GE finds friends on Wall Street

ON AUGUST 20th credit-raters at Fitch warned of insufficient financial reserves against the costs of long-term care for buyers of insurance products at General Electric. Days earlier Harry Markopolos, an accounting investigator, alleged inadequate provisioning of reserves in GE’s insurance division and improper accounting of its Baker Hughes petroleum holdings. This, claimed the corporate sleuth, who shot to fame by uncovering Bernard Madoff’s Ponzi scheme, may dig a $38bn hole in the industrial conglomerate’s books. Its share price fell by 11% in response.

So far, so familiar. Management missteps and other stumbles have erased 70%, or $200bn, of GE’s market capitalisation since 2016. Nor did the full-throated defence of GE by its executives come as a surprise, though it took a particularly macho form when Larry Culp, its third boss in as many years, bought $3m in GE shares to show his confidence in the company. What was really surprising was the chorus of support for the struggling giant from experts, investors and analysts.

Harvey Pitt, a former chairman of America’s Securities and Exchange Commission (SEC), criticised Mr Markopolos for going public without giving his target the chance to respond to his concerns. Stanley Druckenmiller, a respected billionaire investor, praised Mr Culp’s efforts to turn around the firm...



via Business Feeds

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