GE Datapoint of the Day

Rolfe Winkler has run the numbers on how GE compares to other banks (yes, GE is a bank) and has come to the conclusion that as of December 31, GE had total tangible common equity of… wait for it… $5 billion. As a result, its leverage ratio, of tangible assets divided by tangible common equity, is a whopping 140 — the kind of number which would make Fannie or Freddie blanche.

GE is now trading at less than $11 a share, which is a drop of 81% from its all-time high in 2000, and a drop of 36% just since the beginning of this year. It’s weird: even as the company retains its triple-A rating, the stock market seems to be worrying that it might actually be moving into the arena of insolvency.

GE’s not trading at option value yet — it still has a market capitalization of more than $100 billion — but it’s clearly distressed. According to Winkler, GE managed to lose $9 billion of tangible common equity in just three months. With only $5 billion left, this might be a good time to start raising equity, rather than debt.

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