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GE-Let's Hope This is the Last Shoe to Fall
Old 10-01-2008, 02:30 PM   #1
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GE-Let's Hope This is the Last Shoe to Fall

Buffett buys $3b GE preferred at 10% yield. And, GE to make common stock offering.

Trickle, trickle, trickle...

Buffett to buy $3B of GE preferred stock: Financial News - Yahoo! Finance
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Old 10-01-2008, 02:45 PM   #2
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I wish we could get terms like that on the public market. 10% yield on preferred for a good blue chip company and warrants to buy stock at ~10% off the asking price today. And that is on a stock that yields 5.5% dividends at the warrant exercise price.

I think the preferred and warrants he received from Goldman Sachs were similarly juicy. Is this how Buffett can deliver outsized returns beyond what us Main Street individual investors can obtain? Niiiice...
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Old 10-01-2008, 02:46 PM   #3
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I wish we could get terms like that on the public market. 10% yield on preferred for a good blue chip company and warrants to buy stock at ~10% off the asking price today. And that is on a stock that yields 5.5% dividends at the warrant exercise price.

I think the preferred and warrants he received from Goldman Sachs were similarly juicy. Is this how Buffett can deliver outsized returns beyond what us Main Street individual investors can obtain? Niiiice...
It must help.
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Old 10-01-2008, 03:17 PM   #4
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There is an advantage to being considered the smartest investor around when times are tough.

I'm sure GE did this mainly to make it easier to raise the other capital.

People will be more likely to sign up for the stock offering with the Buffett stamp of approval.

Of course, his investment is a lot different than the deal the new shareholders get.


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Originally Posted by FUEGO View Post
I wish we could get terms like that on the public market. 10% yield on preferred for a good blue chip company and warrants to buy stock at ~10% off the asking price today. And that is on a stock that yields 5.5% dividends at the warrant exercise price.

I think the preferred and warrants he received from Goldman Sachs were similarly juicy. Is this how Buffett can deliver outsized returns beyond what us Main Street individual investors can obtain? Niiiice...
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Old 10-01-2008, 03:57 PM   #5
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There is an advantage to being considered the smartest investor around when times are tough.

I'm sure GE did this mainly to make it easier to raise the other capital.

People will be more likely to sign up for the stock offering with the Buffett stamp of approval.

Of course, his investment is a lot different than the deal the new shareholders get.
Even Warren himself has said: "I have many business associates out helping me look for deals, most of which never get considered"..........translation (Unless I can make a killing quickly)
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Buffet/GE
Old 10-01-2008, 05:07 PM   #6
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Buffet/GE

Goldman was at 125 when Buffet bought. Today it's at 134. It has been as high as 138. I hope his purchase of GE stock has a similar effect.
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Old 10-01-2008, 09:47 PM   #7
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A new Buffet book is going to be released next week. It will be the 1st one that he has a say in the material. From what was described in a preview, he supposedly described the scenario playing out a year or so before it happened and went down the list of those that would likely be affected. Although he has a ton of capital and connections, the dude is pretty freaking smart too.
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Old 10-01-2008, 10:13 PM   #8
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Goldman was at 125 when Buffet bought. Today it's at 134. It has been as high as 138. I hope his purchase of GE stock has a similar effect.
I hope you are right (as I own the stock). However, given that GE had to pay 10% (with a minimum 3 years until they can call it) is a whole-bunch-of-basis-points above Treasuries. What does this say about other, less robust borrowers and their ability to get credit?
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Old 10-08-2008, 12:59 PM   #9
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this seems like an opportune time to buy GE right now...it's at a 5 yr low....high divs....


how can one get in on the stock offering? or is it best to just buy the stock thru a broker?
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Old 10-08-2008, 10:50 PM   #10
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I really cant believe (well I CAN believe given the situation) that GE - such a diverse company, although very exposed to the financial side of things - is selling at 20/share. To me this is a very opportune time to own a portion of this company with minimal downside risk....if for nothing other than the Div's
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Old 10-08-2008, 11:04 PM   #11
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I made a couple purchases of GE yesterday and today. I don't think it's a stock that is going to bounce back really fast, but rather a slow and steady rise as things get sorted out.
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Old 10-08-2008, 11:12 PM   #12
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I made a couple purchases of GE yesterday and today. I don't think it's a stock that is going to bounce back really fast, but rather a slow and steady rise as things get sorted out.
I'm with you. Bought a couple $K for my gambling account today. I'll check it again in 10 years or so. Let's see, 7%/yr *10....maybe it will be at $40! Excellent! Plus dividends.
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Old 10-09-2008, 03:07 PM   #13
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I have to honestly say I didn' think GE would be under $20 a share, so I bought some for myself and clients. I think a 5-7 year double sounds good, plus the high dividend is an extra treat.........
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Old 10-09-2008, 03:53 PM   #14
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Analysts announced today they are now expecting GE to announce it will be cutting it's dividend tomorrow.
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Old 10-09-2008, 03:59 PM   #15
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GS's trailing price to earnings ratio is six. That's six-point-zero. Amazing. And GE is at 8 and change.
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Old 10-09-2008, 06:48 PM   #16
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Analysts announced today they are now expecting GE to announce it will be cutting it's dividend tomorrow.
Which analysts? Jeff Immelt said a couple of weeks ago that the dividend was safe through 2009. I think it's likely the dividend won't be increased, which is a big deal for GE, but a cut would cause Immelt to lose all credibility.
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Old 10-09-2008, 06:51 PM   #17
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I think Immelt is like Bush, about the same approval rating. Wasn't GE in the 60's when he took over. Ya think he has any credibility at this point.

Tomorrow they announce earnings, should be interesting. If they bomb the market will follow suit.
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Old 10-09-2008, 06:57 PM   #18
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i got more today around 19, but expect it to keep dropping a bit....might see 16 at this rate...that's my next limit order
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Old 10-09-2008, 07:15 PM   #19
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i got more today around 19, but expect it to keep dropping a bit....might see 16 at this rate...that's my next limit order
Have you considered a targeted buy by selling puts? With the market volatility as high as it is today (VIX = 63%), the premiums are pretty fat. You can sell the Jan 17.5 put for about 2.50. Of course, if the stock rallies from here you won't own it, but you will still get about a 13% return (2.5 / 19) in 3 months. If GE is below 17.5 at the January expiration, you will own the stock at 15 (17.50 - 2.50).
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Old 10-09-2008, 09:24 PM   #20
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I'm more interested to see if they cut the dividend tomorrow.
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