Full disclosure: I own shares of GE. My last purchase was in December. The price today is above what I paid for the stock then. I do not have any orders in place to buy or sell shares of GE. I might place an order in the future, but there's not one yet. I don't have so many shares that I'm ruined if the price goes to $0.
Madoff whistleblower claims General Electric is committing fraud ‘bigger than Enron and Worldcom combined’
Ethan Wolff-Mann | Senior Writer, Yahoo Finance • August 15, 2019
The accountant who blew the whistle on Bernie Madoff’s scheme is blowing the whistle again with a new report attacking GE’s (GE) accounting practices. ... In a
175-page report posted online, forensic accountant Harry Markopolos and his fraud team allege that GE is committing $38 billion in accounting fraud.
“{I}t’s the biggest, bigger than Enron and WorldCom combined,” he wrote. “In fact, GE’s $38 Billion in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds.” ... Markopolos is calling GE “GEnron,” because the company appears to be “using many of the same accounting tricks that Enron did.”
At the center of his investigation are eight long-term care insurance deals that GE executed. The report alleges that the GE has been hiding “massive loss ratios” and “exponentially increasing dollar losses.”
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Markopolos warns that GE losses are about to spike. The report says that GE needs $18.5 billion in cash immediately to deal with a wave of impending claims in the insurance unit. Further, it will need another $10.5 billion to address a non-cash charge that will come due by 2021.
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All of this, the report says, makes it very unlikely that GE can become cash-flow positive by 2021. Markopolos
told the WSJ that he is working with an undisclosed hedge fund, which has a short position, betting the stock will fall.
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
The news two days ago was that the CEO had bought a whole bunch of shares:
GE's Culp makes big stock buy in face of analyst’s pessimism
Greg Ryan -- Law and Mondy Reporter, American City Business Journals • August 13, 2019
General Electric Co. CEO Larry Culp bought $3 million worth of the company’s stock on Monday — the same day that GE’s most notorious skeptic expressed pessimism about its performance going forward.
Culp acquired more than 330,000 GE (NYSE: GE) shares for an average of $9.04 per share, according to a securities filing published early Tuesday morning. The purchase increased Culp’s GE holdings by more than 50 percent.
The filing came after JPMorgan Chase & Co. analyst Stephen Tusa, a well-known GE pessimist, published a research note maintaining his target price for GE stock at $5 per share — well below where shares are now trading. Even though GE reported better-than-expected second-quarter earnings last month, Tusa said the company’s fundamentals continue to look negative from his perspective, according to media reports.
After ending Friday at $9.15 per share, GE’s stock fell as low as $8.95 on Monday before ending the day at $9.05 per share.
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