Traders Cooperative

[Joe Stocks]

GNW - Another longer term trade that I am waiting to play out. I like the longer term prospects for both ACT and GNW. ACT is proposing to their board a $200mil dividend. There is only 163 mil shares outstanding, or $1.23 pershare. ACT trades at 85% of book. A little better than RDN and widely better than ESNT and NMIH. Of course those two are newer and don't have the legacy insured from the 2008 mortgage financial crisis. GNW owns 81.6% of ACT. ACT value per share to GNW is about $6.00. GNW sells for 4.36 here. Obviously the market believes that the remainder of GNW, mainly long term care and life insurance, is worth less than zero. GNW said at the last conference call that GNW holdings will not be contributing any more funds to the LTC and life units. Indicating that they are on there own. Imo, GNW should be selling for at least the value of ACT at this point. The way I read this is that LTC/Life sinks or swims and GNW holdings would not be affected. LTC/Life is currently profitable. GNW also says that expect to not receive any dividends from LTC/Life for the foreseeable future. And I am thinking that ACT will perform better as an independent unit.