I am surprised that GE Aerospace can outperform analyst expectations. It is one of or the one issue most heavily analyzed. For most to miss the trend in aerospace orders and build speaks volumes for how little true analysis is being done.

GE Aerospace Non-GAAP EPS of $2.25 beats by $0.24, revenue of $13.29B beats by $410M

Oct 20, 2026, 6:33 AM ET, Seeking Alpha

• GE Aerospace press release (GE): Q3 Non-GAAP EPS of $2.25 beats by $0.24.
• Revenue of $13.29B (+17.6% Y/Y) beats by $410M.
• Total revenue (GAAP) of $14.1B, +16%; adjusted revenue* $13.3B, +18%;
• Total orders of $19.0B, +49%;
• FY26 Guiadnce: Revenue expected consensus of 19.07%. Adj EPS of consensus of $7.93
• Based on GE Aerospace’s year-to-date performance and outlook for the fourth quarter, the company is raising total company guidance across the board and now expects:

• Shares +1.9% PM.

Industrial Production(IndPro) posts a cycle high of 103.9606 and poised to exceed the all-time high posted Dec 2018 of 104.0936.

The doom and gloom that has been circulating in the media is not warranted.

I had Gemini run a comparison between Carret and Graham the results are summarized below. My own approach evolved to be more Carret than Graham with putting management skill at the center vs mathematics. The industry made a choice long ago to go with Graham’s approach because it was far more definite. After all, mathematical analysis provides a price point per share to the penny and it seems scientific. The problem with this is that math does not run companies. It is only used by management teams to outline to others and to themselves, ‘How are we doing in the bigger picture!’. It remains the actual process of management to mesh all the parts of a business together into some form of a Swiss timepiece so that others can tell what time of day it is within the competitive business landscape and the ever bigger global economic-scape.

Modern Portfolio Theory is all Ben Graham-thinking. Carret’s views have not been grasped but for a few.  Singleton and Buffett seem to have operated on Carret’s basis. Neither outlined this as well as Carret. Management skills are only identified over a period of time. They are defined by what they say they expect to do, what they in fact end up doing with exceptions during unexpected challenges being very good identifiers of management skill.

Identifying a competent management team has a process that can be taught but the actual skill set requires human insight personally developed over multiple examples across multiple years and even across one or two business cycles. Once developed, a competent management team installs their process into their business model at all levels including their Board of Directors. They want all to understand where in the operation of the business each has a role and personal responsibility to act in the best interests of not only the business but the customer. We call this Lean Six Sigma.

When one identifies management teams operating on Lean Six Sigma principles whose corp share price is heavily discounted, one will find a good investment. Carret’s “The Art of Speculation” link is:

https://dn721609.ca.archive.org/0/items/artofspeculation0000phil/artofspeculation0000phil.pdf

 Head-to-Head Comparison: Carret vs. Graham

This development will forever change this company…..in a very good way

General summary

HHH closed its roughly $2.1B cash purchase of Vantage, a specialty insurance and reinsurance company, on June 4. That completed its shift from a pure real estate company into a holding company with two platforms: Howard Hughes Communities and Vantage. Because Vantage only shows up for the last few weeks of the quarter, year-over-year GAAP comparisons aren’t a clean run rate.

Bill Ackman described the strategy as Berkshire-like: hire top insurance leadership, put capital into Vantage, and let the real estate business sell land, condos and selected assets to fund insurance growth. Marc Grandisson said Vantage’s full-quarter combined ratio was 101.6%, hurt by $18M of catastrophe losses tied to the Iran conflict and $19M of adverse prior-year reserve development, though the underlying accident-year combined ratio excluding cats improved to 91.4%. Gross and net written premiums both rose 29%. Ryan Israel said the team quickly rebalanced Vantage’s about $3.4B investment portfolio into short Treasuries and equities. David O’Reilly reported master planned community earnings before taxes up 32% to $134.7M, operating assets NOI up 2% to $70.5M, about $227M of net proceeds from Park Ward Village condo closings, and a condo pipeline of more than $4B of expected revenue with about 78% already under contract.

