Short interest in General Electric (NYSE: GE) rose 8.2 million shares, to 67.4 million. After all the excitement about future earnings and the stock trading over $40 for the first time in half a decade, the shares have slipped back to just above $38.
What appears to have happened is that the market is concerned that the black box known as GE Finance may have mortgage and high-yield loan problems. But GE is not saying much.
It is hard to find another explanation. NBC Universal should get good money from the upcoming Olympics. The company has won several aviation equipment deals and a large contract with Hitachi to build reactors for Entergy and GE Electric picked up $3.5 billion in building deals in the Middle East.
But GE plays the cards for its financial units very close to the vest. The operations have been money machines for years, but they have already been hit by some sub-prime problems. If the economy gets softer, questions will arise about its credit card portfolio and any high interest loans it may have purchased.
Some part of GE is always worrying investors. For now, it is financial services.
Douglas A. McIntyre is a partner at 24/7 Wall St.
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Tiffany's serves up solid quarterly earnings
Reader Comments (Page 1 of 1)
8-23-2007 @ 3:17PM
j.c. said...
Their is another explanation. The sheer moronic, gambling nature of these idiots in the options market. Half of them barely got out of highschool. The sad thing is, there is no protection from the random idiocy of jerks like this. They hurt the poor retiree who owns GE stock. Just as there is no protection from those larcenous asses who trade in the futures market and have driven the price of gasoline to almost $3 per gallon, when supply and demand variables would have the price at $2 per gallon.
8-28-2007 @ 10:28AM
Raybo said...
GE is a remarkable story of astounding brilliance. 40% of earnings come from financial sectors and they are heavily involved with commercial paper, residential and commercial lending, aircraft leasing, sick company buyouts and many other toxic areas of risk. Yet they have not been harmed at all in the latest debacle of stupid lending. I am either very impressed, or very misled. ??? Regards- Raybo