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Genworth Financial Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Genworth Financial (NYSE: GNW  ) closed down more than 16% after falling as much as 22% earlier in the trading session. The wealth manager took a beating after being mentioned in a report cited by Barron’s that identified a handful of stocks with major U.S, debt exposure.

So what: Sandler O’Neill + Partners named five life insurers with major U.S. debt exposure, including Genworth, which could see lower book value as the value of its Treasury holdings decline. Others named in the report included Aflac (NYSE: AFL  ) and Prudential Financial (NYSE: PRU  ) .

Now what: It's far too early to know the implications of the downgrade on book values, but Sandler said declines could come, and if they do, the corresponding stocks would take a hit. Genworth seems to be falling in anticipation of exactly that. Is the haircut deserved, or are you buying at these levels? Weigh in using the comments box below.

Interested in more info on Genworth Financial?Add it to your watchlist.

Fool contributorTim Beyers is a member of theMotley Fool Rule Breakers stock-picking team. He didn’t own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdings andFoolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insightsdelivered directly to your RSS reader.

The Motley Fool owns, and Motley Fool newsletter services have recommended buying, shares of Aflac. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

Read/Post Comments (1) | Recommend This Article (2)

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  • Report this Comment On August 09, 2011, at 10:22 AM, chadhenage13 wrote:

    I am not buying Genworth, but the theory behind why this would be an issue seems flawed. The premise that their holdings could be hurt by their Treasury holding declining isn't going to happen. While S&P put the US at AA+ there is no likelyhood that the US doesn't pay it's debts. The only reason that the above companies Treasury holdings would decline in value is if either:

    1. Interest rates ticked up - not likely near term

    2. The stock market went on a bull run thus making Treasuries less attractive - likely.

    Not sure why anyone would think Treasuries would decline in value outside of these two events.

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