Opportunities

• Insurance platform and leadership: Management sees Vantage as the long-term growth engine, with a mid-teens return on equity target over the cycle, permanent capital, about $300M of new capital, and fee-free investment management from Pershing Square. Grandisson is Executive Chair, and David Gansberg is CEO designate once a roughly 10-month noncompete ends.
  • Ackman: “we now had really our dream team in the insurance industry.”
• Real estate as self-funding capital for Vantage: Park Ward Village brought in $226.6M of net proceeds after debt repayment, and the Creekside Park / The Grove sale brought in $127.3M, or $30.2M net. Ryan Israel pointed to roughly $2.5B to $3B of excess free cash flow over about five years from selling lots, condos and noncore assets, plus joint ventures.
  • Ackman: “the nature of our real estate business is that it’s effectively in large part, self-liquidating.”
• Land pricing and scarcity: Master planned community earnings before taxes rose 32% to $134.7M. First-half residential land sales covered 206.7 acres at an average of $1.2M per acre. New home sales rose 12%, including Woodlands Hills up 34% and Bridgeland up 17%. Residual master planned community land is projected at about $5.6B of margin-effective residual value, excluding Teravalis and Floreo.
  • O’Reilly: “We’ve often said that we’re not selling land, we are harvesting scarcity, and this quarter is another example of that principle.”
• Condo cash pipeline: Margins are largely locked in years before delivery. Park Ward Village closed 97% of its units in the quarter, and buyer deposits plus nonrecourse construction loans fund most of the development cost.
  • O’Reilly: “we largely lock in our margins years before delivery. And today, we have more than $4 billion of future expected condominium revenue with roughly 78% already under contract.”
• Barbell investment strategy on the insurance float: By quarter-end more than 60% of the portfolio was in short-term Treasuries, with about $1.1B in equities. Most of the inherited fixed-income book was sold, equities later reached about 40% of the portfolio, and management aims for at least about 50% equities over time.
  • Israel: “we moved very quickly to rebalance that portfolio to a barbell approach where we have as of the end of the quarter… more than 60% of the overall portfolio allocated to short-term U.S. treasuries… And then we also had about a $1.1 billion equity portfolio.”

Risks

• Catastrophe losses and reserve development at Vantage: Those items added 10.2 points to the combined ratio. The full-quarter group combined ratio was 101.6%, versus 94% a year earlier. In the stub period in HHH’s results, Vantage still showed $4.7M of underwriting income but a $20.8M pretax loss because of purchase accounting.
  • Grandisson: “we had $18 million of cat losses tied to the conflict in Iran and $19 million of adverse prior development largely in the discontinued transaction liabilities line, totaling a 10.2% impact on the combined ratio.”
• Softening insurance pricing: Rates are off their peak and competition is rising. Management still sees attractive returns in places, but expects quarter-to-quarter swings.
  • Grandisson: “Today, we are primarily in Stage 3 with casualty seemingly stalled in Stage 2 and a few property and short-tail lines already entering Stage 4.”
• High cost of capital: Management doesn’t want to issue equity near current prices and plans to use third-party and joint-venture capital instead.
  • Ackman: “we have very high-cost capital, certainly, as the market assigns it to us. We’re not a REIT. We’re kind of an unusual company.” He also said: “We don’t think that’s an intelligent approach, certainly at anything close to current share prices.”
• Rating-agency treatment of the group: AM Best affirmed Vantage’s A- rating with a positive outlook, but S&P’s action reflected HHH as parent rather than Vantage on a stand-alone basis.
  • Grandisson: “S&P’s rating action reflected its group methodology, which included Howard Hughes as opposed to the stand-alone quality of Vantage for which the anchor rating remained A-.”
• Mark-to-market and stub accounting noise: The press release shows a $38.3M net investment loss in Q2. Israel said stocks were down about 3% through quarter-end while the book was being built, then recovered about 4% to 5%. Condo closings and the Vantage stub also make GAAP year-over-year income comparisons hard to read as a run rate.

Year-over-year changes (Q2 2026 vs. Q2 2025)

The company itself says period-over-period comparisons for total revenues, net income and EPS aren’t comparable and don’t show run-rate performance, because Vantage is only included from June 4 to June 30.

Income statement

Vantage’s full historical quarter (not the stub in HHH’s GAAP): gross written premiums $473M (+29%), net written premiums $325M (+29%), net earned premiums $295M (+22%), accident-year combined ratio excluding cats 91.4% vs. 96.2%.

Balance sheet (June 30, 2026 vs. Dec 31, 2025 — post-acquisition, not year-over-year)

Liquidity at quarter-end was $2.6B of cash, plus $515M undrawn on the Bridgeland notes and $1.0B of undrawn property-development lender commitments

Bank of America a produced another strong quarter. the consumer and commercial markets remain strong and credit quality is solid….

The consumer, wealth and commercial businesses drove the quarter. Loans and deposits grew, wealth management brought in strong client flows, net interest income (NII) rose 8%, and credit quality improved. Trading and investment banking were weaker, mostly in fixed income after a sharp move in interest rates. Reported net income was $6.9B, or $0.91 a share. That includes a $1.2B regulatory settlement over anti-money-laundering and sanctions orders with the OCC and FinCEN, which isn’t tax-deductible. Without that charge, net income was $8.1B, or $1.08 a share. Management kept its full-year 2026 NII growth target of about 8% and guided to 8% or more for 2027. They said remediation costs are already in the expense base, there’s no asset cap, and they expect revenue to grow faster than expenses again in Q4. The CET1 capital ratio was 10.9%, and the bank returned $8.3B to shareholders through dividends and buybacks.

