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Steve Eisman Tells Genworth Financial It’s “Overseen Massive Destruction Of Shareholder Value,” Threatens To Wage Proxy Battle On Conference Call, Throw Management “Out Of Here”

Jazzy-Jeff style. Do not test him on this one.

Operator: Steven Eisman, FrontPoint.

Steven Eisman: Yes, hi. I think it is pretty clear this was a very poor quarter, but there are larger issues here that I think you need to address. Frankly, the only accomplishment that this management team can truly point to is the survival of this Company, which I don’t mean to minimize, but otherwise, this management team has overseen a massive destruction of shareholder value. In fact, at the current price to book, Genworth is selling at a steep discount to both MGIC and PMI, the pure play MIs and this is probably because this Company does not meet its cost of capital in any of its businesses. In other words, the market currently is ascribing negative value to your non-MI businesses. It’s a pretty astonishing statement and I don’t get any sense of urgency from this management team as to how this is all going to be addressed. I think going down the current road seems to me a complete waste of time.

Clearly, the best use of capital for this Company is to buy back stock when it is at a discount, less than 40% of book value. The ROE on that activity is multiples higher than any new business you can write. So it seems we can go down a couple of roads. Number one, you could shut down businesses and use resulting excess capital to buy back stock or you can give us a roadmap and a time schedule, which we are going to hold you to as to when each of your businesses will achieve at least its cost of capital.

I want you to understand that my patience and the patience of your shareholders is not infinite and my patience is just about done. And I would like a response to my comments. And one other thing, at the beginning of this conference call, Mr. Fraizer said that they might do bolt-on acquisitions. Do not do that. Your stock is selling at less than 40% of book value. You do a bolt-on acquisition and I will wager a proxy battle immediately to throw you out of here. And I would like a response.

Mike Fraizer: (Genworth Financial- Chairman & CEO): You have touched upon a number of areas.

GNW Transcript [PDF]

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33 Responses to “Steve Eisman Tells Genworth Financial It’s “Overseen Massive Destruction Of Shareholder Value,” Threatens To Wage Proxy Battle On Conference Call, Throw Management “Out Of Here””

  1. Elliott Swallows says:

    They plan on using the consulting firm of A. Dupre, Inc., as their adviser for the bolt-on acquisitions.

  2. Bolt On Tools says:

    If he had that melt-down while inhaling helium those comments would have been much funnier!!

  3. Guest says:

    All that aside Mike, I think you’re doing one heck of a job…

    Bess – any truth to the rumor that you will be dressing as Lisa Falcone for Halloween? Think of all the options.

    – Fixed Income

  4. Guest says:

    All that aside Mike, I think you’re doing one heck of a job…

    Bess – any truth to the rumor that you will be dressing as Lisa Falcone for Halloween? Think of all the options.

    – Fixed Income

  5. NakedShort says:

    I don’t know who you are. I don’t know how you are trying to deliver shareholder value. If you are looking for an equity infusion, I can tell you I don’t have money. But what I do have are a very particular set of skills; skills I have acquired over a very long career. Skills that make me a nightmare for people like you. If you buy back shares now, that’ll be the end of it. I will not look for you, I will not pursue you. But if you don’t, I will look for you, I will find you, and I will kill you.

  6. NakedShort says:

    I don’t know who you are. I don’t know how you are trying to deliver shareholder value. If you are looking for an equity infusion, I can tell you I don’t have money. But what I do have are a very particular set of skills; skills I have acquired over a very long career. Skills that make me a nightmare for people like you. If you buy back shares now, that’ll be the end of it. I will not look for you, I will not pursue you. But if you don’t, I will look for you, I will find you, and I will kill you.

  7. Steve Eisman says:

    That PDF link is not working. Please fix it!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  8. Guest says:

    In hindsight instead of going long, he should have shorted GNW. Obviously his original analysis is wrong. And now he’s blaming GNW for his ineptitude. Wtf?

  9. FrontTits says:

    Other than that I have no concerns.

  10. touchy feely shareholders says:

    “You have touched upon a number of areas” – somebody call HR

  11. Koolaidisfun says:

    Good Luck

  12. John LeCarre says:

    Mike Frazier: “You have touched on a number of areas. Thank you for that, Mr. Eisman. Now, I’d like everyone to know that because of confidentiality agreements, Mr. Eisman speaks to us only in a “one time” code of which he and I only know how to decipher. I will now have my assistant take Mr. Eisman’s comments along with my decoder pad to another office for decoding and I will respond to him later. Now, let’s move on to holiday party arrangements…….

  13. Anonymous says:

    OR, and I’m just throwing this out here, he only recently went long the company at its new, lower price with the intent of getting management to make some changes. Just spitballin’ here.

  14. Guest says:

    Then using your logic he shouldn’t be complaining, he now gets a golden opportunity to average in at a lower price.

  15. trojan says:

    rooney from ferris bueller’s day off

  16. trojan says:

    Frazier: Please understand… it was all business. It wasn’t personal.
    Eisman: It was all personal to me.

  17. trojan says:

    Frazier: Please understand… it was all business. It wasn’t personal.
    Eisman: It was all personal to me.

  18. You really are quite daft aren’t you?

  19. Guest says:

    No, just short GNW

  20. A. Fastow says:

    tell me Frazier threw out an “asshole” on the call?

  21. A. Dupre, Inc.’s bolt-on division was acquired by Debrahlee & Stick months ago.

  22. LEDL says:

    Unless, of course, the stock price can go down, which may occur with a bolt-on non-MI acquisition given the Street is currently valuing non-MI businesses at a negative value. Carrying it long at a lower price wouldn’t be good then.

    Just sayin…

  23. Anal_yst says:

    I believe you mean “…aside from that, I have no concerns.”

  24. Tanker2Banker says:

    A wise sage once told me “If GE is selling it, don’t buy it”

  25. S. Zell says:

    it’s fucking asshole

  26. Guest says:

    business “insider”…”the full transcript isn’t available online but here’s what we gather”

    O RLY

    http://www.businessinsider.com/steve-eisman-genworth-conference-call-proxy-battle-2010-10

  27. anon says:

    what the hell do you expect from the happy time slideshow factory?

  28. front office at a small shop says:

    i never read business insider because i can’t stand those slideshows

  29. A. Fastow says:

    uh…you are incorrect dumb ass. go check the video. i was there. right next to skilling. i heard what he said….asshole.

  30. Alanswartz8 says:

    Steve Eisman is a hideously ugly and incomparably frail sissy. His behavior on the earnings call belied his gross inadequacy and a childhood marred by severe beatings, wedgies, and the occasional face full of sand (compliments of Charles Atlas). Although Frazier held his cool when answering Eisman, I genuinely felt badly for Frazier. Eisman is a useless pinworm.

  31. Not a fan of Eisman says:

    Eisman’s attack on for-profit colleges is comically inept and deceitful. It looks as if he may have peaked in 2008.

  32. GradyP says:

    Steve,
    Straight to the point, love it. Frazier is dilusional!

  33. eugene says:

    Does anyone know how to contact Steve Eisman? I wrote a play/satire "Requiem to Greed" that I would like to send to him. My email is esalganik@aol.com. Thanks.

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