Light bulb maker General Electric bounced back from fraud allegations Friday after CEO Larry Culp bought stock and Wall Street analysts stood up for the company.
Culp, who took over the troubled conglomerate last year, bought nearly $2 million worth of GE stock, or 252,200 shares, for $7.93 a share, he said in a regulatory filing.
Wall Street analysts then came out in force to push back against accounting scam allegations published by Bernie Madoff whistleblower Harry Markopolos — sending GE stock up 9.9 percent, to $8.79 per share, following Thursday’s 11.3 percent plunge.
“Markopolos’ attack on GE using his Madoff credibility and his sheriff mentality is disingenuous and does not pass the smell test,” short seller Andrew Left wrote in a Citron Research update.
For reasons more technical than Left’s, Bronte Capital’s John Hempton rejected the report as “misleading” and dismissed its comparison of GE’s and Genworth’s long-term care businesses, which showed GE to be deficient by many variables, as “bizarre.”
“GE reinsured Genworth,” he wrote. “They are the same policies.”
William Blair analyst Nick Heymann called Markopolos’ overarching allegation that GE has cooked its books to the tune of $38 billion “at best disingenuous and at worst highly inaccurate.”
He noted GE’s already under regulatory investigation. And with so many setbacks behind it and a brighter future under Culp, Heymann likened the report to “the last Molotov cocktail that someone is throwing down the street.”
Markopolos on Thursday blasted the Wall Street analyst community as falling for “GE’s accounting tricks hook, line and sinker” when it should have been asking why the company wasn’t allocating expenses “in an accurate and transparent manner.”
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