Technical revision of an undervalued insurance giant
Genworth recently took a nosedive on concerns related to one time expenses, a good will impairment and a capital reserve charge. Another capital reserve charge is possible for the next quarter. All in all, this company is trading at a wide discount to long term earnings power. Through a sum of parts analysis, we have currently valued the business at $14 a share. However once return on equity improves, reflecting book value more accurately, we come up with a 0.6x bv figure which generates a $18 price target --- this will likely take 2-3 years to take full effect.
The reason I'm analyzing the 30 minute chart is because we have very interesting volume going on in the prints just below $9 a share. In the three circles, I have noticed heavy accumulation which are likely related to mutual funds or hedge funds. This is a critical area for prop traders, possibly a buy limit level. The good news is that we will most likely NOT re-test this support. Prints are consolidating and technical indicators are projecting a measured move to the positive side following this descending wedge formation. The two candles highlighted in RED is confirmation of this breakout. This is not a dead cat bounce.
Load up and be patient. This gap will fill. It may arrive at $10.50+ before the next ER.
The reason I'm analyzing the 30 minute chart is because we have very interesting volume going on in the prints just below $9 a share. In the three circles, I have noticed heavy accumulation which are likely related to mutual funds or hedge funds. This is a critical area for prop traders, possibly a buy limit level. The good news is that we will most likely NOT re-test this support. Prints are consolidating and technical indicators are projecting a measured move to the positive side following this descending wedge formation. The two candles highlighted in RED is confirmation of this breakout. This is not a dead cat bounce.
Load up and be patient. This gap will fill. It may arrive at $10.50+ before the next ER.
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