GE = Enron?

[Benny B]

Stealing bias's thunder from HK.

Full disclosure: I am long both GE and various GE calls and puts ranging from October 2019 to January 2021, i.e. I benefit from large swings either way (although upside is more on the call side).  GE is my largest single holding/underlying (but still well under 10% of my portfolio).


What I don't get here is how the Markopolos report can be considered legal.  At its very core, either a) he acted on inside information [illegal], b) he is participating in a massive dump-and-pump [the opposite of a pump-and-dump, also illegal] or c) both.

If this is truly a whistleblower job, it's got to be the first whistleblower who's sold the info to a hedge fund. 

Or perhaps he's found a loophole in the whistleblower laws that's extends the immunity to illegal trading.

[tower912]

Which is why in the HK thread, I said I was going to wait and see on this.    It could very well be legit, but right now it smells funny.   

[Hards Alumni]

Stealing bias's thunder from HK.

Full disclosure: I am long both GE and various GE calls and puts ranging from October 2019 to January 2021, i.e. I benefit from large swings either way (although upside is more on the call side).  GE is my largest single holding/underlying (but still well under 10% of my portfolio).


What I don't get here is how the Markopolos report can be considered legal.  At its very core, either a) he acted on inside information [illegal], b) he is participating in a massive dump-and-pump [the opposite of a pump-and-dump, also illegal] or c) both.

If this is truly a whistleblower job, it's got to be the first whistleblower who's sold the info to a hedge fund. 

Or perhaps he's found a loophole in the whistleblower laws that's extends the immunity to illegal trading.

Agreed.  No matter what, its messed up and is breaking new ground.

[SERocks]

Porter Stansberry has been saying the same about GE for the last couple/few years.

[TinyTimsLittleBrother]

Gee, wonder why I discount the economic opinions of those who worked for GE Capital?  This type of stuff doesn’t surprise me. History will show that Welsh is a fraud and used Capital to cover up for how poor the company was actually performing.

[TSmith34, Inc.]

It appeared to me for years that Welch was cooking the books, or rather I should say using manipulative accounting to show the desired result.  I don't claim to know the truth of the latest rumor, but GE results seemed pretty suspicious under his leadership.

[Jon]

The reports of GE's death are greatly exaggerated.

GE has access to significant amounts of liquidity. The whistle blower references about $18 B in exposure but GE right now could tap into more than  $70 B.

If necessary, and it's a big step, they could sell assets but that isn't required from what I am hearing.

I was an E Band at GE Cap under Gary Wendt during the Welch era. There was no "cooking of the books" - we had access to tens of billions of dollars in cash generated by the industrial businesses and we put that capital to work in ingenious ways.

For those who have the technical ability the key to GE understanding the issue lies in leveraging securitized vehicles. You either get that or you don't.

A lot of us bought GE yesterday because the ignorance of the masses creates opportunities for the clear-headed. 

[Dr. Blackheart]

It's no coincidence that once great brands/companies like GE, Kraft Heinz, and Sears are on the death spiral. While all have access to cash, all implemented strict zero based budgeting which put the focus on the short-term as they are being bled of assets as they call down the values of their assets/brands.

Marketers grow companies and cost accountants kill them. It's no surprise all are facing government scrutiny.

[Benny B]

It appeared to me for years that Welch was cooking the books, or rather I should say using manipulative accounting to show the desired result.  I don't claim to know the truth of the latest rumor, but GE results seemed pretty suspicious under his leadership.

/\ /\ True.  But all this is already known.  According to the experts (who’ve read the entire report) CNBC spoke to today, there are no new allegations.   


Although I’m up 34-38% on the various calls I bought yesterday afternoon, I can’t help but feel bad for those who (or whose advisors) panicked.

[Cheeks]

It's no coincidence that once great brands/companies like GE, Kraft Heinz, and Sears are on the death spiral. While all have access to cash, all implemented strict zero based budgeting which put the focus on the short-term as they are being bled of assets as they call down the values of their assets/brands.

Marketers grow companies and cost accountants kill them. It's no surprise all are facing government scrutiny.

Accountants definitely kill companies....it is painful and miserable to live on a daily basis.

[Frenns Liquor Depot]

The reports of GE's death are greatly exaggerated.

GE has access to significant amounts of liquidity. The whistle blower references about $18 B in exposure but GE right now could tap into more than  $70 B.

If necessary, and it's a big step, they could sell assets but that isn't required from what I am hearing.

I was an E Band at GE Cap under Gary Wendt during the Welch era. There was no "cooking of the books" - we had access to tens of billions of dollars in cash generated by the industrial businesses and we put that capital to work in ingenious ways.

For those who have the technical ability the key to GE understanding the issue lies in leveraging securitized vehicles. You either get that or you don't.

A lot of us bought GE yesterday because the ignorance of the masses creates opportunities for the clear-headed.

I think your first sentence is correct and your last paragraph may in fact be a good bet.  However the key issue with the stock is in fact liquidity.  The obligations to the pension plan and insurance are large. Second Industrial cash is negative.  GE has put O&G, digital and healthcare on sale paths to recap the company.  The stuff this week seems like a hyperbolic fanning of these flames, but it’s not as sanguine as you are stating.

