I am generally skeptical of stocks when they do parabolic-type increases that we have seen over the past two weeks of trading, but the obvious conclusion is that somebody presumably wanted to get their hands on some shares of Genworth MI Canada (TSX: MIC) quickly.
My theory is that whoever decided to do the “dump the shares slowly starting April until they’re gone” sale was gone after the couple high volume days in late July and then it was off to the races once that supply dump was concluded. This is one of those rare moments where I have some technical analysis insight (but alas it is still backward-looking).
What I find rather funny is that I (hopefully) timed the bottom relatively well (my average price is around $18/share) but I still feel quite bad that my entry wasn’t perfect. That is the emotional feel. The cold, hard rational world of mathematics, however, says that it is impossible to pick that exact bottom – you will not be that person picking up shares at $16.72 unless if you are very lucky and getting 100% of what you wanted in your portfolio at that bottom price.
With any luck the stock will get around to book value, which is around $26.30/share when you strip out intangibles. It won’t be a straight line otherwise I will start to really get worried. The dream scenario is if they’ve found somebody to buy out the subsidiary business of Genworth (NYSE: GNW). Heaven forbid if they fetch a premium to book value.
I will warn readers that now that I have a tendency of picking tops and bottoms when writing about upward and downward price spikes, respectively!
Well done and many thanks for this tip. A little technical analysis helped me pick out $17 bucks a a good entry point.
It’s still early but, any favourites for that charity?
Let’s not count the chickens before they hatch? Whenever you’ve liquidated let me know and I’ll give you a charity that is registered with the CRA (and in compliance!)