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Bernie Madoff whistleblower Harry Markopolos drops a bombshell of a report on the doorstep of struggling industrial giant General Electric and it may be bad news for the company's CEO.
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 firstname.lastname@example.org;Brendan Case in Dallas at email@example.comTo contact the editors responsible for this story: Brendan Case at firstname.lastname@example.org, 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.
(Bloomberg) -- When it comes to General Electric Co., two of the nation’s largest mutual fund companies have been going all in on the industrial conglomerate’s latest chief executive, Larry Culp.Fidelity Investments and T. Rowe Price Group Inc. have bulked up on GE stock since Culp was named in October 2018. While neither fund company had much of a stake in GE before he took the helm, the two now rank as its second- and fourth-largest institutional shareholders, respectively, according to regulatory data compiled by Bloomberg.Fidelity, based in Boston, actually began raising its stake in GE during the second quarter of last year, filings show, and by the end of September 2018 the firm held 187 million shares. That figure jumped to 301.4 million shares in the quarter ended December 2018. By the end of June, that stake had risen to 548.7 million shares.At the end of last September, funds run by Baltimore-based T. Rowe Price held 30.8 million GE shares, according to Form 13Fs filed with the U.S. Securities and Exchange Commission. Their combined stake soared to 235.6 million shares during the ensuing quarter, and by June 30 had reached 365.6 million shares.Culp, 56, is a renowned turnaround expert who won Wall Street’s praise for transforming manufacturer Danaher Corp., where he served as CEO from 2001 until 2014. Danaher’s share price rose an average of 14% annually during Culp’s tenure, compared to just 5.5% for the S&P 500, as he grew the company through $22 billion in acquisitions.As Danaher’s two largest shareholders from 2006 through 2015, T. Rowe and Fidelity benefited from Culp’s leadership of the company; Fidelity at one point held an 18% stake in the company. Culp left Danaher in September 2014 and was named to T. Rowe Price’s board about one year later. He continued as a director at the mutual fund company until he took the top job at GE.(Adds details on Culp’s record at Danaher Corp. in two final paragraphs.)To contact the reporter on this story: Miles Weiss in Washington at email@example.comTo contact the editors responsible for this story: Alan Mirabella at firstname.lastname@example.org, Melissa KarshFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shares of General Electric Company (NYSE: GE ) plummeted Thursday after a short seller report penned by Harry Markopolos emerged that argued the company is engaged in fraud. If the report surfaced two ...
As of mid-day Friday, the stock price had not completely returned to where it was before Harry Markopolos claimed that GE is concealing accounting fraud worth at least $38 billion.
The university struck a deal with Baring to sell some of its U.S. rights for a drug used to treat dangerously low blood pressure.
General Electric (NYSE:GE) stock price plunged more than 11% yesterday after forensic accountant Harry Markopolos issued a report accusing the conglomerate of massive accounting fraud and predicted that it could go bankrupt soon. GE stock price is climbing 6.5% today but remains about 20% below its July 24 levels.Source: JPstock / Shutterstock.com Known for reporting Bernie Madoff's Ponzi scheme to the federal government years before Madoff was caught, Markopolos' has earned some credibility with The Street.Yet, for multiple reasons, including Markopolos' history and recent conduct, I'm very skeptical about his conclusions. For these reasons, I recommend that risk-tolerant investors buy General Electric stock on weakness.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Markopolos Can Make Money if the Street Believes His StoryAccording to CNBC, Markopolos said that a mid-sized, U.S.-based hedge fund had agreed to give him "a decent percentage of profits" that it would earn by betting on the decline of GE stock. * 10 Cheap Dividend Stocks to Load Up On Let's say that the hedge fund bet $100 million against GE stock, and that it, using put options, made $50 million on the trade. Let's say that Markopolos' percentage was 20%. He would then of course earn $10 million on the deal. That's a pretty high sum for putting together a report and appearing on a few TV shows.And, if Markopolos' report had not been negative enough to push GE stock price down, it appears he would earn nothing on the deal. So, I'd say calling him pretty biased when it comes to GE stock would be a huge understatement.My confidence in the accountant isn't increased by his refusal to name the hedge fund that's paying him or the exact percentage of their profit he's getting. And in my opinion his statement that his report was "self-funded" could make some people mistakenly believe that he has no profit motive in this case. As somebody who scathingly criticized