[warriorchick]

It's no coincidence that once great brands/companies like GE, Kraft Heinz, and Sears are on the death spiral. While all have access to cash, all implemented strict zero based budgeting which put the focus on the short-term as they are being bled of assets as they call down the values of their assets/brands.

Marketers grow companies and cost accountants kill them. It's no surprise all are facing government scrutiny.

Blackie, the accountants only accumulate data.  It's the upper management and ownership who make the decisions based on that data.

[Cheeks]

Blackie, the accountants only accumulate data.  It's the upper management and ownership who make the decisions based on that data.

True, but if you are in an org that Finance has major influence that POV can dominate.  Basically, how strong the upper management is in what discipline can dictate if the bean counters win, marketing, legal, etc.

[warriorchick]

True, but if you are in an org that Finance has major influence that POV can dominate.  Basically, how strong the upper management is in what discipline can dictate if the bean counters win, marketing, legal, etc.

Well, what do I know?  I have been an accountant for 35 years, in nearly every position up to and including CFO.  But I know better than to get into an argument with you.

[Jon]

I think your first sentence is correct and your last paragraph may in fact be a good bet.  However the key issue with the stock is in fact liquidity.  The obligations to the pension plan and insurance are large. Second Industrial cash is negative.  GE has put O&G, digital and healthcare on sale paths to recap the company.  The stuff this week seems like a hyperbolic fanning of these flames, but it’s not as sanguine as you are stating.

I agree that Culp has his work cut out for him and let me say that I am not trying to understate the magnitude of the task he has in front of him.

You are correct that part of the restructuring, which is aimed at sorting out the balance sheet, will require the divestiture of some/a core business(es).

Our fund works with GE Power and Renewables and I am fairly certain Renewables will be spun off in the near term.

Perhaps the truest indication for us is that in the past 6 months we have begun using ABB gear for projects we are backing in AK and Sri Lanka; a year ago that would have been unthinkable (most of us are GE Cap alums and our fund chair is a former GE Corporate officer.)

We need to manage the risk associated with the uncertainty surrounding GE and if our chair, who has walk-in access to Culp, directs us to work with ABB there is more to the story.

Having said which, every single one of us bought GE yesterday and continue to spec GE Power gear for infrastructure projects. 

GE will emerge from this. The question is how much will be left.

Back in the day, Cap generated more than 70% of the earnings which were massive. The tear down of Cap required GE Industrial to deliver the financial returns the Street had come to expect; of course, the margins in making something are nowhere near as robust as in deploying capital.

As for accountants, they give a history lesson. Corporate finance guides decision-making through Strategic Planning which is designed to do one thing: deliver shareholder value.

[Dr. Blackheart]

Blackie, the accountants only accumulate data.  It's the upper management and ownership who make the decisions based on that data.

I said “cost accountants”.

[Cheeks]

Well, what do I know?  I have been an accountant for 35 years, in nearly every position up to and including CFO.  But I know better than to get into an argument with you.

I think we actually agree on the topic WC.   . And yes, I am aware of your background.  My point is each of the disciplines view input differently.  We are going through it right now with an internal war on this stuff, the last few years the Finance people have won the battles, they are driving the decision making and we are in a perpetual cycle of short term thinking not long term opportunity in my opinion.  Ultimately all disciplines serve as a check and balance I think you would agree.  It’s just that some orgs one disc can have more power than another which can lead to some problems of over spending, under spending, over conservatism, under, etc.

Peace

[Cheeks]

Other side of the story, does whistleblower have to gain financially on this?

https://www.cnbc.com/2019/08/15/ge-ceo-culp-calls-markopolos-report-accusing-company-of-fraud-market-manipulation.html


GE CEO also personally bought $2M in GE stock yesterday...stock rose 9%.

[MU82]

I sold my GE stock several years ago and I have no interest in owning the stock again, so I have not been following the company and I am not qualified to comment on it as an investment.

However, I would caution those who think that the GE CEO buying company stock signals that all is well.

The common perception is that nobody knows a company better than the CEO, and if he is putting $2M of his own money into the stock, he must be extremely confident in the company's future. In GE's case, the market certainly looked at it as a bullish sign yesterday.

Truth is, there are many reasons CEOs make large buys. Fairly often, it is done as a sign to show the market some confidence. Sometimes, it can be a desperate attempt to pop the stock price.

Two examples from the not-distant past were CEOs of Kinder Morgan and Seadrill buying millions of dollars in their companies' stock even though both faced huge problems. After the initial boost of excitement in the market, both companies got crushed not long after.

While KMI has hung in there and is still a viable company -- albeit one trading at half the price it did 4 years ago and one that had to cut its dividend 75% -- Seadrill ended up going into bankruptcy after its stock plunged from $40+ to 10 cents. The Seadrill CEO made his big buy during the decline (just as the GE CEO did), and what emerged is a shell of its former self.

I am NOT saying the GE CEO's purchase was a ruse or anything like that. I don't know what his motivation was ... and neither does anybody else. I also am not saying GE will meet the same fate as Seadrill, again because I don't know what its future holds ... and neither does anybody else.

I'm just throwing a little word of caution out there, using history as a guide.

