Short-Seller Makes a Pessimist's Case Against China Oceanwide-Genworth Deal

Hindenburg acknowledges at the top of its commentary on Genworth that it has “taken a significant short position in Genworth’s equity.”

The short position means that Hindenburg has a financial incentive to criticize Genworth. If Hindenburg can persuade Genworth shareholders to sell their shares, that could push the price of the shares lower, and push the value of the Hindenburg’s short position higher.

Hindenburg asserts, based on documents obtained through Freedom of Insurance Act requests, that:

• China Oceanwide appears to be losing money and accumulating too much debt.
• Genworth appears to need $9.9 billion more in reserves than it has today.
• The Genworth deal would give China Oceanwide, a company based in China, control over Genworth’s $70 billion in assets.

If China Oceanwide had control over Genworth’s assets, policyholders would have to rely on regulators in China to make sure that Genworth paid its claims, Hindenburg says.

— Read Delaware Schedules China Oceanwide-Genworth Hearing, on ThinkAdvisor.

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