GE’s Immelt is a Loser, Who Wasted $45 Billion in Buybacks, And Left the Company With a $31 Billion Hole

This article is a corollary that describes everything that is wrong with corporate America — caitiffs basing decisions on share prices gains instead of the safety and security of its employees. In a way, it’s indicative of a larger civilizational struggle, one that juxtaposes the people against the elite.

For years, the CEO of GE had been ignoring GE’s ballooning pension deficit. When the financial crisis hit in 2008, there was little Immelt could do, other than right the ship. But in the years following, he should’ve deleveraged the company. Unlike all of his peers, GE’s balance sheet is fucking screwed, sporting a pension hole of $31 billion — blown out by an astounding $45 billion in buybacks in order to fend off hedge fund activist Nelson Peltz.

What loser looks like

Over the past 5 years, GE’s stock price rose by 70%, which sounds great until you realize it underperformed the S&P by 30% over the same time period.

Due to the low interest rate environment, GE’s pension fund, similar to other funds, only measurably worse, performed dreadfully.

The $31 billion shortfall is the largest in the S&P 500, and 50% more than any other company in the country.

Why would Immelt do such a stupid thing? Because his compensation was tethered to how well the share price performed. He’s walking away with a retirement package upwards of $200m. During his tenure at the company, Immelt made upwards of $30m per annum and upwards of $300m during his time at the company — based upon three criteria.

Operating cash flow
Return on capital compared to peers
Money returns to Investors via Dividends and Buybacks

Stock price performance was also a key factor in triggering stock options. In other words, Immelt’s decision to waste $45 billion in company share buybacks directly correlated with the amount of money he’d receive in compensation. He had a vested interest in doing this, as opposed to ensuring that the pensions of the 300,000 employees of GE were secure. No one on the GE board challenged him; and as a result, the company is on track for their pension hole to swell to $50 billion over the next decade. If the market should ever go down, that pension hole will grow in an exponential manner.

The process is entirely systematic, based solely around buying what’s working, but hedged with ‘risk off’ options — if those risk off assets are outperforming. In a sense, my strategy, which I am having immense fun doing, is all about alpha.

Here is how I start, finding a pool of stocks, or quantile. To do this, I drill down to the very essence of risk: market cap. We can talk about growth, revenues, earnings, charts, but at the end of the day, risk is best defined by the size of the company you are buying — best represented by market caps.

I have several options. Here they are with their median % returns for the past week.

Over $50b -0.11%
$10-50b +0.29%
$5-10b +0.36%
$1-5b +0.28%
under $1b -0.58%

TLT +1.38%
GLD -1%

If I were to allocate right now, I’d choose from the $5-10b pool. But once the market starts trading, judging by how close the returns are in those groups, it could change. Last week I shifted down to $1-5b. My returns over the past week is +1.18% — buoyed by IMAX, PAYC and SSD.

Because TLT outperformed all asset class groups, I will be adding 5% of my assets to it — upping my exposure to TLT to 10%. Because gold underperformed, I will be selling out of the balance of my holdings and will not own any gold — unless something changes during the trading day. Cash reserves will remain constant at 20%, set aside for an Exodus overall system oversold signal.

After diligent backtesting, I’ve put together a strategy, based on fundamentals, that produces optimal returns. I will now apply those PE, PS, rev growth, eps growth, gross margin, free cash setting flow settings into a screener and select the stocks with the highest hybrid scores (Exodus’ tech, fundamental scores combined produces a hybrid score) per sector, to ensure diversification.

Because there are limited names in the $5-10b quantile, my new portfolio will be concentrated. Picks are limited to two stocks per sector, in order to avoid over exposure to a particular sector. If I was to construct the portfolio now, this is what it’d look like.

(equal weighted)
MKTX
AGNC
SNI
LAMR
FTNT
TLLP
EQGP
ATHM

And 10% in TLT.

The system will reassess my portfolio on Friday of each and every week, in order to reduce complacency and to make sure I’m not picking around with underperforming pieces of shit. The overarching them of this strategy, as opposed to investing artistically, is that it can be quantified and appropriately graded on its macro qualities. If I find this to be lacking in performance, I can simply adjust the criteria to conform with where Wall Street is getting its dick sucked. I will not, however, trade off fundamentals for hot stocks of the pavement ape varietal.

Rap music is great. It contributes to the death of a lot of people, which is why I like it. When I was a teenager, I interned at the NYC Comptroller’s Office and worked alongside Jay Z’s mother, Gloria. She was a pleasant enough woman, who manned the billion dollar bond desk for the city of New York. Contrary to the lore, Jay Z could not have grown up poor, having a mother who traded bonds for the City of New York.

Back then, late 90s, J wasn’t even popular. I only knew him because I listened to underground rap music in some of New York Cities little known, broken antenna, sounding channels.

