|Day's Range||0.0300 - 0.0300|
Yahoo Finance's Alexis Christoforous, Brian Sozzi and Jared Blikre talk to Kathy Jones, Chief Fixed Income Strategist at Charles Schwab, and Stephen Guilfoyle, President of Sarge 986, around the opening bell on Monday.
The heads of nearly 200 U.S. companies said Monday they are committing to a move away from the idea that the main purpose of a company is to maximize shareholder value, marking a break with a long-held conviction.
Shares of General Electric Co. fell Monday, as the big bounce of last week’s lows lost some steam, while the industrial conglomerate continued to defend itself from last week’s attack by a short seller.
General Electric Co intensified its defense of its accounting practices on Monday after investors questioned it about an unusual research report alleging GE failed to put aside money to cover $29 billion in potential insurance losses and improperly counted profit from subsidiary Baker Hughes. The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE's shares fell as much as 15% after financial investigators Harry Markopolos and John McPherson published the report on Thursday, which said GE needed to set aside $29 billion for insurance reserves.
General Electric Co intensified its defence of its accounting practices on Monday after investors questioned it about an unusual research report alleging GE failed to put aside money to cover $29 billion in potential insurance losses and improperly counted profit from subsidiary Baker Hughes . The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE shocked investors in 2017 by saying it would set aside $15 billion for long-term care insurance payouts, one of the largest such amounts ever.
General Electric Co intensified its defense of its accounting practices on Monday after investors questioned it about an unusual research report alleging GE failed to put aside money to cover $29 billion in potential insurance losses and improperly counted profit from subsidiary Baker Hughes. The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE shocked investors in 2017 by saying it would set aside $15 billion for long-term care insurance payouts, one of the largest such amounts ever.
GE and others have since countered claims by Markopolos, who was reportedly working for a hedge fund with a short position on GE. Last thanksgiving, I was bullish as I thought the credit risks were overstated.
The spread between the 2-year and 10-year yield is now back above 10 basis points, and the further they get away from each other the more things might calm down. Another piece of news that might be helping: Reports in the media say Huawei will get a three-month extension from the U.S. Department of Commerce on a license that allows it to buy parts from U.S. companies. Fed Chair Jerome Powell is scheduled to speak Friday morning.
General Electric disputed the accounting fraud allegations raised by forensic accountant Harry Markopolos. The claims triggered a dive in GE stock last week.
Alicia Hammersmith, general manager of Latin America & Texas Operations for Wabtec, discusses where she sees a place for rail in the future of transportation and more.
Danaher's (DHR) solid product portfolio and focus on innovation are boons. However, rise in costs and expenses as well as high debts and forex woes are concerning.
Harry Markopolos, the forensic accountant who warned securities regulators about Bernie Madoff's investment scheme, posted a 175-page missive on Aug. 15 that likened General Electric GE to Enron.
A bad month got worse for General Electric (GE) yesterday when a whistleblower report was released by a forensic accountant alleging that accounting fraud will cause GE to go bankrupt. Shares plunged 11% after the report went public.However, today the stock climbed nearly 10% on the back of news that GE CEO Larry Culp bought $2 million worth of shares after yesterday's drop.William Blair analyst Nicholas Heymann remains unfazed by the bearish report, supporting Culp's huge vote of confidence, as he reiterates an Outperform rating on GE stock. Although Heymann does not have a price target on the stock, his calculations imply an intrinsic value between $14 and $16 per share. He thinks that range “could be a plausible valuation for GE’s shares over the next 12-18 months.” (To watch Heymann’s track record, click here)The report, led by Harry Markopolos, alleges that GE has been overstating its financial strength. The most significant aspect of the report is that it predicts that GE will need to “contribute $18.5 billion in cash and take a $10.5 billion non cash charge to comply with accounting changes that become effective in the first quarter of 2021 for GE’s Long Term Healthcare Reinsurance (LHTR) legacy business.” This goes beyond the $15 billion of cash reserve contributions GE already announced early on in 2018. If these changes were made to GE’s financial statements, GE would be in a financially weak position.Heymann finds it hard to believe that GE, which has been engaged with several regulator reviews of its accounting and financial disclosures for over two years, has fraudulently misrepresented its financial reporting.GE’s CEO raised the company’s full-year guidance in July, so the stock’s disappointing month comes as a surprise to management. In addition to buying shares after the 11% drop yesterday, the CEO called the allegations false and accused the accounting firm of trying to manipulate the share price.The transformation under newly installed CEO Larry Culp will be a long and complex process. Heymann believes that the worst has passed, and GE’s financial health is “gradually beginning to improve.”All in all, Wall Street is pretty evenly split between the bulls, bears, and fence sitters. Based on 14 analysts polled by TipRanks in the last 3 months, 3 rate GE a 'buy', 3 issue a 'hold', while 3 suggest to 'sell' on the stock. The 12-month average price target stands at $9.58, marking a nearly 9% upside from where the stock is currently trading. (See GE’s price targets and analyst ratings on TipRanks)
