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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Comments (33)

  1. Posted by Elliott Swallows | October 29, 2010 at 4:13 PM

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

  2. Posted by Bolt On Tools | October 29, 2010 at 4:26 PM

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

  3. Posted by Steve Eisman | October 29, 2010 at 4:29 PM

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

  4. Posted by Guest | October 29, 2010 at 4:31 PM

    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?

  5. Posted by FrontTits | October 29, 2010 at 4:32 PM

    Other than that I have no concerns.

  6. Posted by touchy feely shareholders | October 29, 2010 at 4:37 PM

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

  7. Posted by Koolaidisfun | October 29, 2010 at 4:47 PM

    Good Luck

  8. Posted by John LeCarre | October 29, 2010 at 4:50 PM

    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…….

  9. Posted by Anonymous | October 29, 2010 at 4:51 PM

    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.

  10. Posted by Guest | October 29, 2010 at 5:00 PM

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

  11. Posted by trojan | October 29, 2010 at 5:05 PM

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

  12. Posted by trojan | October 29, 2010 at 5:05 PM

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

  13. Posted by Shallow Thinker | October 29, 2010 at 5:07 PM

    You really are quite daft aren’t you?

  14. Posted by Guest | October 29, 2010 at 5:17 PM

    No, just short GNW

  15. Posted by A. Fastow | October 29, 2010 at 5:21 PM

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

  16. Posted by ExtraOrdinaryPopularDelusions | October 29, 2010 at 5:29 PM

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

  17. Posted by LEDL | October 29, 2010 at 5:40 PM

    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…

  18. Posted by Anal_yst | October 29, 2010 at 5:42 PM

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

  19. Posted by Tanker2Banker | October 29, 2010 at 5:52 PM

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

  20. Posted by S. Zell | October 29, 2010 at 6:10 PM

    it’s fucking asshole

  21. Posted by Guest | October 29, 2010 at 6:11 PM

    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

  22. Posted by anon | October 29, 2010 at 6:14 PM

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

  23. Posted by front office at a small shop | October 29, 2010 at 6:42 PM

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

  24. Posted by A. Fastow | October 29, 2010 at 8:47 PM

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

  25. Posted by Alanswartz8 | October 30, 2010 at 2:17 AM

    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.

  26. Posted by Not a fan of Eisman | November 3, 2010 at 2:38 PM

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

  27. Posted by GradyP | November 29, 2010 at 1:41 AM

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

  28. Posted by Guest | October 29, 2010 at 4:29 PM

    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

  29. Posted by Guest | October 29, 2010 at 4:29 PM

    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

  30. Posted by NakedShort | October 29, 2010 at 4:29 PM

    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.

  31. Posted by NakedShort | October 29, 2010 at 4:29 PM

    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.

  32. Posted by trojan | October 29, 2010 at 5:01 PM

    rooney from ferris bueller’s day off

  33. Posted by eugene | October 5, 2011 at 11:28 PM