While I have been a fan of Jay Z for decades, I am a bit surprised to see the former President of the United States shill for a music genre that cuts through the black community like a hot blade through butter. If any of you fuckers like to take me up on this subject matter, you should know that I grew up in a ‘diverse’ neighborhood and didn’t enjoy the splendour of the rap culture from afar, but instead intimately, unlike so many of you do-gooders out there, praising it for its ‘artistic qualities.’

JayZ ft Swizz Beatz- On To The Next One from malik Oliver on Vimeo.

Now this is the sort of journalism that gets the blood pumping. Scott Pelley from SHEE-BEE-ESH News asked the question last night, ‘Was the congressional shootings self inflicted?’ To prove his case, Pelley didn’t cite the endless barrage of violent protest by leftists in the streets or Democratic politicians calling for ‘resistance.’ Instead, Pelley called into question President Trump’s tweets, especially one that said the enemy of America was the media — as the millstone from which killers like Hodgkinson drew energy from to activate into seditious violence.

The FAKE NEWS media (failing @nytimes, @NBCNews, @ABC, @CBS, @CNN) is not my enemy, it is the enemy of the American People!

— Donald J. Trump (@realDonaldTrump) February 17, 2017

Source: SHEE-BEE-ESH News

It’s time to ask whether the attack on the United States Congress Wednesday was foreseeable, predictable and, to some degree, self-inflicted.

Too many leaders, and political commentators, who set an example for us to follow have led us into an abyss of violent rhetoric which, it should be no surprise, has led to violence.

Wednesday was not the first time.

In December last year, a man with an assault rifle stormed into a Washington-area pizzeria to free child sex slaves whom Hillary Clinton was holding there — or at least that’s what political blog sites had said. He fired into a locked door to discover no children in chains.

Sen. Bernie Sanders has called the president the “most dangerous in history.” The shooter on Wednesday was a Sanders volunteer.

You might think that no sane person would act on political hate speech, and you’d be right. Trouble is, there are a lot of Americans who struggle with mental illness.

In February, the president tweeted that the news media were the “enemy of the American people.”

Later, at a lunch for reporters, President Trump was asked whether he worried that language would incite violence. His pause indicated it had never crossed his mind. Then he said, “No, that doesn’t worry me.”

As children we’re taught, “Words will never hurt me.” But when you think about it, violence almost always begins with words. In “Twitter world,” we’ve come to believe that our first thought is our best thought.

It’s past time for all of us — presidents, politicians, reporters, citizens, all of us — to pause to think again.

In summary, Hodgkinson shot up a baseball field filled with GOP politicians because of pizzagate, which Pelley said inplicated Hillary Clinton in holding child sex slaves inside of Comet Ping Pong’s basement (even the most extreme conspiracy theorists never implicated Clinton, just Podesta), Trump’s hatred for the media, and also mental illnesses pervading America’s collective psyche. CBS never bothered to mention, in this disgraceful display of agitprop, the fact that left wing extremists have been slandering the President of the United States with false accusations of treason, blatant lies regarding Russia’s involvement in the elections, and a wholesale disregard and contempt for the highest office in the land. To blame right wingers for inciting violence conducted by a left wing Berniebro is reprehensible, but not unexpected by the cromagnons who traverse the indecorous halls of SHE-BEE-ESH News.

Vladimir Putin is an evil man. But aside from that, he’s ok.

In a press conference with his fake news media, the Russian leader offered political asylum to the now defamed and admitted coward, James Comey. To think that such a kindness would be offered to a man who blatantly said he was ‘100% certain’ that Russian rabble rousers interfered in our glorious democracy is both heartening and encouraging — a testament to the larger than life character that is the former KGB evil doer — Vlad.

Shares of SNAP broke its IPO price today, begging the question: are you man enough to step in here, taking advantage of the future of social media?

Don’t worry about the ASTOUNDINGLY high p/s ratio of 41x, or the fact the company has no idea if they’ll ever make money. Look at FB. They figured it out and look at all of the money they’re making.

While it’s true, SNAP is a feral piece of shit, so is TWTR and that stock is +10% over the past 3 months.

In the big scheme of things, SNAP ‘coming in’ by 40% from its high watermark is subterfuge. Whoever bought up there deserves to lose money, and/or die. Consider it a generous game of natural selection, whereby the densest amongst us suffer horrible financial setbacks during banal periods of wanton misdirection.

Markets are jogging on into the hazy afternoon. We’re undergoing a bit of a sell off. There’s no need to panic, unless of course you think this is the beginning of something dreadful and horrible.

Tech stocks are being muddied again. The larger and noteworthy narrative here is the plunge in high beta stocks, tracked by me in what’s called a ‘Bubble Basket.’ These are high valuation, high return names, which have been cracked asunder during today’s session — down by 1.63%.

