I don't really care about short vol, since I am not short GE.
Short interest is pretty much a meaningless figure anyway, since most of the shorts are related to the HON arbitrage anyway and will vanish when the merger consummates.
I recall that is what was thought when conseco bought Green Tree Financial !! LOL !
I guess it was inevitable that this comparison would be made. But I'm having some trouble buying it as a fair comparison. I mean, HON's debt load is maybe twice what Green Tree's was, and GE is on the order of 100 times as big as CNC was at the time of its transaction. Even if I'm quite a ways off on these numbers, the HON deal still has to be about an order of magnitude smaller, relative to the acquiring company, than the CNC/GNT deal was.
To put it another way, GE paid about $45B for HON, plus HON's $7 in debt, call it $52B. That's about $5.20 per GE share. GE's been knocked down something like $9 since the deal was announced. From that alone it can be argued that, regardless of how much you think GE overpaid for HON, the overpayment is already reflected in GE's share price.
Now if accounting irregularities turn up at HON, all bets are off of course, but so far I've not heard any indications of that. Or if you're going with the trendy thought around here that now that the Naz has dropped 50%, it's the Dow's turn to do likewise, that's a completely different set of arguements. But it seems really hard to buy the notion that the HON acquisition, by itself, is capable of taking down Welch's entire empire. |