Opportunities

• NII growth and the 2027 outlook: NII on a tax-equivalent basis was $16.6B, up 8% year over year. The asset yield rose 15 basis points to 2.16%, heading toward a 2.3% medium-term target. The guidance assumes three quarter-point rate hikes through June 2027, plus continued loan and deposit growth and higher yields as fixed-rate assets reprice.
  • CFO Borthwick: “We still expect to hit that full-year revised NII growth guidance of approximately 8%. For 2027, we currently expect full-year growth of NII to be 8% or more.”
• Customer growth: The bank added about 200,000 net new consumer checking accounts, its 31st straight quarter of growth, for about 39 million checking customers in total. Card balances grew about 5%, and commercial loans rose in every segment.
  • CEO Moynihan: “We added another 200,000 in the quarter of net new core consumer checking accounts… It has been nearly eight straight years of quarterly progress and growth.”
• Wealth management: Revenue rose 13% to $7.1B and net income rose 22% to about $1.5B. Client balances reached $5.1T, up 9%, with about $38B of net client inflows in the quarter.
  • Borthwick: “Client balances climbed above $5 trillion for the first time, up 9%, while AUM rose 12% to about $2.4 trillion.”
• Credit quality: Credit loss provisions were about $1.3B, flat from a year ago and down from Q2. Net charge-offs fell to 0.44% of loans, and the card loss rate was 3.22%. Problem commercial loans were at their lowest level since late 2019.
  • Borthwick: “Credit quality remains stable and in fact improved modestly once again this quarter.”
• AI and productivity: Headcount fell about 3,500 from a year ago even as the bank added sales staff, and about 130 AI projects are running.
  • Moynihan: “We expect that number to go from the $250, $300 this year to $700 million next year in terms of projects we put in the pipeline… We are 10% more efficient [in tech development], so next year we get 10% more work for the same cost.”
• Room to lend: Deposits ended at about $2.04T. The average rate paid on deposits was 1.49%, up only 0.03 points.
  • Moynihan: “We have $2 trillion in deposits and $1.2 trillion in loans. There is a lot of room to grow loans without thinking about needing to raise money to fund them.”

Risks

• The $1.2B settlement and regulatory orders: The charge took $0.17 off EPS and settles the penalty from the 2024 cease-and-desist order. Remediation is underway and cost “a couple hundred million dollars plus” this quarter. Analysts questioned management’s confidence given how the stock reacted.
  • Moynihan: “We understand the seriousness of compliance, and we are responsible for getting it right… The ongoing cost remediation is embedded in our company’s expense base.”
  • Borthwick: “No, there is no asset cap here… it should not impact our clients in any way.”
• Weaker trading: Sales and trading revenue fell 5% to $5.1B, with fixed income trading down 17% and total Global Markets revenue down 6%. Management blamed lower client activity after rates rose about 0.85 points during the quarter, and said rates have been calmer so far in Q4.
  • Borthwick: “Reduced client activity and changing market conditions, including a major shift in interest rates, significantly affected our leading FICC micro businesses, including credit, mortgages and municipals.”
• Slower investment banking: Investment banking fees fell 11% to $1.8B on weaker advisory and debt underwriting, though they’re still up 16% for the year so far. Borthwick said rate swings made buyers and sellers “readjust valuations and expectations.” He added that the deal pipeline is still healthy and he’s hopeful about Q4.
• Capital ratio and pending rules: The CET1 ratio fell 0.35 points from Q2 to 10.9%. Loan growth, payouts that were large relative to earnings after the settlement, and about a $1.8B loss on bond values from higher rates all pulled it down. Management wants to see the final capital rules, expected in Q4, before giving firmer buyback guidance. They called the roughly 6% tangible common equity level flexible rather than a hard floor.
• Expense growth: Reported expenses were $19.7B, up $2.4B, including the settlement. Without it, expenses were about $18.5B, up high single digits on pay tied to revenue, technology, AI and marketing. Management expects revenue to grow faster than expenses in Q4 and still targets a 2 to 3 point gap over the medium term. Some extra remediation spending will stay in the expense base until the work is done.

Year-over-year changes (Q3 2026 vs. Q3 2025)

Income statement

Balance sheet (Sept 30, 2026 vs. Sept 30, 2025)