Any stock investment is a "bet" on a company's future. To my fellow Scoopers who have decided to place this bet on GE, I wish you good fortune.

[JWags85]

Seadrill got caught up in a rapid fundamental shift in offshore drilling. Same thing happened to Transocean (RIG). It recovered strongly after Deepwater Horizon but has just bled out for years to a sub $5 share price. SDRL happened too fast for that to be a desperate attempt to pump the stock, I really think the CEO and others truly felt it was an anomaly they could ride through and it was not. That industry has just changed precipitously in ways that many didn’t foresee.

I agree with the above points about the damage overly focused cost accountants can do. In many ways, I view it as a team that goes into a prevent defense or takes the air out of the basketball after generating a lead. A market leading position has been created, then they shift to far too acute a focus on stripping spend and keeping costs down.

Great example is Signet Jewelers. They became the largest jeweler in the US and the world by being a branding and marketing machine. They were skilled merchants, but put money behind brand vision. Sought to compete not with other mall stores, but the local family jewelers. And they were wildly successful. Zales, on the other hand, was the larger chain for a long time and had a very cost centric approach. They struggled most of the 2000s before Signet surpassed them and then swallowed them up. Signet subsequently was the unquestioned top dog and slowly their practices began to change. Beating suppliers down on costs, losing focus on creating and sustaining brands, focusing heavily on internal credit offerings to customers, etc... The management turned over and the result C-suite and adjacent had little marketing or retail experience or focus, and relied heavily on Excel jockeying. The Street recognized this and SIG has been a short seller fav for some time. Many of the retail jewellery struggles in the US recently, they ushered in themselves and thus will make it even harder to rebound

[Frenns Liquor Depot]

Seadrill got caught up in a rapid fundamental shift in offshore drilling. Same thing happened to Transocean (RIG). It recovered strongly after Deepwater Horizon but has just bled out for years to a sub $5 share price. SDRL happened too fast for that to be a desperate attempt to pump the stock, I really think the CEO and others truly felt it was an anomaly they could ride through and it was not. That industry has just changed precipitously in ways that many didn’t foresee.

I agree with the above points about the damage overly focused cost accountants can do. In many ways, I view it as a team that goes into a prevent defense or takes the air out of the basketball after generating a lead. A market leading position has been created, then they shift to far too acute a focus on stripping spend and keeping costs down.

Great example is Signet Jewelers. They became the largest jeweler in the US and the world by being a branding and marketing machine. They were skilled merchants, but put money behind brand vision. Sought to compete not with other mall stores, but the local family jewelers. And they were wildly successful. Zales, on the other hand, was the larger chain for a long time and had a very cost centric approach. They struggled most of the 2000s before Signet surpassed them and then swallowed them up. Signet subsequently was the unquestioned top dog and slowly their practices began to change. Beating suppliers down on costs, losing focus on creating and sustaining brands, focusing heavily on internal credit offerings to customers, etc... The management turned over and the result C-suite and adjacent had little marketing or retail experience or focus, and relied heavily on Excel jockeying. The Street recognized this and SIG has been a short seller fav for some time. Many of the retail jewellery struggles in the US recently, they ushered in themselves and thus will make it even harder to rebound

I think you are taking a fundamental problem out on a function.  CEOs get paid for growth and when there are less market or consolidation revenue opportunities available, efficiency becomes the only way to grow.  The way out of course is innovation which remains difficult for large companies to produce.  The market isn’t happy with 2-3% market or market plus growth. So you are faced with a dilemma...

[Cheeks]

I sold my GE stock several years ago and I have no interest in owning the stock again, so I have not been following the company and I am not qualified to comment on it as an investment.

However, I would caution those who think that the GE CEO buying company stock signals that all is well.

The common perception is that nobody knows a company better than the CEO, and if he is putting $2M of his own money into the stock, he must be extremely confident in the company's future. In GE's case, the market certainly looked at it as a bullish sign yesterday.

Truth is, there are many reasons CEOs make large buys. Fairly often, it is done as a sign to show the market some confidence. Sometimes, it can be a desperate attempt to pop the stock price.

Two examples from the not-distant past were CEOs of Kinder Morgan and Seadrill buying millions of dollars in their companies' stock even though both faced huge problems. After the initial boost of excitement in the market, both companies got crushed not long after.

While KMI has hung in there and is still a viable company -- albeit one trading at half the price it did 4 years ago and one that had to cut its dividend 75% -- Seadrill ended up going into bankruptcy after its stock plunged from $40+ to 10 cents. The Seadrill CEO made his big buy during the decline (just as the GE CEO did), and what emerged is a shell of its former self.

I am NOT saying the GE CEO's purchase was a ruse or anything like that. I don't know what his motivation was ... and neither does anybody else. I also am not saying GE will meet the same fate as Seadrill, again because I don't know what its future holds ... and neither does anybody else.

I'm just throwing a little word of caution out there, using history as a guide.

Any stock investment is a "bet" on a company's future. To my fellow Scoopers who have decided to place this bet on GE, I wish you good fortune.

Agree completely, just presenting some new info

[Cheeks]

I think you are taking a fundamental problem out on a function.  CEOs get paid for growth and when there are less market or consolidation revenue opportunities available, efficiency becomes the only way to grow.  The way out of course is innovation which remains difficult for large companies to produce.  The market isn’t happy with 2-3% market or market plus growth. So you are faced with a dilemma...

