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alstry (35.40)

GE paying 10 1/2% PLUS in the money warrants

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October 01, 2008 – Comments (7)

So we are probably looking at an effective rate of around 15-20%.

If GE is forced to pay such high rates to raise capital......what do you think the rest of the world is going to be paying very very soon!!!!!!!

Between GS and GE both AAA and US Grade Prime....two of the most influential companies in America both paying effective rates north of 15%.....this is going to destroy DCF valuations going forward if applied to analysts' models.

We could be on the verge of the biggest equity revaluation in human history.

For those who this is too technical........this may help:

LOOK OUT BELOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

7 Comments – Post Your Own

#1) On October 01, 2008 at 3:03 PM, jesusfreakinco (28.80) wrote:

Scary stuff.  Is Berkshire the only company with any significant cash on hand to invest?

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#2) On October 01, 2008 at 3:24 PM, alstry (35.40) wrote:

How  long do you think Buffett was waiting for this day????

Lucky for him he didn't die first.

The joke is that he is killing the common stockholders and they don't even know that yet.

Can you imagine the conversations he and Munger have???

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#3) On October 01, 2008 at 3:44 PM, goldminingXpert (29.40) wrote:

Yup. I did put up my 2nd crash warning of the week in my blog last night. The first one, obviously, came true as predicted, and another crash shall also come to pass.

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#4) On October 01, 2008 at 4:45 PM, leohaas (32.23) wrote:

Kudos to Buffett!

Disclosure: I owned BRK stock at the time of writing. And I have no intention of selling it. Ever.

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#5) On October 01, 2008 at 5:40 PM, FleaBagger (29.43) wrote:

Buffett is a pirate who profits from the irresponsibility of the gov't. We must emulate him.

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#6) On October 01, 2008 at 8:39 PM, rd80 (98.47) wrote:

I think GE did this as an insurance policy against a credit meltdown.  CNBC reported that this capital raise combined with cash on hand was about equal to their short term credit lines.   GE  doesn't plan on changing how they roll their credit, but this would protect them against a credit lock-up.

Expensive, but a wise move if that's why they did it. 

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#7) On October 02, 2008 at 7:44 PM, dcwalk75 (29.06) wrote:

Hey so why not roll the dice and buy too.

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