Broeb22 Posted November 14, 2018 Share Posted November 14, 2018 I bet Buffett views GE the same way he viewed AIG during the crisis. Interesting company, probably some opportunity, but such a black box that it makes no sense to buy it at the parent level. Makes sense to buy some parts of it unencumbered by the liabilities that plague the parent co, but at a huge discount. Why wouldn't Buffett want to own the GE Aviation business? He's already interested in airlines based on recent purchases. GE Aviation unquestionably has a better business than the airlines do based on its duopoly position in major airplane models, Buffett has the cash, and he might be able to get a deal if the company really gets in trouble. But I only see him getting a price he would salivate over if GE is in real distress/BK. I don't think GE is in distress yet. Still a lot of levers to pull before we can really say the debt/pension is insurmountable. Link to comment Share on other sites More sharing options...
walkie518 Posted November 15, 2018 Share Posted November 15, 2018 I bet Buffett views GE the same way he viewed AIG during the crisis. Interesting company, probably some opportunity, but such a black box that it makes no sense to buy it at the parent level. Makes sense to buy some parts of it unencumbered by the liabilities that plague the parent co, but at a huge discount. Why wouldn't Buffett want to own the GE Aviation business? He's already interested in airlines based on recent purchases. GE Aviation unquestionably has a better business than the airlines do based on its duopoly position in major airplane models, Buffett has the cash, and he might be able to get a deal if the company really gets in trouble. But I only see him getting a price he would salivate over if GE is in real distress/BK. I don't think GE is in distress yet. Still a lot of levers to pull before we can really say the debt/pension is insurmountable. ge aviation would be comp to pcp ... but if I were culp, I wouldn't want to sell the crown jewel Link to comment Share on other sites More sharing options...
nickenumbers Posted November 16, 2018 Share Posted November 16, 2018 Interesting 2 method valuation done by Aswath Damodaran, NYU Professor of Finance. And, because you are a Dragnet bunch "Just the facts ma'am!" Damodaran values GE between $10.9 and $11.9 per share. His narrative is also worth listening to. Enjoy. Link to comment Share on other sites More sharing options...
Broeb22 Posted November 16, 2018 Share Posted November 16, 2018 Interesting 2 method valuation done by Aswath Damodaran, NYU Professor of Finance. And, because you are a Dragnet bunch "Just the facts ma'am!" Damodaran values GE between $10.9 and $11.9 per share. His narrative is also worth listening to. Enjoy. I'll have to read Damodaran's thoughts, but how can he credibly assign value within such a narrow range? Sure there are real assets here, but does Damodaran have actuarial training to figure out the true tail risk on the LTC reinsurance contract, or insight into the fire sale value of divestitures in a higher interest rate world? I'm not saying these things are impossible to put a range around, but if I were doing this my range would be a hell of a lot wider. Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 7, 2018 Share Posted December 7, 2018 GE's push to fix power turbine problem goes global https://www.reuters.com/article/us-ge-power-exclusive/exclusive-ges-push-to-fix-power-turbine-problem-goes-global-idUSKBN1O60F4 Link to comment Share on other sites More sharing options...
LongHaul Posted December 14, 2018 Share Posted December 14, 2018 This is a lawsuit against GE, etc that alleges GE execs knew of the aggressive accounting. They have some quotes from former employees, which was a really interesting read in some parts. I think it gives a window of what GE (at least in part) was like. The 1st half had the juicer stuff FYI. http://securities.stanford.edu/filings-documents/1063/GEI00_20/2018410_r01c_17CV08457.pdf Link to comment Share on other sites More sharing options...
Liberty Posted December 14, 2018 Share Posted December 14, 2018 https://www.wsj.com/articles/ge-powered-the-american-centurythen-it-burned-out-11544796010 "GE Powered the American Century—Then It Burned Out: How the company that was once America’s biggest, the maker of power turbines, the seller of insurance, the broadcaster of ‘Seinfeld,’ became a shadow of its former self" Link to comment Share on other sites More sharing options...