Agree also, and Jwag Signet example also good.  Dilemma for sure.

[Pakuni]

As a near illiterate on some of these matters (a fact I'm not proud to admit), this has been a fascinating read.
Thanks to all who've contributed.

[Dr. Blackheart]

I think I learned this in my first MU business management class.

Stage 1 is led by the entrepreneur.  Stage 2 is the marketer.  Stage 3 is sales. Stage 4 is accounting and finance.  The professor said when they name the CFO as CEO, leave.

Same as above:  When the venture capital folks took over, the death spiral accelerates.  Pabst and Schlitz were the # 1 and 2 beers not too long ago.

[Jon]

Truth is, there are many reasons CEOs make large buys. Fairly often, it is done as a sign to show the market some confidence. Sometimes, it can be a desperate attempt to pop the stock price.

Two examples from the not-distant past were CEOs of Kinder Morgan and Seadrill buying millions of dollars in their companies' stock even though both faced huge problems. After the initial boost of excitement in the market, both companies got crushed not long after.

While KMI has hung in there and is still a viable company -- albeit one trading at half the price it did 4 years ago and one that had to cut its dividend 75% -- Seadrill ended up going into bankruptcy after its stock plunged from $40+ to 10 cents. The Seadrill CEO made his big buy during the decline (just as the GE CEO did), and what emerged is a shell of its former self.

I am NOT saying the GE CEO's purchase was a ruse or anything like that. I don't know what his motivation was ... and neither does anybody else. I also am not saying GE will meet the same fate as Seadrill, again because I don't know what its future holds ... and neither does anybody else.

I'm just throwing a little word of caution out there, using history as a guide.

Any stock investment is a "bet" on a company's future. To my fellow Scoopers who have decided to place this bet on GE, I wish you good fortune.

Mike

It is very rare that an individual buys such a large quantum in a desperate attempt to prop up the share value.

But I have some first hand insight on this matter. And GE has the ability to meet all obligations. Period. And that is the heart of the matter. As I said above, GE will leveraged securitized vehicles to see it through this situation.

It is terrible what has happened to the Meatball but the enterprise will survive.

As for Culp buying stock - he knew that the stupidity of the herd was an opportunity for the rational.

[Jon]

Seadrill got caught up in a rapid fundamental shift in offshore drilling. Same thing happened to Transocean (RIG). It recovered strongly after Deepwater Horizon but has just bled out for years to a sub $5 share price. SDRL happened too fast for that to be a desperate attempt to pump the stock, I really think the CEO and others truly felt it was an anomaly they could ride through and it was not. That industry has just changed precipitously in ways that many didn’t foresee.

I agree with the above points about the damage overly focused cost accountants can do. In many ways, I view it as a team that goes into a prevent defense or takes the air out of the basketball after generating a lead. A market leading position has been created, then they shift to far too acute a focus on stripping spend and keeping costs down.

Great example is Signet Jewelers. They became the largest jeweler in the US and the world by being a branding and marketing machine. They were skilled merchants, but put money behind brand vision. Sought to compete not with other mall stores, but the local family jewelers. And they were wildly successful. Zales, on the other hand, was the larger chain for a long time and had a very cost centric approach. They struggled most of the 2000s before Signet surpassed them and then swallowed them up. Signet subsequently was the unquestioned top dog and slowly their practices began to change. Beating suppliers down on costs, losing focus on creating and sustaining brands, focusing heavily on internal credit offerings to customers, etc... The management turned over and the result C-suite and adjacent had little marketing or retail experience or focus, and relied heavily on Excel jockeying. The Street recognized this and SIG has been a short seller fav for some time. Many of the retail jewellery struggles in the US recently, they ushered in themselves and thus will make it even harder to rebound

Wags

You are spot on re seismic shifts in offshore drilling. Technology, regulatory oversight, access, and consolidation culled the flock. I have friends from various points in my life who spent decades at Transocean, Nabors, Diamond, and Schlumberger and who witnessed that change; some are in early retirement while others are part of the executive team running much larger businesses.

It really does underscore the maxim that change is inevitable but the key lies in how we address it.

We are seeing fundamental shifts in intermittent renewable energy, especially in PV, the integration of stored energy systems, and the digital systems which optimize performance. Industries have inflection points where risk is magnified; for those who are willing to understand these dynamics there is incredible opportunity.

I know I have told you that the extent of my grasp of the jewelry biz is I go to Tiffany's at Bellevue Square when the Baby David's mother has some life event looming. What's interesting is that she has been telling me lately that Olson's Tack Shop has greater appeal for her than powder blue boxes.

How was the nasi goreng?

[Jon]

When the venture capital folks took over, the death spiral accelerates.  Pabst and Schlitz were the # 1 and 2 beers not too long ago.

For every Schlitz horror story there are dozens where an infusion of outside capital and expertise brought significant benefit.

If I recall from a business school case study, the profound mistake at Schlitz was messing with the product formula.