GE for a lack of transparency, Markopolos' own lack of transparency is puzzling and disappointing. Markopolos' Past Prophecies Haven't Come TrueMarkopolos, of course, was spot on about Madoff, but his warnings about insurance companies haven't been nearly as prophetic. As CNBC noted, his case centers around GE's long-term care insurance unit.Interestingly, in an interview published by Business Insider in November 2016, Markopolos alleged that all sorts of fraud was rampant across the insurance sector."I have some large insurance fraud cases that I'm going to make public in 2017. And they're going to be in the tens of billions of dollars each. … Basically the insurance industry is where the banking industry was in 2007," he told Business Insider. But over two years later, I can't find any references to insurance fraud exposed by Markopolos. Does anybody else hear a wolf? America Doesn't Crack Down Hard on Illegal Conduct by CompaniesIn his report, Markopolos compared GE to two of the very few large American companies that collapsed due to illegal conduct: Enron and WorldCom.But the reality is that the vast majority of large firms that violate the law do survive, and many thrive. For example, American International Group (NYSE:AIG), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) were charged with committing fraud during the financial crisis. Toshiba (OTCMKTS:TOSBF) had its own accounting scandal in 2015. They all managed to survive and thrive since then. More recently, Wells Fargo (NYSE:WFC) has admitted to various fraudulent actions. Multiple hospital-chain owners have admitted to Medicare fraud. None of them have gone out of business, either. So even if GE did commit fraud or break laws, the chances of it disappearing are pretty low. Most of GE's Problems Involve a SubsidiaryAs CNBC pointed out, most of Markopolos' allegations of insolvency and lack of liquidity relate to GE's long-term insurance business. He identifies Employers Reassurance Corporation as the source of much of the debt he says GE owes.But ERAC is a subsidiary of GE, rather than part of the company itself. Interestingly, earlier this year, another GE subsidiary, sub-prime lender WMC Mortgage, went bankrupt. Although I'm not a legal or financial expert, I do think it's fair to wonder why GE cannot get rid of most of its debt stemming from ERAC by simply having the unit declare bankruptcy. Apparently, bankruptcies by insurers are not unheard of or illegal. Why Would Culp Join a Corrupt Company?General Electric CEO Larry Culp is in an altogether different situation than the CEOs of Enron and WorldCom were. In the latter two cases, the long-time heads of the companies were involved in fraud for years.Culp, by contrast, just joined GE at the end of last year. At that point, Markopolos alleges that GE had already started their fraudulent practices. By all accounts, Culp was tremendously respected for the turnaround he engineered while he was CEO of Danaher (NYSE:DHR).If Markopolos' accusations are true, Culp either did not examine GE's financial situation prior to taking the job, didn't understand its financial situation or knew that it was about to crash but, for some reason, didn't care about wrecking his sterling managerial reputation. None of those scenarios seems very likely. General Electric Stock's Fundamentals Are StrengtheningDespite the bears' insistence that GE stock is doomed and its fundamentals are collapsing, there are concrete signs that the company's fundamentals are improving or are poised to improve.The oracle of the GE stock bears, JPMorgan analyst Stephen Tusa, reported that GE's second quarter was an operational miss and that the company's fundamentals had worsened.But, as I pointed out in a previous column, the gas power segment of GE's Power unit jumped 27% in the first half of the year, and the company's overall backlog jumped 11% year-over-year. Culp reported that GE Power would benefit from positive trends going forward, including strong demand for natural gas in Asia. Moreover, despite temporary problems, the company's Aviation unit received a record $55 billion of orders at the Paris Air Show in June.Meanwhile, Greentech reported earlier this month that U.S. wind energy development accelerated in the second quarter, which should boost GE's renewable energy unit. Additionally, New York and New Jersey are going all-in on offshore wind, which also bodes well for GE.Finally, Caterpillar (NYSE:CAT) reported that the orders of its power business surged 17% year-over-year. Woodward (NASDAQ:WWD), which sells parts to GE, said that its gas turbine business is improving. And Barclays analysts reported that U.S. power turbine orders jumped more than 12% year-over-year.Based on all of those numbers and fundamental catalysts, I really can't see how Tusa can state with confidence that GE's fundamentals are worse. I also am not very confident at all about Markopolos' charges, so I would recommend buying GE stock on weakness.As of this writing, Larry Ramer was long GE. 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 Investors Should Buy General Electric Stock on Its Latest Decline appeared first on InvestorPlace.
