Dilutive Capital Raises are the Latest Wall Street Fad

Running a public company is no cake walk. Occasionally I have owned stocks in companies that have decided to raise capital out of the blue, merely taking advantage of a strong stock price and attendant low cost of capital a richly valued stock brings.

But while that move might set the BuySide a twitter, as they speculate as to the motives of management that is playing coy, it is infinitely more astute than going to market when Mr. Market has you over a barrel and you are desperate for the money. Jack Welch might have left Jeffrey Immelt with a powder keg of businesses ready to blow, but Immelt's move to raise money on onerous terms is not likely to put him in the GE Hall of Fame.

And if you are sick of his continual PR campaign at wholly owned subsidiary CNBC, Morningstar has their own take on the deal. GE is arguably a hedge fund in drag.....what will they do with the capital? And will it spark a rally in the stock, assuming they price the secondary tomorrow morning in the hole and the El-Erian thesis works its magic? It has worked for Goldman and JP Morgan, and might just might restart the feint heartbeat at the Dow stalwart.


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GE Raises $15 Billion; Buffett Gets Preferred Stake
Bloomberg

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