LongHaul Posted December 15, 2018 Share Posted December 15, 2018 https://www.wsj.com/articles/ge-powered-the-american-centurythen-it-burned-out-11544796010 "GE Powered the American Century—Then It Burned Out: How the company that was once America’s biggest, the maker of power turbines, the seller of insurance, the broadcaster of ‘Seinfeld,’ became a shadow of its former self" Great article. Enron AIG GE patterns to think about.... Link to comment Share on other sites More sharing options...
aws Posted December 15, 2018 Share Posted December 15, 2018 How big were the misstatements in earnings for power compared to the entity as a whole? Admittedly I haven't really dug into the numbers here at all so it's just a wild guess, but it just seems to me unlikely they could have invented more than around $10 billion in profit in the aggregate, which is peanuts compared to the total market value destruction. It certainly put them in a much weaker position as they paid out more cash in dividends and buybacks than they could really afford so their balance sheet got worse and worse as a result of overly optimistic (and possibly fraudulent) profit assumption, but is it really a house of cards like an Enron? They tried to paper over problems while pivoting into an increasing reliance on a declining business, but if they identified and stopped the problem soon enough they are still salvageable. The aviation business is great, healthcare seems great, they are selling off businesses left and right, and will hopefully contain the blackhole that is GE Capital. I'm pretty optimistic so long as there aren't many more cockroaches in the kitchen. A lot probably comes down to how much they are getting for the asset sales they have made. One of the one hand it seems like the buyers know GE is desperate and could demand low prices, but from what I've heard there is still trillions of undeployed private equity funds so they can probably find someone to pay good prices for what they sell. The big ones have been bad though - a big slice of Baker Hughes for like half of what they paid for it last year. Link to comment Share on other sites More sharing options...
LongHaul Posted December 16, 2018 Share Posted December 16, 2018 That was an AWESOME WSJ article on GE. Thanks for posting Liberty. There are real businesses there. It is extraordinarily hard to know the real profitability of GE because I think their accounting was aggressive. My opinion is that the culture was a really rotten one. Power seems a very large part of the issue - not sure how much. My opinion - $10b is likely a fraction of the issues here. It is also interesting to note that GE took on very long term liabilities with the LTC insurance and got completely hosed. Super risky. Then GE turns around and does a lot of long term deals (20+ years) in power (some for apparently uneconomic prices). This is just insanity. Sam Walton had a simple and effective philosophy when he ran Walmart. He told the truth. Link to comment Share on other sites More sharing options...
Spekulatius Posted January 31, 2019 Share Posted January 31, 2019 Looks like stock is trending upwards, despite what looks like horrible results: https://finance.yahoo.com/news/general-electric-swings-small-profit-113647216.html Expectations must be really low. Link to comment Share on other sites More sharing options...
WneverLOSE Posted August 15, 2019 Share Posted August 15, 2019 The gefraud.com website is broken at the moment, did anyone manage to get the report and can share it ? any thought from reading it ? edit : CNBC posted it http://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2019/8/15/2019_08_15_GE_Whistleblower_Report.pdf Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted August 15, 2019 Share Posted August 15, 2019 I tried to attach, but I think the file is too large. As John Hempton has pointed out, some of the slides are nonsensical. http://brontecapital.blogspot.com/2019/08/the-flat-out-silly-markopolos-ge-report.html Link to comment Share on other sites More sharing options...
Spekulatius Posted August 15, 2019 Share Posted August 15, 2019 Same idea than Burford short - pick a company with troublesome accounting and probably a shareholder base with weak conviction and pick a time with poor market sentiment Now add a twist and pick a high profile “ investigator”, even though he appears to bring nothing to the table than name recognition and start a short attack: Ca-shing! Link to comment Share on other sites More sharing options...
Cardboard Posted August 15, 2019 Share Posted August 15, 2019 Druckenmiller says that he bought some on this drop: believes Culp. I am thinking to sell puts on this one. Cardboard Link to comment Share on other sites More sharing options...
Gregmal Posted August 15, 2019 Share Posted August 15, 2019 I would think...we've seen this before. I am not a fan of GE, but for those whom are, I would consider this a gift. Markopolis is being paid by a hedge fund who is short. Thats all you need to know. Link to comment Share on other sites More sharing options...