Two Goldman Sachs analysts collaborated on a research report, published Friday, that compares General Electric insurance reserves to other life insurers.
After the worst fall in 11 years, GE stock opened higher on Friday. The stock, which closed at just over $8 on Thursday, rose 8.8% at 12:03 PM ET.
(Bloomberg) -- General Electric Co. shares bounced back on Friday after a brutal rout Thursday as Wall Street analysts defended the industrial conglomerate against allegations from a prominent financial examiner and reiterated their faith in the chief executive officer.Shares rose as much as 9.2%, following Thursday’s 11% decline, which marked the steepest drop since 2008. William Blair analyst Nicholas Heymann questioned whether the whistleblower report is “the last Molotov cocktail” and said he does not believe GE’s financial statements purposely misrepresented the company’s financial condition and potential liabilities.The report’s effort to portray GE’s financial condition with an assumption that charges worth about $38 billion should have been previously recognized was “at best disingenuous and at worst highly inaccurate,” he wrote.Harry Markopolos, who was involved in exposing the frauds of investment manager Bernie Madoff, said in a report on Thursday that GE would need to raise its insurance reserves immediately by $18.5 billion in cash -- plus an additional non-cash charge of $10.5 billion when new accounting rules take effect. He also claimed that GE was hiding a loss of more than $9 billion on its holdings in Baker Hughes.Markopolos said that the company’s cash situation was “far worse than disclosed in their 2018” annual report.Citi analyst Andrew Kaplowitz said there were “sufficient shortcomings” in the report itself, and that he continued to believe in CEO Larry Culp’s ability to improve the company. Some of the allegations made in the report were already known and others were “known unknowns,” the analyst said, adding that the Baker Hughes write-off was already expected.Baker Hughes shares also rose as much as 2.1% on Friday in New York.The resurgence in GE shares on Friday will also mean some gains for Culp, who bought $2 million of GE stock on Thursday, a move that reflected “high conviction that the allegations do not represent incremental unknown challenges,” Citi’s Kaplowitz said. Baker Hughes’ Chief Executive Officer Lorenzo Simonelli also bought $309,081 of shares in the oil and gas services provider yesterday.(Updates share move in second paragraph; adds stock purchases by GE, Baker Hughes CEOs in eighth paragraph.)To contact the reporter on this story: Esha Dey in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Will Daley, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
This most-searched list is a feature included in Benzinga Pro's Newsfeed tool. It highlights stocks frequently searched by Benzinga Pro users on the platform. NVIDIA (NASDAQ: NVDA ) shares were up 5.7% ...
General Electric Company (NYSE: GE ) confirmed CEO Larry Culp bought nearly $2 million worth of the company's stock on Thursday and denied fraud accusations. Harry Markopolos, a financial fraud investigator ...
