johnpane

What do you guys think of this new interest rate hedge ETF as a way to position for interest rate rises (and increased interest rate volatility) with limited downside and timing risk? The fund uses swaptions on 20-year treasuries dated 7 years out. The chart shows theoretical performance of the swaptions, with a positive convex response to interest rates, and carry cost of about 10% per year if rates and volatility are unchanged. I think an increase in interest rate volatility would push the entire curve upward. These swaptions represent about half of the ETF holding with the rest in 5-year treasuries. This post has more details on the ETF's strategy, and is the source of the curve shown here.

Are you sure $120b by July is correct? I see you cited a Bloomberg article early in this thread that quotes that number, but others are saying the target may be higher and the deadline later, e.g. $500b, $750b.

At the midpoint of the IPO range the implied value of USMI is $3.58B. If we take corporate assets - liabilities, plus this value for USMI, the implied value of GNW is $6.51 at the midpoint of the IPO range. Spreadsheet attached. This assumes the other subs have no value, which is conservative. Interested in how to improve this calculation of the implied value of GNW stock. ACT GMHI IPO.xlsx

My interpretation is that he sold Starbucks again in 2021. It hasn't been in the media because this is probably the first public indication of that fact. [quote]At the company’s current valuation, about twice the price we paid one year ago, our expected returns from owning Starbucks are below our long-term targets. As a result, we recently sold our stake.

You're right. Thanks and sorry for my error.

He makes a gross error in his tweet storm. In this tweet ( ) he points out that intrinsic value is $41.67. However, if you look here: he makes a very basic error: adding back $2.86 where he should actually subtract it (i.e. adjusted book value is ~$36, rather than ~$42). MBIA looks like an interesting stock but I think you should ignore the guy pumping this stock on Twitter. He seems very promotional and his analysis is sloppy and speculative (the part about suggesting the company could be sold for $70 within a short time seems grossly optimistic). I'll leave open the question whether he is genuine or not. By the same logic he is also adding 4.29 where he should be subtracting it. The true book value at 12/31/20 was $27.37.

How does Perelman get his ABV figures of ~32 at the end of 2019 and $42 at the end of 2020? The 10-K does not explicitly state ABV but applying the stated adjustments yields 22.46 and 27.37, respectively.

From the MD&A and judging from current position, it appears that they could pay off 1 or the other, but likely not both. They could always try refinancing but I presume the debt markets would not be hot on it. They don't seem keen on the idea themselves, strategically speaking deleveraging has been a cornerstone of their plan. From 10K: On January 13, 2021, Moody’s took additional action and downgraded the credit rating of Genworth Holdings’ senior unsecured debt from “B3” (Speculative) to “Caa1” (Speculative). The additional downgrade reflects the stalled deal with China Oceanwide and the need to raise additional liquidity to address debt maturities due in 2021 and beyond. (p. 23) We may decide to take additional measures to increase our financial flexibility, in the absence of the China Oceanwide transaction, including issuing equity at Genworth Financial which would be dilutive to our shareholders, or additional debt at Genworth Financial, Genworth Holdings or GMHI (including debt convertible into equity), which could increase our leverage. The availability of any additional debt or equity funding will depend on a variety of factors, including market conditions, regulatory considerations, the general availability of credit and particularly important to the financial services industry, our credit ratings and credit capacity and the performance of and outlook for our company and our businesses. Market conditions may make it difficult to obtain funding or complete asset sales to generate additional liquidity, especially on short notice and when the demand for additional funding in the market is high. Our access to funding may be further impaired by our credit or financial strength ratings and our financial condition. See “—Our internal sources of liquidity may be insufficient to meet our needs and our access to capital may be limited or unavailable. Under such conditions, we may seek additional capital but may be unable to obtain it.” (p. 49) In connection with repaying our senior notes maturing in September 2021, Genworth Holdings expects to have a cash shortfall of approximately $15 million which raises doubt about our ability to meet our financial obligations within the next year. While conditions and events occurring and expected to occur raise doubt about our ability to meet our financial obligations, management’s plans alleviate this doubt. We believe that our plans, along with existing cash and cash equivalents, will provide Genworth Holdings sufficient liquidity to meet its obligations and maintain business operations for one year from the issue date of the consolidated financial statements. (p. 196)

This was mentioned on the earnings call, "We now project the need for $22.5 billion in LTC premium increases and benefit reductions on a net present value basis." I had to go back a bit to document that this was $16B, but they said this in the 2018 10K, "$10.5 billion, on a net present value basis, or approximately 65% of the total amount required under our multi-year in-force rate action plan in our long-term care insurance business."

Those rate increases do not compound unless the same policies are in both rate actions. The 2018 set of policies acted upon may be mostly disjoint from the 2020 set which impacted about 38% of their in-force premiums.

The company does seem considerably better off than when the market "naturally" valued it at $5.20. Can they pay off their 2021 and 2022 obligations without having to do something dilutive?

Maybe. Did you notice the sudden increase to $22B from $16B in the NPV of necessary premium increases, and that the rate at which regulators are approving these has been decreasing over the past 3 years?

I wouldn't count on a quick payoff. Isn't most of that book value in the GLIC subsidiary and its subs, which won't pay any dividend to the holding company for the foreseeable future. A key question is, if GLIC is essentially a zero, what is the rest of the company worth? To pay upcoming debt, GNW is banking on an IPO of USMI, but that unit is not in a position of strength, hobbled by forbearance and unknown delinquency cure rates. If OW comes back to the table, the never ending cycle of seeking regulator approvals will resume, yet the refusal to cancel the merger means the transaction price acts as a cap on share price. Same regulator issue, even worse, if some other white knight swoops in for the whole corp. If they completely sell off USMI to some interested party, power to generate holding company cash flow will be almost gone.

What lag after the dividend pay date is typical for the funds to be credited to U.S.-based brokerage accounts?

Apparently, these are options for 100 shares of PSTH bundled with 11 warrants. 100/9=11.1111 but fractional warrants are not issued. I assume if someone transacts 9 of these options the number of warrants involved would be 100=900/9 and not 99=9*11. But what does the :5.0 mean?