Highfields increases stake in Genworth Financial

Highfields Capital Management LP increased its stake in Genworth Financial Inc. and the hedge fund plans to discuss options for the insurance company's mortgage insurance operations and other businesses, according to a regulatory document filed Thursday.

The news sent Genworth's stock soaring 52 cents, nearly 11 percent, to close at $5.43. The stock slumped for much of the day, dropping to $4.80, a point last seen in September, but rallied after the filing was submitted to the U.S. Securities and Exchange Commission.

Highfields said in the SEC filing it has "maintained on ongoing dialogue" with Genworth's management about its performance, and plans to discuss options for its global mortgage insurance assets, its U.S. mortgage insurance assets and its retirement and protection businesses. These talks will include risk mitigation strategies and a possible sale or spin of assets, the filing said.

Highfields now holds a 5.2 percent stake in the company, up from the 3.8 percent stake it held as of March 31.

Genworth, based in Richmond, Va., has been dealing with losses in its U.S. mortgage insurance business due to the rise in foreclosures tied to the housing crisis. The company reported a decline in first-quarter profit and revenue in May that missed market expectations and its CEO Michael D. Fraizer resigned at that time.

The company also recently delayed an anticipated IPO of its Australian mortgage insurance business, where it also has suffered losses due to a jump in foreclosures.