My long-time friend Martin Bayne had Parkinson's disease for decades, forcing him into nursing care in his middle-age years. The cost of his care over 20 years was enormous, unbearable by either him, his family or (more important) any of the long-term care policies he had previously been in the business of selling, evaluating and recommending as "Mr. Long-Term Care."Source: JPstock / Shutterstock.com What Bernie Madoff whistleblower Harry Markopolos is calling a "fraud" by General Electric (NYSE:GE) of just over $38 billion, enough to sink the company, is mostly the natural consequence of forcing an unlimited draw on a limited pool of funds. The Cost of Long-Term CareThat's what long-term care represents. It's not just waiting to bankrupt GE, but you and your family -- even if you think you're comfortable. It can hit at any moment, from an accident, disease, or just natural aging.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNursing home care costs an average of $245 per day. That's $1,715 per week and almost $90,000 per year. This doesn't include the costs of doctors, drugs and the occasional hospitalization. * 10 Cheap Stocks to Buy Now The companies that sell long-term care policies are aware of these costs when they quote premiums. But they haven't always been, and many carriers have gone bankrupt. So have senior care centers and hospitals. So did my friend Martin Bayne. What Immelt Did Not DoAccording to Markopolos' report, GE should have been accounting for its unsustainable obligations with reserve funds back in 2012. The whistleblower claims General Electric didn't acknowledge them until new management came in. This created a $15 billion hit that had to be spread out over seven years.This was during the time when then-CEO Jeff Immelt was transforming GE from the banking-and-entertainment giant that predecessor Jack Welch had built into an industrial enterprise. This was highlighted by the $10 billion acquisition of French power and grid business Alstom in 2015. Analysts called the Alstom deal "brilliant" but it eventually became a disaster. General Electric's GE Power has been dragging the rest of the company down ever since.But the company's refusal to account for policy costs is worse, Markopolos writes. GE is stuck with reinsurance on policies written in the twentieth century, long before the real costs were known. They have just $1,133 of premium, on average, 70% of which cover lifetime benefits for customers whose average age is now 75.Markopolos also claims that GE is hiding $9.1 billion in losses on its acquisition of what is now Baker Hughes (NYSE:BHGE), which the company closed on in June 2017. This was just four months before Immelt's sudden retirement that October. Markopolos estimates GE stock's current ratio of assets to liabilities at 0.67, once Baker Hughes' numbers are taken out of the balance sheet. The Bottom Line on General Electric StockNeither John Flannery, who succeeded Immelt as CEO, nor current General Electric CEO Larry Culp, who once headed Danaher (NYSE:DHR), caused GE's problems.Culp, who was brought in from the Harvard Business School, responded to Markopolos' accusation by buying $2 million in GE stock and calling the report "market manipulation."But I have 20 years of second-hand experience in the horrors of long-term care, of how it bankrupts everyone it touches -- those who need care, who provide care, and those who try to insure against the un-insurable costs of care.I can't speak to Baker Hughes but, to me, the long-term care section of Markopolos' report adds up. Reinsurance costs have always hung like a Sword of Damocles over GE stock's books, perhaps even before Immelt became CEO in 2001.If you want to get to the bottom of this, ask Jack Welch when GE wrote that reinsurance. Meanwhile, get out of General Electric stock if you can.Dana Blankenhorn is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. 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 Long-Term Care Costs Might Kill General Electric Stock appeared first on InvestorPlace.
Investing.com – General Electric (NYSE:GE) surged on Friday, clawing back some its losses from a day earlier after its CEO Larry Culp bought shares and analysts downplayed allegations that it was involved in financial foul play.
GE stock dropped 11% Thursday after the release of a negative report by forensic accountant Harry Markopolos. Wall Street is weighing in, and here’s what analysts and big investors are saying.
Shares of General Electric are bouncing back just one day after whistleblower Harry Markopolous published a report accusing the company of massive accounting fraud. Wall Street analysts are coming to General Electric’s defense. Yahoo Finance’s The Ticker discusses.