On a more personal level, I’ve never spent more money at the grocery store in my life. After leaving whole foods with half a cart filled with steaks, chops and delicacies, I find myself angry at the bill — usually in the range of $400-$600. Everything is expensive. If you want to eat cheaply, head on over to Shop-rite and procure poisonous foods for yourself and your family.

Today’s KR is getting rocked. Being the country’s largest independent food retailer, I’d say this is a big deal. We’re at 2014 levels on KR today.

Kroger reports EPS in-line, beats on revs; lowers FY18 EPS below consensus (30.28)

Reports Q1 (Apr) earnings of $0.58 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.58; revenues rose 4.9% year/year to $36.28 bln vs the $35.69 bln Capital IQ Consensus.

Co issues lowered guidance for FY18, sees EPS of $2.00-2.05 from $2.21-2.25, excluding non-recurring items, vs. $2.19 Capital IQ Consensus Estimate.
Gross margin was 22.1% of sales for the first quarter. Excluding fuel, ModernHEALTH and the LIFO charge, gross margin decreased 45 basis points from the same period last year.

Guidance Details: Kroger continues to expect identical supermarket sales growth, excluding fuel, of flat to 1% growth for 2017. The company continues to expect capital investments excluding mergers, acquisitions and purchases of leased facilities, to be in the $3.2 to $3.5 billion range for 2017.

This has spilled over into other retailers of delicious provisions, such as SFM (-9%), SFS (-7.6%), WFM (-6.6%) and SVU (-5%).

Dare I say, what the hell is going on in America, in that its finest retailers of food are plunging in share price? Clearly, what this market needs is a dot plot and much higher interest rates, to help break us out of this low interest rate burden of an environment.

The President ripped into what he called a ‘WITCH HUNT’ this morning, after reports by the Washington Post that suggested the new special counsel, Robert Mueller, was set to launch a fresh inquiry into obstruction by the President. Having not been able to find any collusion between Russia and Trump, the democrats and their deep state shills have now switched focus on the obstruction topic — all to do with former FBI director, James Comey.

Incidentally, there is now a push by those loyal to Trump to impugn the integrity of Robert Mueller. Last night, long term Trump ally and former chief of staff, Roger Stone, said that Mueller had coached Comey before his senate and was hiring a slew of never Trumpers to head up the investigation into the President.

Yesterday, Ann Coulter concluded Mueller was being weaponized by deep staters to take down Trump, helped by Rod Rosenstein — something Stone agreed with.

Early this morning, former speaker of the house and Trump ally, Newt Gingrich, went on a twitter rampage over the Mueller investigation, saying that he was ‘the tip of the deep state spear aimed at destroying’ the Trump presidency.

The tweets by the former speaker set off trip wires by Never Trump deep staters. One of their key mouthpieces, Joe Scarborough, hit Newt tit for tat this morning, vigorously defending Mueller, attempting to shame him into cowing his opinions in light of yesterday’s baseball field shootings.

Earlier this week, Trump’s good friend, Chris Ruddy, floated the idea that Trump, might in fact, fire Mueller. One thing is for certain, chaos is in the air and markets don’t like it.

The god damned Russians are finally getting what they deserve: sharply lower share prices. The days of elaborate and ornate evening balls are over for the oligarchs in Moscow. The RTSE is down a staggering 3.9% now. Over in europe, cuckholds are getting beat the fuck down, led lower by the losers in Spain and Germany, off by 1.4% and 1.1% respectively. Here in the states, the tech wreck continues, with NASDAQ futs off by 63.

The issue of sharply lower crude prices may begin to take a toll on markets soon. Keep your eyes on HYG and JNK to see if lower crude spills over into the junk bond market. Lord knows it should and it will. Any notion of corporate credits under pressure is certain to ruin your trading day, unless of course you’re short.

We have a bad scenario in risk off land, thanks to the Fed. Both gold and bonds are lower, the former sharply, due to yesterday’s hawkish statements by the Fed. Along the same vein, the dollar is higher by 0.5% v the euro. We have a scenario, gents, where nothing and no one is safe — a real fuckery brewing just ahead of hedge funded summers in the Hamptons (extra cocaine).

It’s setting up to be a real dreadful day. Good morning!

Where are all of the scholars and intellectuals on the left, leading the vanguard of liberalism — showing republitards that their way is the better way?

Instead, we get Eric Clanton, the bike lock guy.

A sundry of shrill comedians, cloaking hatred behind jokes.

NYC plays in the park, depicting Trump being stabbed to death.

ANTIFA rioters, beating up people who they disagree with.

The eloquent Mark Steyn, an extremely talented columnist, offers his 2 cents on the subject — describing a political environment bereft of decency.