GE filing in 2020, mini thesis https://www.ge.com/investor-relations/sites/default/files/ge_webcast_10Q_07312019.pdf Page 16, Paragraph 1, With respect to this announcement, we completed $15 billion of asset reductions during 2018 and $1.6 billion of asset reductions during the first half of 2019, including approximately $0.5 billion during the second quarter of 2019, We expect to execute total asset reductions of approximately $10 billion by the end of 2019. 8.4 Billion for H2 2019. Paragraph 5, As previously disclosed within the GAAP Reserve Sensitivities included in “Other Items” in our Annual Report on Form 10-K for the year ended December 31, 2018, a 25 basis point reduction in our discount rate, holding all other assumptions within our 2018 premium deficiency test constant, could increase our future policy benefit reserves on a GAAP basis by up to $1.0 billion (pre-tax). Our discount rate is based upon the actual yields on our investment security portfolio and our forecasted reinvestment rate, which comprises the future rates at which we expect to invest proceeds from investment maturities and projected future capital contributions. While the movement in market rates impacts the reinvestment rate, it does not typically impact the actual yield on our existing investments. Furthermore, our assumed reinvestment rate on future fixed income investments is based both on expected long-term average rates and current market interest rates. Page 22, Paragraph 3, GE cash, cash equivalents and restricted cash totaled $20.1 billion at June 30, 2019, including $3.1 billion in BHGE, $2.7 billion of cash held in countries with currency control restrictions, and $0.6 billion of restricted use cash. Excluding these items, total GE cash and cash equivalents was $13.6 billion at June 30, 2019. GE Capital cash, cash equivalents and restricted cash totaled $11.9 billion at June 30, 2019 (excluding $0.6 billion classified within discontinued operations), including $0.9 billion which was subject to regulatory restrictions, primarily in insurance entities. 32 Billion Total, 13.1 Billion in the US and 18.8 held outside of the US minus the 6.4 Billion that isn’t retrievable, GE has 25.5 Billion Cash and Cash equivalents at end Q2 2019 with the majority outside of the US, GE has 106 Billion in Total Debt ( Page 23 ) Page 22, Paragraph 6&7, GE Indicates Net Available Credit of 35.3 Billion which is positive, 7.4 Billion in commitment reductions in Q4 2019 will bring it down to 28 Billion, still given it a healthy emergency line Page 24, We have relied, and may continue to rely, on the short- and long-term debt capital markets to fund, among other things, a significant portion of our operations. The cost and availability of debt financing is influenced by our credit ratings. Moody’s Investors Service (Moody’s), Standard and Poor’s Global Ratings (S&P), and Fitch Ratings (Fitch) currently issue ratings on GE and GE Capital short- and long-term debt. Rest of page indicates Credit Conditions. I believe that it’s loss estimate to derivatives on further downgrades is lower then reality would prove, especially if it were to BB+ or lower. Total debt impact would be substantial given the size of debt If our short-term credit ratings were to fall below A-2/P-2/F2, it is possible that we would lose all or part of our access to the tier-2 commercial paper markets, which would reduce our borrowing capacity in those markets. This may result in increased utilization of our revolving credit facilities to fund our intra-quarter operation
Page 34, Paragraph 4 Interest Rate Sensitivities, huge downside risks to ZIRP Page 38, Net earnings loss of 61 Million would have been a loss of 292 Million for Q2 2019 if not for Tax Benefits of Discontinued Operations Page 44, Goodwill of 52.272 Billion ( Huh ? ) Other Intangible Assets of 16.653 Billion… Something isn’t right, will be examined further down Page 55, 4 Billion in Renewable Energy Goodwill, 9.8 in Aviation, 11.7 Healthcare, 24.719 in Oil & Gas!!!! GE is clearly in trouble just from the size of this, expect big write offs in the coming quarters, Page 55 is just a nightmare… Page 58, Borrowings Page 59, 4.792 Billion added in Liabilities under Other Adjustments for Q2 2019 Page 62, Paragraph 2, As previously announced, we plan an orderly separation of our ownership interest in BHGE over time. Any reduction in our ownership interest below 50% will result in us losing control of BHGE. At that point, we would deconsolidate our Oil & Gas segment, recognize any remaining interest at fair value and recognize any difference