Normax59 Posted August 15, 2019 Share Posted August 15, 2019 I hesitate to dip my toe into the inter-workings of legal corporate structure and consolidation but: The BHGE part of the report makes little sense to me, they seem to be conflating the consolidation of the VIE named BGHE LLC and GE consolidating the BHGE listed co because it holds a 50%> voting interest in the listed co. First GE owns a 50.4% stake of BHGE LLC which is the VIE that has the operating assets of BHGE but they don't have any influence over how those assets are operated, that is under the control of the BHGE listed co. which owns the other portion, because they actually control the assets, even with a minority stake in the VIE they would consolidate the VIE. Now GE has a 50%> voting interest in the list co through their shares so they would consolidate the list co on their balance sheet. I believe Harry is trying to say that GE and BHGE are consolidating the same entity, they are not. Just my two cents. Link to comment Share on other sites More sharing options...
Liberty Posted August 17, 2019 Share Posted August 17, 2019 Even Andrew Left thinks it's beyond the pale: https://citronresearch.com/citron-issues-comment-on-general-electric-ge-and-markopolos-report/ Link to comment Share on other sites More sharing options...
WneverLOSE Posted August 17, 2019 Share Posted August 17, 2019 I highly doubt his claims but all I have to do to find out is wait for 2020 and see if they are bankrupt like he says, Culp is a fantastic CEO and a human being, he knows GE very well and his word is as good as a bond to me. It would be one of the greatest human tragedies if he left Danaher, went to GE and then to prison for accounting fraud, I know sometimes smart people do dumb things but this will take the cake as far as I am concerned. Link to comment Share on other sites More sharing options...
Spekulatius Posted August 17, 2019 Share Posted August 17, 2019 I highly doubt his claims but all I have to do to find out is wait for 2020 and see if they are bankrupt like he says, Culp is a fantastic CEO and a human being, he knows GE very well and his word is as good as a bond to me. It would be one of the greatest human tragedies if he left Danaher, went to GE and then to prison for accounting fraud, I know sometimes smart people do dumb things but this will take the cake as far as I am concerned. I don’t think Culp is likely commit accounting fraud, but he will have to rely on his own accountants and actuaries to calculate the extend of GE insurance liabilities, as he is certainly no expert in this field. I actually think they most of it had been cleaned up prior to his arrival, but there is always the risk that these liabilities get worse and the assets are not enough to cover them, especially when interest rates go down again. Any insurance company with very long tail assets is very suspect to me (look at how BHF is trading) and only time will tell how this works out. In any case, I believe that interest rates going to zero and staying their for a long time may ruin many insurance companies income statements for years to come. Link to comment Share on other sites More sharing options...
ValueMaven Posted August 17, 2019 Share Posted August 17, 2019 I bought a small position the day before the report came out. Amazing how uninformed this guy is. His analysis is extremely flawed. FYI with regards to rates - that is well understood - and much more complex for GE: ie: lower rates benefits their PBO Link to comment Share on other sites More sharing options...
peridotcapital Posted August 17, 2019 Share Posted August 17, 2019 Even Andrew Left thinks it's beyond the pale: https://citronresearch.com/citron-issues-comment-on-general-electric-ge-and-markopolos-report/ So the hedge fund is the only other party that knows about the report, gets a heads up about when it will be released, shorts GE the day before, covers the short the day it comes out (presumably), and then splits the profit from the trade with the report's author. How is it legal to engage in this type of scheme? Link to comment Share on other sites More sharing options...
Liberty Posted August 17, 2019 Share Posted August 17, 2019 Even Andrew Left thinks it's beyond the pale: https://citronresearch.com/citron-issues-comment-on-general-electric-ge-and-markopolos-report/ So the hedge fund is the only other party that knows about the report, gets a heads up about when it will be released, shorts GE the day before, covers the short the day it comes out (presumably), and then splits the profit from the trade with the report's author. How is it legal to engage in this type of scheme? Reminds me a bit of Ackman's move with Valeant when they tried to takeover Allergan... Link to comment Share on other sites More sharing options...
ValueMaven Posted August 17, 2019 Share Posted August 17, 2019 All of it was disclosed ... plus, he spent time focusing on a very complex topic - so unlikely to get sued. GE lost about $9bn in market-cap thursday ... my guess is they went to some really high-powered lawyers (Ackman did something very similar) and made sure everything was OK ahead of time. He prob made $50M+ or more, depending how % profit sharing --- which he called 'really good' Link to comment Share on other sites More sharing options...
Liberty Posted August 17, 2019 Share Posted August 17, 2019 Thread: https://twitter.com/pegobry/status/1162253145625395200 Link to comment Share on other sites More sharing options...
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