Why Genworth Financial's Shares Surged

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 troubled insurer Genworth Financial (NYSE: GNW  ) were jumping today, gaining as much as 10% in intraday trading, after a hedge fund increased its stake in the company.

So what: Boston's Highfields Capital Management disclosed in an SEC filing today that it upped its stake in Genworth to 5.2%. For starters, this is significant to other investors, because it signals Highfields' increased confidence in Genworth's value.

It's also notable because in Highfields' filing, the hedge fund said that it's been in an "ongoing dialogue" with Genworth's management about the various pieces of the company's business. Though some investors see value in Genworth's non-U.S. mortgage business and its retirement and life insurance arm, the U.S. mortgage-insurance segment has caused significant heartburn, so any move towards spinning that off, or taking other major actions to deal with it, would likely be cheered by the market.

Now what: Since long-time CEO Michael Frazier stepped down in May, Genworth has been in the market for a new head honcho. While this isn't an ideal situation for a struggling company to be in, it could work in investors' favor if the next CEO is keener on trying to unlock value by breaking up the company.

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