(Bloomberg) -- General Electric Co.’s biggest plunge in 11 years came at an awkward time for some of Wall Street’s savviest investors, after a recent buying spree by the likes of Renaissance Technologies, Citadel Advisors and Adage Capital Management.Hedge funds added more shares of GE than any other company to their industrial investments in the second quarter, according to an initial analysis of U.S. regulatory filings compiled by Bloomberg Global Data. Their holdings increased by 25% to a total of 199.3 million shares, valued at $2.09 billion at the quarter’s end.While some recent buyers may have sold since then, many of them were probably left holding the bag when Harry Markopolos, who rose to prominence by blowing the whistle on Bernie Madoff, on Thursday accused GE of “accounting fraud.” Markopolos’s report wiped out much of the company’s share gains this year. Chief Executive Officer Larry Culp labeled the analysis “market manipulation -- pure and simple.”While a Friday advance softened the blow, the rout highlights the perils in trying to call a bottom as a company attempts a turnaround from an epic collapse. GE’s market value fell by more than $200 billion in the two years ended Dec. 31 amid weak cash flow, a slump in its power division and two CEO changes. While Culp vowed to improve financial transparency after taking over in October, Markopolos accused GE of masking tens of billions in liabilities.The shares surged 9.7% to $8.79 at the close in New York, the most in six months, with some analysts expressing skepticism over Markopolos’s report. But that didn’t make up for all of GE’s 11% plunge on Thursday, the sharpest one-day drop in 11 years.It’s impossible to know which hedge funds may have sold some or all of their GE holdings before Thursday’s rout, and the firms typically don’t discuss their holdings.Buyers, SellersRenaissance added 38.3 million GE shares in the second quarter, more than doubling its holdings in the company, according to data compiled by Bloomberg. Renaissance is a quantitative fund that makes investing decisions based on mathematical and statistical methods, a representative said, declining to provide additional comment.Citadel’s hedge fund bought about 4.5 million shares during the period, increasing its stake more than sixfold, according to regulatory filings.Adage, which declined to comment, took a new position of 7.24 million GE shares.Not all hedge funds were buyers in the second quarter. Steadfast Capital Management dumped almost all of the 15.3 million GE shares it held as of March 31. The firm didn’t immediately respond to a request for comment. Tocqueville Asset Management, which declined to comment, pared its holdings 37% to 1.7 million shares.This week, prominent buyers swooped in amid the selloff. Hedge fund billionaire Stanley Druckenmiller said he picked up GE shares on Thursday. The implication that Culp and the new management team are engaged in intentional fraud is “outrageous,” he said by email.Culp himself purchased about $2 million in shares Thursday, Boston-based GE said. That followed a $3 million stock purchase earlier this week, which the company called a reflection of “confidence in GE’s long-term strengths and its progress.”‘Impending Losses’Markopolos, who is working with a short seller, said GE will need to increase its insurance reserves for a long-term care portfolio immediately by $18.5 billion in cash -- plus an additional noncash charge of $10.5 billion when new accounting rules take effect. GE also is hiding a loss of more than $9 billion on its holdings in oilfield-services company Baker Hughes, he said.“These impending losses will destroy GE’s balance sheet, debt ratios and likely also violate debt covenants,” Markopolos said in his report.GE defended its accounting in a statement by Culp and board member Leslie Seidman, who chairs the audit committee.“The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit,” Culp said of Markopolos.Seidman said the analysis included “novel interpretations and downright mistakes” about accounting requirements.Hedge-Fund HoldingsFor the analysis of hedge-fund investments, Bloomberg looked at 824 filings for the second quarter, which showed $1.66 trillion in total stock holdings. Industrial-sector investments accounted for $120.5 billion, or 7.2% of the value of the securities listed in the filings. The firms cut their holdings the most in railroad CSX Corp., which has fallen 17% since the end of the period.Several analysts, while cautious about GE’s outlook, defended the company.“Our initial reaction is that we believe that there are sufficient shortcomings in the short report’s assertions and we continue to believe in CEO Larry Culp’s ability to improve the company over time,” Citigroup analyst Andrew Kaplowitz wrote in a note to investors.\--With assistance from Esha Dey.To contact the reporters on this story: Jack Pitcher in New York at email@example.com;Brendan Case in Dallas at firstname.lastname@example.orgTo contact the editors responsible for this story: Brendan Case at email@example.com, Kara Wetzel, John LauermanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
