GE-Let's Hope This is the Last Shoe to Fall

[haha]

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

 

[FUEGO]

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...

 

[haha]

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.

 

[Hamlet]

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.

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...

 

[FinanceDude]

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)

 

[flatrock]

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.

 

[wildcat]

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.

 

[copyright1997reloaded]

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?

 

[thefed]

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?

 

[thefed]

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

 

[Uncle Drew]

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.

 

[harley]

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.

 

[FinanceDude]

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.........

 

[Running_Man]

Analysts announced today they are now expecting GE to announce it will be cutting it's dividend tomorrow.

 

[soupcxan]

GS's trailing price to earnings ratio is six. That's six-point-zero. Amazing. And GE is at 8 and change.

 

[FIRE'd@51]

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.

 

[73ss454]

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.

 

[thefed]

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

 

[FIRE'd@51]

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).

 

[soupcxan]

I'm more interested to see if they cut the dividend tomorrow.

 

[Running_Man]

Dividend Stocks - The Dividend Daily » Blog Archive » General Electric May be Next to Cut its Dividend (GE)

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.

 

[FIRE'd@51]

No analysts names are mentioned in the blog. The BAC situation is not even comparable. BAC hasn't earned its dividend in three of the past four quarters. Plus they have aquired two large companies (CFC and MER) with all the attendant write down risks. GE, on the other hand, has had earnings in excess of their dividend every quarter, and current estimates for the 3rd quarter and next year are in excess of the dividend.

 

[clifp]

GE earnings are .43-.45 right at expectations. (Wow what a surprised GE hit its numbers, how often has the company done this over the last generation or two.) The BOD say they will maintain the dividend at $1.24 . So at ~$20 a share it is pay 6% dividend, it is earning make the PE around 11.

I don't really care if the crazy market drives the price of the stock down to $10 a share today. I'm sticking with it. On another board somebody suggested that short term GE bonds yielding 6-7% maybe a better investment cause during a bankruptcy they'll get paid off.

I am pretty sure that stock will trade considerably below its current price sometime in the next few weeks, I don't really care. Uncle Sam is offering to pay 1.7% to loan them money for two years, GE is going to give me 3x that. The way I figure it if GE files for bankruptcy in the next couple of years, neither the economy nor the financial markets or the bankruptcy courts will be working worth a damn. Now Uncle Sam promises to give me the money back after two years. GE credit rating is AAA but since the ratings is from the almost useless credit rating agencies I'm not sure that means much.

On the other hand I have a pretty good measure of the IQ of the 535 members of Congress and the top 100 folks in the Bush administration, I'll take the top 600 folks at GE any day.
In short, I trust GE more than Uncle Sam

 

[al_bundy]

going to go out on a limb and say GE will bottom out around $14 or $15

 

[jimnjana]

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

I bought some today for the first time around 19... Will buy again if it dips as you say it might. Hopefully any additional dilution will be kept to minimum. their qtrly report was not half as bad as some were projecting. If their finance division hangs in their, we may not see dip in pps

Jim