Author Topic: GE - General Electric  (Read 91178 times)

Spekulatius

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Re: GE - General Electric
« Reply #290 on: August 27, 2019, 04:13:56 AM »
I am going though Markopolos short report - there were a few things I noticed:

1) The last actuary  test for the insurance co was done last November, before Fuld became CEO. It is likely that.p  GE in the insurance teach in in March 2019 then claimed the adjustment was close zero as higher losses were compensated for with higher interest rates. Without higher discount rates resulting from higher interest rates, the adjustment would have been $1.9B. The way interest rates likely are going, I think this discount rate will get dialed down again.

2) I am curious about this difference between statutory and GAAP reserved. If the books indeed get aligned around the statutory assumptions, the GE indeed will take a significant hit against equity.

3) I donít see what he sees with respect to BHGE accounting treatment.

Looks to me that GE May indeed be short on cash. It all depends on aircraft engines becoming more cash flow positive. If not, I see some sort of a deal with Berkshire and we know how they work :-).
Life is too short for cheap beer and wine.


dwy000

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Re: GE - General Electric
« Reply #291 on: August 27, 2019, 07:54:44 AM »
Fuld was the head of Lehman Bros. CEO of GE is Culp.  Freudian slip perhaps? Or just unfortunate auto correct.

SharperDingaan

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Re: GE - General Electric
« Reply #292 on: August 27, 2019, 09:39:49 AM »
You might want to do some high-level comparison against FFH - back when they were the target of a similar short-selling attack.

The short-case was, indeed, partially correct - but not really proveable.
We know that, because FFH subsequently went through a long period when 'pot-holes' kept unexpectedly showing up. If everything was going as smoothly as claimed, it shouldn't have been such a 'rocky' road.

Long-tail 'Insurance' is a very murky business.
Firms get to 'manufacture' the size of their future liability (recognition, and discount rates), the future value of their offsetting assets, and amortize any currrent losses forward. Arcane actuarial/accounting treatment that is difficult to explain, and highly confusing to the average Joe. The natural bias is to think the worse and sell down - when in fact, there's actually nothing wrong.

The attack has two stages; 1) the initial accusation/supported claim, and 2) collapse of the targets defense. The drawback is that the shorter has to continuously roll their loans, and play the option markets to maintain/increase their position. It's a melting ice-cube, with time not on the shorters side.

For HM to win stage 2, GE has to find it impossible/difficult to roll its short-term debt as it comes due - as was the trigger the last time WEB came to their 'rescue'. The downside is that if the 'rescuer' has also been a buyer of the shorted/re-lent shares, their intervention squeezes the short two-ways. To win; the target has to be hit hard, isolated, and gased quickly.

Obviously, everyone will have their own views.
But a little context here, could take you a long way  ;)

SD



« Last Edit: August 27, 2019, 01:35:38 PM by SharperDingaan »

EricSchleien

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Re: GE - General Electric
« Reply #293 on: October 26, 2019, 08:34:15 AM »