This was a lesson I used when in Indonesia we took over a large local kretek cigarette enterprise (our real client was Philip Morris). The brand went from dominance to a distant #4 over the course of a decade. The third generation of this family business had been robbing it blind and failed to mind the store, as it were.

Cigarettes is a huge cash business so priority one was to secure the cash. We ran market tests to understand what was wrong with the product and the focus results were staggering: tastes like sh1t, harsh, etc... An audit of the tobacco stocks confirmed that staff were buying grade D tobacco rather than the superior grades called for in the specs (and pocketing the difference).

Because there was still equity in the brand, it had been the market leader for 80 years, addressing product quality was enough to reinvigorate sales and get the cash flowing again.

Stabilizing the product is essential in branded FMCG. If you change the Schlitz formula to save pennies the consumer will not only notice but will feel betrayed and defect. Loyalty goes two ways in branding.

But, as I say, for every Schlitz horror story there are dozens more where the capital markets have topped up the balance sheet and brought in expertise to drive success.   

[The Hippie Satan of Hyperbole]

The basic problem with Schlitz and Pabst was that American beer at the time, as Mike Royko once put it, "was filtered through a horse."

[Dr. Blackheart]

The basic problem with Schlitz and Pabst was that American beer at the time, as Mike Royko once put it, "was filtered through a horse."

Yep. Cost cut to swill. 

[Jon]

The basic problem with Schlitz and Pabst was that American beer at the time, as Mike Royko once put it, "was filtered through a horse."

Mike Royko. I miss his sardonic take on the world as filtered through the prism of working class Chicago.

Reading Royko while sitting in various places around the world made me feel connected to home, albeit its gritty, unrepentant side.

Royko was accused of being a racist by rather dull witted sorts who failed to grasp the razor edge of his satire. Rather than give in to iniquitous, naive outrage, Royko turned up the volume on Slats Grobnik, much to the chagrin of the fools who were too dense to see Royko's actual message.

Royko's pen today would make this divided nation seem more comprehensible. Sumbitch died twenty years too soon, frankly.

[ZiggysFryBoy]

Mike Royko. I miss his sardonic take on the world as filtered through the prism of working class Chicago.

Reading Royko while sitting in various places around the world made me feel connected to home, albeit its gritty, unrepentant side.

Royko was accused of being a racist by rather dull witted sorts who failed to grasp the razor edge of his satire. Rather than give in to iniquitous, naive outrage, Royko turned up the volume on Slats Grobnik, much to the chagrin of the fools who were too dense to see Royko's actual message.

Royko's pen today would make this divided nation seem more comprehensible. Sumbitch died twenty years too soon, frankly.

Royko and mu82, both penning witticisms in Chicago at the same time.  what a world. 

[MU82]

Royko and mu82, both penning witticisms in Chicago at the same time.  what a world.

Unfortunately, Royko and I barely overlapped in Chicago, as he died about 2 years after I got there. And he died before I became a columnist who dispensed "witticisms." But thanks for mentioning me in the same sentence as one of the all-time greats.

[MU82]

Mike

It is very rare that an individual buys such a large quantum in a desperate attempt to prop up the share value.

But I have some first hand insight on this matter. And GE has the ability to meet all obligations. Period. And that is the heart of the matter. As I said above, GE will leveraged securitized vehicles to see it through this situation.

It is terrible what has happened to the Meatball but the enterprise will survive.

As for Culp buying stock - he knew that the stupidity of the herd was an opportunity for the rational.

As I said in my post, I was not making any claims about this particular situation.

What I will say is that it happens more times than you might expect that a CEO, chairman or other high-ranking corporate officer makes a major buy for reasons other than believing he or she will make a big profit on the purchase.

I gave 2 examples from the last few years alone, and there have been plenty of others.

I was going to say something like, "To these guys $1 million or $2 million is like $100 or $200 to me or you," except you or I actually probably would miss  the $100 or $200 more than they would miss the $1M or $2M.

[JWags85]

I know I have told you that the extent of my grasp of the jewelry biz is I go to Tiffany's at Bellevue Square when the Baby David's mother has some life event looming. What's interesting is that she has been telling me lately that Olson's Tack Shop has greater appeal for her than powder blue boxes.

How was the nasi goreng?

Normally I’d encourage you to steer her back to the shiny baubles, but breaking out of the powder blue vortex, no matter what the alternative, is something I co-sign. Those guys are excellent at what they do but wholly insufferable from a business perspective, and with more snake oil than they’d care to admit.

I had an braised oxtail nasi goreng that knocked my socks off. Another variant with foie that was sublime. Between that and the dim sum fried rices I’ve had in Shanghai and Shenzhen, I’m ruined for the dish from any “Americanized” Chinese joint in the US.

[Cheeks]

As I said in my post, I was not making any claims about this particular situation.

What I will say is that it happens more times than you might expect that a CEO, chairman or other high-ranking corporate officer makes a major buy for reasons other than believing he or she will make a big profit on the purchase.

I gave 2 examples from the last few years alone, and there have been plenty of others.

I was going to say something like, "To these guys $1 million or $2 million is like $100 or $200 to me or you," except you or I actually probably would miss  the $100 or $200 more than they would miss the $1M or $2M.

