerings and increased debt leverage. While the firm has stabilized itself at this point, GNW isn't out of the woods just yet. Another economic hiccup could spark the need for more capital.

>>5 Financial Stocks Hedge Funds Love

In spite of those challenges, Genworth is at least starting to look cheap right now. While the firm's valuation is in line with peers, GNW was known for being one of the more conservative mortgage underwriters going into the crisis, and increased exposure to international mortgage insurance (rather than housing here at home) makes it an even better risk. And even though the firm had to raise capital after the recession, the debt load is more than tenable right now, especially given the mountains of cash that Genworth threw off in the most recent year.

I'd suggest that risk-averse investors steer clear of this stock -- there are a lot of unknowns that still need to get worked out here. But investors looking for a little more excitement could do worse than following Seth Klarman's lead.

3 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs