GE Showing Some Bad mojo

[haha]

Ge down 8% today, much worse than the market, and at $12 and change Jack should soon be out yelling about what a loser Jeff is.

OK, a dividend cut seems very likely,. This degree of weakness is kind of funny; it really suggests that something pretty negative is in the works. Market cap is down to $129B.

Maybe a rating downgrade, and a dividend cut?

Ha

 

[Dawg52]

That is a big hit for a company that size. Looks like this baby is headed for single digits.

 

[Rustic23]

Friend of mine is a CPA. When ever GE came up he would point out the if you look closely you will see GE is a finance co. That they make more of their income from the financing of product than from the sale of products. If this is true, and considering what is going on in the financial markets, then a drop in GE would be expected.

 

[FinanceDude]

Immelt has said repeatedly that the dividend is "safe" for 2009. He didn't say anything about 2010.......

I think he is out within 3 months. GE Finance is weighing them down. I do know a few folks at GE Heathcare, and they are still carrying a 15 month backlog on their MRI machines..........

 

[CyclingInvestor]

I agree. GE was the last of the financials I held, but asset value uncertainty is so high I sold it a few months ago.

 

[cashbalancetrouble]

You don't have to look far to see GE cuts, people are disappearing left and right on NBC etc.

 

[Running_Man]

If you look at GE compared to the finance and REIT companies, GE actually did not do too bad. GE with a book value of $12, I have been assuming a 1-2 $ per share writeoff from their finance arm and a possible dividend cut, surely no increases. This company is not however a Citicorp or Bank of America. I believe it will survive to another day and is finally arriving at a value that a very long term holder will find profitable. I do not think this stock will go to zero.

However Value Line just this week dropped it's safety rating of GE from 1 to 2 and it's technical rating dropped as well. Those have typically been bad signs for the short term stock price of the effected company. GE has been a "1" in safety for as long as I can remember, so I think it is probable that down the road their "AAA" rating will be gone, which short term will not help the stock price either. Value Line is not expecting that GE will cut it's dividend but realizes no increases for the forseeable future. Insiders also are not buying yet as well.

Since my investing discipline is to require a company that can raise dividends in excess of inflation I am not and will not purchase it for myself, but a long term value holder might use a drop on disappointment in upcoming earnings in the coming weeks as a value investment entry. A price of 11 - 12 or under would be a good value entry point in my view.

REITS on the other hand are scaring me silly this year, I was looking at them in December as an investment thinking their drop was overdone but the possibility of rent reductions, and bankrupt clients to factor in makes me think REITS may be the banking sector of 2009.

http://www.valueline.com/dow30/f3807.pdf

 

[dex]

Ge down 8% today, much worse than the market, and at $12 and change Jack should soon be out yelling about what a loser Jeff is.

Jack did a good job but, he did ride the bull market. He also moved GE into financials. He should know when to keep quiet.

 

[FIRE'd@51]

We'll get some indication Friday when GE announces 4Q '08 earnings. Most likely they will give some guidance for '09.

 

[haha]

GE has been a "1" in safety for as long as I can remember, so I think it is probable that down the road their "AAA" rating will be gone, which short term will not help the stock price either. Value Line is not expecting that GE will cut it's dividend but realizes no increases for the forseeable future.

Not only would a downgrade hurt the stock it would also hurt the business. How much of GE Financial's profitability in the past has depended on their low cost of debt?

Ha

 

[NW-Bound]

I recently bought some GE shares. Will not buy more, but am not thinking about selling.

About Jack's past performance, I think he was just riding the bull market. It does not mean he was a bad CEO, only that he wasn't the demigod some might have believed. Taleb in "Fooled by Randomness" pointed out that so many widely acclaimed successes are merely circumstancial.

 

[haha]

I recently bought some GE shares. Will not buy more, but am not thinking about selling.

About Jack's past performance, I think he was just riding the bull market. It does not mean he was a bad CEO, only that he wasn't the demigod some might have believed. Taleb in "Fooled by Randomness" pointed out that so many widely acclaimed successes are merely circumstancial.

In the early to mid-eighties I subscribed to a weekly insider service that just listed all outright buys or sells. For months on end Jack Welch and many other officers bought GE shares heavily, with their own money. I ignored it, thinking who needs light bulbs and jet engines?

Then the stock took off on anamazing run that lasted a very long time and increased values many times over. GE became a financial powerhouse, as well as getting much deeper into other higher margin businesses.

GE killed its peers. Cosidering that it was a huge, mature conglomerate, I think there was some excellent management going on here.

http://moneycentral.msn.com/investo...1&DB=1&DC=1&D7=&D6=&symbol=GE&nocookie=1&SZ=0



Ha

 

[Running_Man]

Not only would a downgrade hurt the stock it would also hurt the business. How much of GE Financial's profitability in the past has depended on their low cost of debt?

Ha

It seeems the 80 percent stock drop from 2000 to here though is anticipating that, so that you would be getting short term action on the rating drop, but going forward GE assets still have a productive value. It may be a very long term to realize the value though after working through the credit mess. But they will have businesses to help them work through the mess.

The love for GE seems to have evaporated and the fear of Citi and BAC seems to have been dipped on GE but I think GE is the far better company with real long-term prospects. Still I will not abandon my strategy and buy it so perhaps I should not be commenting on this stock!?

 

[FinanceDude]

It seeems the 80 percent stock drop from 2000 to here though is anticipating that, so that you would be getting short term action on the rating drop, but going forward GE assets still have a productive value. It may be a very long term to realize the value though after working through the credit mess. But they will have businesses to help them work through the mess.

The love for GE seems to have evaporated and the fear of Citi and BAC seems to have been dipped on GE but I think GE is the far better company with real long-term prospects. Still I will not abandon my strategy and buy it so perhaps I should not be commenting on this stock!?

No, you should always comment. I believe it was YOU who said stay away from bank stocks. Anyone who listened is very happy today........

 

[haha]

It seeems the 80 percent stock drop from 2000 to here though is anticipating that, so that you would be getting short term action on the rating drop, but going forward GE assets still have a productive value. It may be a very long term to realize the value though after working through the credit mess. But they will have businesses to help them work through the mess.

The love for GE seems to have evaporated and the fear of Citi and BAC seems to have been dipped on GE but I think GE is the far better company with real long-term prospects. Still I will not abandon my strategy and buy it so perhaps I should not be commenting on this stock!?

I agree; just wanted to make a point about GE and ratings. I own it, and have bought more although not as cheap as it now is.

Ha

 

[saluki9]

It seeems the 80 percent stock drop from 2000 to here though is anticipating that, so that you would be getting short term action on the rating drop, but going forward GE assets still have a productive value. It may be a very long term to realize the value though after working through the credit mess. But they will have businesses to help them work through the mess.

The love for GE seems to have evaporated and the fear of Citi and BAC seems to have been dipped on GE but I think GE is the far better company with real long-term prospects. Still I will not abandon my strategy and buy it so perhaps I should not be commenting on this stock!?

I don't care that much about long term growth as long as they can keep paying the 9.7% dividend. I'll be happy to wait around for a while.

(I don't own the stock BTW)

 

[FinanceDude]

(I don't own the stock BTW)

Well,that makes a BIG difference,right? Our GE retiree clients are calling for Immelt's head on a platter........

 

[haha]

Well,that makes a BIG difference,right? Our GE retiree clients are calling for Immelt's head on a platter........

Hard to know, but to me he is just wrong place, wrong time. The landscape is littered with big time execs who made huge blunders. It is not at all clear to me that GE's problems having anything to do with Immelt. other than he is not God.

And I doubt the board gives a fig what the retirees want. Still, as long as it deflects some anger away from your firm its all good, right?

Ha

 

[FinanceDude]

Hard to know, but to me he is just wrong place, wrong time. The landscape is littered with big time execs who made huge blunders. It is not at all clear to me that GE's problems having anything to do with Immelt. other than he is not God.

And I doubt the board gives a fig what the retirees want. Still, as long as it deflects some anger away from your firm its all good, right?

Ha

Well, one of the hardest things to do is convince a person who is loaded up in company stock to divest themselves of a chunk of it.

I am still a big fan of guys like Peter Lynch and Jack Welch who know when a big storm is coming and duck safely into port..........

 

[NW-Bound]

Well, I have lost 25% in my GE position, a small position bought recently that did not constitute even 1% of portfolio. I bought it as an industrial play, but its financial arm is dragging down the rest of the corp.

I also continue to lose money in BRK/B, a 16% loss. This one, I have up to 3% of portfolio. One good thing I did not buy one share or two of the A shares about 2-3 months ago when I wanted to get some. That's more than 3% of my portfolio, for sure.

Cash+I-bonds at 50.4% as I write this. Probably won't buy any more equities until the smoke clears some. I say probably because it's tough to resist bargains out there. Nearly every sector got beaten down. I know, I know. Hormone like Unclemick likes to say.

 

[clifp]

I sold my GE position in Dec for tax purposes and was going to buy more at 15. Fortunately/unfortunately I've run out of cash. I would think it is in the too big to fail category but who knows at this point. On every conventional measurement from P/E to balance sheet strength, to Price to Book value, to dividend yield the stock looks cheap.

On the other hand who knows (including possibly GE Management) what troubles reside in GE Capital immense operations. I think I may write some puts at $10 the June contracts are trading at $1.50 making my basis $8.50 if they get exercised.

 

[laurence]

Phew, at these prices my trading button finger is starting to twitch. I could buy 700+ shares with my play account. GE is now around 1/4 it's highs, I can't imagine it won't test those highs in the next ten years, and all the while paying a dividend...I own no individual stocks right now but might be putting my toe in.

 

[ERD50]

On every conventional measurement from P/E to balance sheet strength, to Price to Book value, to dividend yield the stock looks cheap.

One thing bothers me. $130B in market cap, but over $500B in debt. So it seems to me that @ ~ $12/share, you are buying the confidence that GE can keep making money at a higher rate than the cost of its debt.

Which they may be able to do. But I'm not sure how any of us would determine that from the conventional measures. I think it takes a better knowledge of just how they are utilizing that debt to make money.

Just my view of it, I really, really don't know.

But that is why I posted recently about Intel. They have about 5x the cash as debt, so that is at least one variable out of the equation. Amazingly, AAPL has surpassed MSFT in cash holdings.


-ERD50

 

[FinanceDude]

One thing bothers me. $130B in market cap, but over $500B in debt. So it seems to me that @ ~ $12/share, you are buying the confidence that GE can keep making money at a higher rate than the cost of its debt.

Which they may be able to do. But I'm not sure how any of us would determine that from the conventional measures. I think it takes a better knowledge of just how they are utilizing that debt to make money.

Just my view of it, I really, really don't know.

But that is why I posted recently about Intel. They have about 5x the cash as debt, so that is at least one variable out of the equation. Amazingly, AAPL has surpassed MSFT in cash holdings.-ERD50

GE will do anything they can to keep their AAA rating, not that we can trust the rating agencies anymore. However, the folks that price GE's debt when they want a new bond issue are watching thing like a hawk.

GE will be ok as long as they can keep borrowing..........sounds a lot like any big company, hey??

 

[ERD50]

GE will be ok as long as they can keep borrowing..........sounds a lot like any big company, hey??

Heck, I'll be OK as long as I can keep borrowing!

-ERD50