between carrying value and fair value of our interest in earnings. Depending on the form and timing of our separation, and if BHGE’s stock price remains below our current carrying value, we may recognize a significant loss in earnings. Based on BHGE's share price at July 26, 2019 of $24.84 per share, the loss upon deconsolidation from a sale of our interest would be approximately $7,400 million. Harry Markopolos quote : Maintaining a 50.4% interest (non-controlling interest threshold) in BHGE is a sham transaction with no business purpose done solely so that GE can create the false impression that GE has a reason to keep $9.1 billion in losses off of its books in 2018. Page 67, Future Liabilities coming In Summary along with reading Harry Markopolos Thesis on GE, I do not think GE will go bankrupt within months just based off the fact that it still has 25 Billion or so of cash (majority outside of US), and a credit line of 28 Billion with several different banks which is barely being used, but it is almost a guarantee for GE to be in Chapter 11 before 2021… This company is bleeding money, has enormously over valued it’s Assets over the years and it’s coming back to haunt them at a rapid pace, it’s selling a lot of Assets just to be positive cash flow and pay down some debt… Once the bonds get junked which should be within weeks, it is the beginning of the final chapter, then the write down festival starts in 2020 and real panic ensues
I know the reason. It is to do with capital structure and the order of payouts if the company enters administration. If the company goes bankrupt corporate bonds are paid off from the assets of the company before shares, they are also exempt of taxation charges unlike share dividends. My book Modern Applied Macroeconomics explains in the chapter about capital structure. I have linked to the book below. You may benefit from buying a copy. http://morganisteconomics.blogspot.com/p/blog-page.html
I'm not being cynical when I ask - I'm genuinely curious - but is there any reason to think that you know more than the average bear, or are less likely to be wrong? Lots of people have written lots of books, but those who have an actual grip on market direction trade it and make fortunes rather than collecting pennies by selling books (which, if accurate, would dilute their edge.)
My school of economic thought has been used by the British government over the last ten to thirteen years and has been proven successful in application. The book Modern Applied Macroeconomics has a letter in it from the Chancellor of the Exchequer at the time thanking me for the paper and stating the government will use it, there is also evidence in the book showing its effective implementation in hitting the economic targets set by the government, it's proven in application. The book is linked below. http://morganisteconomics.blogspot.com/p/blog-page.html In terms of the information about corporate structure it is correct. Corporate bonds are better protected against corporate insolvency. If the share holders of the company wanted to secure the company by investing further they can do this by buying corporate bonds, they get a higher level of protection if the company folds they also get a guaranteed return based on the amount they paid in as long as the company has assets worth the corporate bond repayment value. Shares are not protected in this way and the price can fall too.
I'm not sure it can force an answer to the question which can be fruitful, read the response above. It looks like the investors are trying to protect the company and their own investment the safest way for themselves. There are other ways they can do it using pension saving as well. This would indicate they are trying to the turn the company around.
@Stockolio, if I wanted to troll you, you'd already be screaming in pain. But since you've made a ridiculous spectacle of yourself, and everyone is already laughing at you, I have no desire to do so (ignoring the fact that I have zero interest in trolling, unlike you - it's obviously at the top of what you call your mind.) I asked a civil question, and was actually interested in the answer; I got it. Since you have nothing worthwhile to contribute, feel free to return to torturing yourself with whatever nightmares of GE fraud, etc. occupy you. Toodles!
Thanks for the response. I agree with the general principles - pretty much textbook stuff - but don't believe that there's a direct correlation to any tradeable strategy (if there was, it would have been arbitraged away by the sharp folks with the deep pockets.)