What's more wild, the story unfolding with General Electric (NYSE:GE) or the volatility in the stock market?Headline after headline has been wreaking havoc on the broader markets, as volatility remains elevated and as investors try to figure out their next step. Trade war worries, imploding foreign stock markets and recession concerns are engulfing the news flow.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCasual investors will at least like the news from the stock market today, where the SPDR Dow Jones Industrial Average (NYSEARCA:DIA) rose 1.25%, the SPDR S&P 500 ETF (NYSEARCA:SPY) climbed 1.48% and the PowerShares QQQ ETF (NASDAQ:QQQ) jumped 1.61%.Amid that calamity, the story unfolding with General Electric is even more interesting. Is GE Stock a Sham or a Buy?General Electric has been under pressure since it reported earnings. For months, readers here have been cognizant of $10.50 range resistance and $9 range support. The breakout never materialized and GE stock quickly sank down to support. * 10 Cheap Dividend Stocks to Load Up On It was an unimpressive showing, but not surprising given the volatility in the broader market and the suspect nature of GE's balance sheet. The most recent quarter showed that General Electric is inching its way out of trouble, but could still have some unknown risks, particularly with Boeing's (NYSE:BA) 737 issues.On Thursday, range support between $9 and $9.25 blew out, as reports began circulating that a whistleblower was sounding the alarm on GE's accounting practices. That whistleblower was Harry Markopolos, who also raised concern over Bernie Madoff before his ponzi scheme was uncovered.GE pushed back, saying it stands behind its financials and that it remains in a strong position of liquidity. GE even went as far as to say that Markopolos is being "compensated by unnamed hedge funds [that] are financially motivated to attempt to generate short selling in a company's stock."Wow, dramatic.It doesn't end there, though. GE CEO Larry Culp refuted the claims even more aggressively, calling it "plain and simple" market manipulation. He then went out and bought 2 million shares of GE stock!Analysts came out to GE's defense on Friday morning, as did the well-known short-seller of Citron Research, Andrew Left. The latter also corroborates GE's stance regarding hedge fund compensation, noting that, "As noted in the disclaimer on his site, Harry is being paid a % of profits from an unnamed hedge fund that is short GE. No credible hedge fund or short seller would ever do this."GE jumped almost 9% in response to Friday's news, (Here's the trade layout). Movers in the Stock Market TodayGE was an obvious mover on the day, but it wasn't the only one.Nvidia (NASDAQ:NVDA) rallied 7.5% on the day, showing some upside momentum after the company beat on earnings and revenue estimates. While the headline numbers look good and many believe in its long-term future, there are still some short-term concerns. Revenue sank 17.3% year-over-year and management expects third-quarter sales of $2.84 billion to $2.96 billion. Expectations were at $2.98 billion.Still, NVDA is on the move higher, which may be good news for bulls should the overall market start to rally too.Deere (NYSE:DE) stock was also on the move higher, climbing over 4% despite missing on bottom-line expectations. Earnings of $2.71 per share missed analysts' expectations by 13 cents. However, revenue of $10.04 billion handedly beat estimates by $660 million despite sinking 2.6% year-over-year.Shares of Palo Alto Networks (NYSE:PANW) were trading well on the day, up several percent before collapsing in the afternoon. PANW ended lower by 7.2% on news that Dave Peranich, EVP of worldwide sales, is leaving his post after three years on the job. Seems like it could be an overreaction, even if he was a top sales exec.Disney's (NYSE:DIS) latest billion-dollar hit is Toy Story 4, the company's fifth billion-dollar film this year. It now holds the record for most such films in a single year, while there is only one other competing film this year to top the nine-figure mark (Spider-Man: Far From Home). Further, the company announced last month that it had broken its prior annual box office record total of $7.61 billion, pulling in $7.67 billion in sales already in 2019.Don't forget, there's Frozen 2 and a Star Wars film still slated for 2019. It's going to be a huge year for Disney.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA and DIS. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Stock Market Today: Is GE a Fraud or a Screaming Buy? appeared first on InvestorPlace.
The stock market fell in volatile fashion amid China trade news and the first inverted yield curve since 2007. Walmart, Cisco, Macy's, GE were big movers.
GE CEO Larry Culp bought shares Thursday as they plunged on accounting fraud accusations. But more analysts defended GE accounting.