That’s a large exaggeration, but we get it.  Using $500k net worth for you ( I know it is much higher, but just bare with me), his stock purchase is like $7400 equivalent based on Culp’s estimated net worth.  If you are worth $1M, then it’s like $14k impact to you.  That’s real money.  You would be fine without, but a lot more than just $100 or $200.

[tower912]

but just bare with me

I don't know of anybody here that wants to get just bare with you

[Cheeks]

I don't know of anybody here that wants to get just bare with you

Jockey, MU82, TSmith for sure....they are so attached to everything I say it's as if they are my underwear looking for the next step in our relationship.   

My device sucks for autocorrect....bear with me. 

[tower912]

Barely

[Jon]

That’s a large exaggeration, but we get it.  Using $500k net worth for you ( I know it is much higher, but just bare with me), his stock purchase is like $7400 equivalent based on Culp’s estimated net worth.  If you are worth $1M, then it’s like $14k impact to you.  That’s real money.  You would be fine without, but a lot more than just $100 or $200.

Jams,

Your analytics demonstrate why marketing folks need to steer clear of finance matters. The flaw in your logic is that capital isn't linear.

The impact of capital through concentration or centralization, like air power or massed armor in war fighting doctrine, increases exponentially. And unlike how Karl Marx defined it, in terms of how workers are exploited, the ability to deploy capital efficiently improves through mass.

So if our sports writer has accumulated half a million he cannot use it as efficiently as a post-IPO dot com wunderkind who has $100 MM to play with. And the wunderkind isn't even close to a Bezos or Gates.

[Lennys Tap]

Mike Royko. I miss his sardonic take on the world as filtered through the prism of working class Chicago.

Reading Royko while sitting in various places around the world made me feel connected to home, albeit its gritty, unrepentant side.

Royko was accused of being a racist by rather dull witted sorts who failed to grasp the razor edge of his satire. Rather than give in to iniquitous, naive outrage, Royko turned up the volume on Slats Grobnik, much to the chagrin of the fools who were too dense to see Royko's actual message.

Royko's pen today would make this divided nation seem more comprehensible. Sumbitch died twenty years too soon, frankly.

Back in the late 70s I used to play racketball once a week with a good friend from work at the Downtown Court Club. This guy is now in the 16" Softball Hall of Fame and at that time he played for the legendary Bobcats who won 16" softball's version of the World Series regularly. Royko loved the game (he fashioned himself quite a pitcher) and had played against my friend in some charity games. One was at Thillens Stadium, where there was a standing offer that hitting the scoreboard with a home run netted the player a  $10,000 savings bond. The only guy (to my knowledge) who ever did it was my friend and he hit it off of (you guessed it) Mike Royko. 

Just so happened that the Billy Goat Tavern was right below the Downtown Court club on lower Wacker - so two double cheeseburgers, chips (no fries) and several beers was our usual reward after a workout. One evening Royko and a few of the younger staff (reporters? copy guys?) were sitting at a table when we walked in. He immediately recognized Kenny (my friend) and invited us to join them. For 2+ hours Royko shared stories and drinks with the group. Then his wife (#2 I think) showed up and we all had one more. Before he left, he told the waiter to keep the tab open for as long as anyone stayed - it was on him. He had a reputation as a bit of a curmudgeon, but in my one encounter with him he couldn't have been nicer.

[Cheeks]

Jams,

Your analytics demonstrate why marketing folks need to steer clear of finance matters. The flaw in your logic is that capital isn't linear.

The impact of capital through concentration or centralization, like air power or massed armor in war fighting doctrine, increases exponentially. And unlike how Karl Marx defined it, in terms of how workers are exploited, the ability to deploy capital efficiently improves through mass.

So if our sports writer has accumulated half a million he cannot use it as efficiently as a post-IPO dot com wunderkind who has $100 MM to play with. And the wunderkind isn't even close to a Bezos or Gates.

Completely agree on the efficiency of money.  My point was there are exaggerations done to try and show how much money CEO’s are compensated or worth, and many certainly have huge hauls that the marketplace has dictated, but that doesn’t mean we need to over exaggerate on top of that with some claims that are simply that...over exaggerations.

[Dr. Blackheart]

Jams,

Your analytics demonstrate why marketing folks need to steer clear of finance matters. The flaw in your logic is that capital isn't linear.

The impact of capital through concentration or centralization, like air power or massed armor in war fighting doctrine, increases exponentially. And unlike how Karl Marx defined it, in terms of how workers are exploited, the ability to deploy capital efficiently improves through mass.

So if our sports writer has accumulated half a million he cannot use it as efficiently as a post-IPO dot com wunderkind who has $100 MM to play with. And the wunderkind isn't even close to a Bezos or Gates.

This is true as is certainly seen in tech, but it is also flawed in the downside. Case in point, 70%-90% of all mergers fail as debt accumulates much faster than those mass synergies (cuts) can be redeployed. Thus, the asset bleed begins after those savings evaporate in 3-4 years. Buffett + 3G have called down their KHC assets by over $18 Billion in six months despite them sitting on a bunch of capital, for example.

That's a lot of wars lost due to leaders starving their armies. Is GE in the former or latter bucket?  We are on different sides on that outcome.

https://chiefexecutive.net/increasing-odds-success-merger/

[Cheeks]

This is true as is certainly seen in tech, but it is also flawed in the downside. Case in point, 70%-90% of all mergers fail as debt accumulates much faster than those mass synergies (cuts) can be redeployed. Thus, the asset bleed begins after those savings evaporate in 3-4 years. Buffett + 3G has called down their KHC assets by over $18 Billion in six months despite them sitting on a bunch of capital, for example.

That's a lot of wars lost due to leaders starving their armies. Is GE in the former or latter bucket?  We are on different sides on that outcome.

https://chiefexecutive.net/increasing-odds-success-merger/

Plus the synergy calculations are often total horse crap.  1 + 1 =3 nonsense.  In my experience the synergy calculations are way too optimistic.

[Newsdreams]

Which is why in the HK thread, I said I was going to wait and see on this.    It could very well be legit, but right now it smells funny.

Just so you all know my son worked for Wells Fargo for awhile and he was part of a whole unit they made to go over all the GE assets they had purchased. My son told me there was almost not one spreadsheet that was correct and they went over hundreds of them. So that says something.

[Jon]

Back in the late 70s I used to play racketball once a week with a good friend from work at the Downtown Court Club. This guy is now in the 16" Softball Hall of Fame and at that time he played for the legendary Bobcats who won 16" softball's version of the World Series regularly. Royko loved the game (he fashioned himself quite a pitcher) and had played against my friend in some charity games. One was at Thillens Stadium, where there was a standing offer that hitting the scoreboard with a home run netted the player a  $10,000 savings bond. The only guy (to my knowledge) who ever did it was my friend and he hit it off of (you guessed it) Mike Royko. 

Just so happened that the Billy Goat Tavern was right below the Downtown Court club on lower Wacker - so two double cheeseburgers, chips (no fries) and several beers was our usual reward after a workout. One evening Royko and a few of the younger staff (reporters? copy guys?) were sitting at a table when we walked in. He immediately recognized Kenny (my friend) and invited us to join them. For 2+ hours Royko shared stories and drinks with the group. Then his wife (#2 I think) showed up and we all had one more. Before he left, he told the waiter to keep the tab open for as long as anyone stayed - it was on him. He had a reputation as a bit of a curmudgeon, but in my one encounter with him he couldn't have been nicer.

Mr Bernstein,

I am green with envy. Royko is one of those outsized personalities I have often said would be fun to have a beer with.

Royko was known for his direct, unforgiving, relentless style but, in fact, possessed a rather deft pen. He demonstrated scintillating wit and acerbic commentary, often in the same sentence.

If he were writing today, he would be labeled as a racist, an anachronism, a defender of unfairness and entitlement......wait a second, he was called those things back in the day. Imagine the outrage if he were still active.

Fact is, he was none of that. People then, and today, are too dense and naive to grasp well crafted commentary presented as satire.

Royko was a curmudgeon. He crusaded against graft, corruption, unfairness, patronage, redlining, injustice, the pathology of the ghetto, and other defects manifest in the Chicago genome. 

Imagine the grist available to him today. His words would sparkle.

[Cheeks]

Mr Bernstein,

I am green with envy. Royko is one of those outsized personalities I have often said would be fun to have a beer with.

Royko was known for his direct, unforgiving, relentless style but, in fact, possessed a rather deft pen. He demonstrated scintillating wit and acerbic commentary, often in the same sentence.

If he were writing today, he would be labeled as a racist, an anachronism, a defender of unfairness and entitlement......wait a second, he was called those things back in the day. Imagine the outrage if he were still active.

Fact is, he was none of that. People then, and today, are too dense and naive to grasp well crafted commentary presented as satire.

Royko was a curmudgeon. He crusaded against graft, corruption, unfairness, patronage, redlining, injustice, the pathology of the ghetto, and other defects manifest in the Chicago genome. 

Imagine the grist available to him today. His words would sparkle.

Yup, which means he couldn’t be Royko as a result, or he would be run out of town or simply quit.  We need more Royko’s and people telling like it is....unfortunately they are a dying breed as the mind / thought patrol starts to dominate.

[Jon]

This is true as is certainly seen in tech, but it is also flawed in the downside. Case in point, 70%-90% of all mergers fail as debt accumulates much faster than those mass synergies (cuts) can be redeployed. Thus, the asset bleed begins after those savings evaporate in 3-4 years. Buffett + 3G have called down their KHC assets by over $18 Billion in six months despite them sitting on a bunch of capital, for example.

That's a lot of wars lost due to leaders starving their armies. Is GE in the former or latter bucket?  We are on different sides on that outcome.

https://chiefexecutive.net/increasing-odds-success-merger/

Doc

I wasn't referencing mergers. I was specifically looking at the efficiency of aggregated capital deployed within a portfolio.

For our fund, we measure dynamic efficiencies where the employment of capital creates efficiencies in power production and and in the distribution and consumption of energy through the introduction or expansion of compelling new technologies. That

If you are thinking of the capital markets, in general, they are allocationally efficient if unfettered by regulatory interference. This is something Friedman and Stigler understood, embraced, and championed. In a truly free market assets find their most effective organic employment which maximizes value.

[Jon]

Normally I’d encourage you to steer her back to the shiny baubles, but breaking out of the powder blue vortex, no matter what the alternative, is something I co-sign. Those guys are excellent at what they do but wholly insufferable from a business perspective, and with more snake oil than they’d care to admit.

I had an braised oxtail nasi goreng that knocked my socks off. Another variant with foie that was sublime. Between that and the dim sum fried rices I’ve had in Shanghai and Shenzhen, I’m ruined for the dish from any “Americanized” Chinese joint in the US.

Wags,

When it came time to buy "The Rock" i looked at Tiffany's but ended up going with James Allen (I looked at Blue Nile, the hometown team, but the 10% sales tax was a big number, especially compared with zero at James Allen.)

theBabyDavid's momma isn't all that big on baubles and beads but keeping horses is like boat ownership.

The food in Asia is varied and sumptuous. And you are correct: it makes the local Jade Garden inedible.

Of course, if you get the fried Canadian tofu at the Golden Dragon in Oconomowoc you are an instant expert on China! 

[Pakuni]

Yup, which means he couldn’t be Royko as a result, or he would be run out of town or simply quit.  We need more Royko’s and people telling like it is....unfortunately they are a dying breed as the mind / thought patrol starts to dominate.

Mike Royko was a left-leaning columnist who supported gun control, was strongly anti-war, railed against the rich and powerful taking advantage of the poor and weak, and famously said "It's harder to be a liberal than a conservative because it's easier to give someone the finger than a helping hand." He quit his beloved Sun-Times rather work for Rupert Murdoch.

I don't see you two seeing eye to eye on much

[Jon]

Mike Royko was a left-leaning columnist who supported gun control, was strongly anti-war, railed against the rich and powerful taking advantage of the poor and weak, and famously said "It's harder to be a liberal than a conservative because it's easier to give someone the finger than a helping hand." He quit his beloved Sun-Times rather work for Rupert Murdoch.

I don't see you two seeing eye to eye on much

To suggest that Royko was a liberal Democrat is specious. Royko made a career of lampooning political elites, especially the Daley Machine.

Royko coined "Gov Moonbeam," cemented shoebox as an emblem for Illinois politics, and was especially fond of Gary Hart's stupid dog tricks.

He was a populist. He lampooned the rich, the powerful, and the absurd. He championed the blue collar worker and his struggles in life.

And while he detested fat cats he ridiculed the Democratic Party for its hypocrisy, its egalitarian pretensions, and self-proclaimed social justice stridency.

Royko possessed a deft pen and his satire was high art. He was a whipping boy of the incipient political correctness crowd and attracted the wrath of the identity-politics activists as that fringe was beginning to stir. What is priceless is that Royko was being attacked by people who didn't comprehend his message. 

 

[MU82]

To suggest that Royko was a liberal Democrat is specious. Royko made a career of lampooning political elites, especially the Daley Machine.

Royko coined "Gov Moonbeam," cemented shoebox as an emblem for Illinois politics, and was especially fond of Gary Hart's stupid dog tricks.

He was a populist. He lampooned the rich, the powerful, and the absurd. He championed the blue collar worker and his struggles in life.

And while he detested fat cats he ridiculed the Democratic Party for its hypocrisy, its egalitarian pretensions, and self-proclaimed social justice stridency.

Royko possessed a deft pen and his satire was high art. He was a whipping boy of the incipient political correctness crowd and attracted the wrath of the identity-politics activists as that fringe was beginning to stir. What is priceless is that Royko was being attacked by people who didn't comprehend his message. 

Agree with most of this ... and also with most of what Pakuni said.

For one thing, there is a difference between "left-leaning" and "liberal." A lot of Independents or moderates are "left-leaning" or "right-leaning." Pakuni did not claim Royko was a liberal, he said he was left-leaning, and I think that's largely true, especially given what was considered left-of-center politically back then.

Royko was one of the all-time great satirists. As Crash said, he often was criticized by those who didn't get whom he actually was lampooning. In some ways, similar to how Norman Lear used the Archie Bunker character. Dopes complained that CBS was promoting racism because they gave Archie such a unique forum, when actually the opposite was true.

[Pakuni]

To suggest that Royko was a liberal Democrat is specious. Royko made a career of lampooning political elites, especially the Daley Machine. 

No one said Royko was a Democrat. And yes, he was anti-PC and did raise the ire of leftist groups, especially in his latter years at the Tribune.
But to suggest the Daley Machine and "liberal Democrats" are somehow interchangeable, or even remotely similar, shows a serious ignorance of the Daley Machine. The Daley Machine was the near antithesis of the liberal Democrats. Daley was a Democrat only because the Democrats held the power in Chicago (as in every other major American city at the time), not because he supported a left-leaning agenda. He hated the leftists in his party more than anyone (see: 1968).

Royko lampooned the Daleys not because of their party, but because they embodied the rich and powerful. Party had nothing to do with it. And for those of us who understand Illinois politics, especially in the 60s-2000s, party never had anything to do with it. The true power brokers in the state had no party affiliation.

As for whether Royko leaned left, what else would call someone who is a) staunchly anti-war, b) pro Civil Rights Movement c) pro gun control d) an advocate for the poor and e) one who detests Rupert Murdoch?