when to buy GE

I don't think GE is going to zero, so I expect it to turn. If I can buy low and the turnaround takes years that's fine by me. "Dogs of the Dow" has been a winning strategy for me in the past.
 
I bought 950 shares at 19.10 today in a traditional IRA that I can't seem to get converted to a Roth in anticipation of selling 950 shares 15 Dec in my taxable accounts to create a tax loss.
 
Well ok on the buying, with the cut of forecasted results by 1 billion in just 4 weeks from the earnings announcement or about 15%, which came after a 50% cut in anticipated results. The dividend cut in 1/2 is what I expected with 7-8 billion of cash generation but if these results continue into next year the dividend will need to be cut a further 25%. I expect GE to trade under 15. Much will depend on the final results of this quarter for trading results into the new year.

On the upside you have Cramer after years of plugging for GE admitting today that GE was the single worst investment he has ever made.
 
Running_Man said:
On the upside you have Cramer after years of plugging for GE admitting today that GE was the single worst investment he has ever made.
Click to expand...

Turboslacker said:
Wow...that is saying a lot right there LOL
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I'm not sure that's true, though. I'm not a Cramer watcher, but I had a friend that worked for Bear Stearns, and I remember him telling me (just before the crash) that Cramer was insisting BS was solvent and not to sell. Of course, maybe that was just (horribly bad) advice, and not a personal investment. But how bad GE is as an investment depends on when you bought it. My original purchase in around '96 at ~$15-$16 dollars has been pretty good. 20 years of dividends and it's (currently) worth more than I paid.
 
My MIL’s portfolio (which I manage) has several thousand GE shares with a cost of about $6. At this point I think we will just hold it.
 
So, if GE is busted up, what is the valuation of its assets (real property, intellectual property, etc.). Can't think of the term: liquidation price?

How close is the current stock price to that range?
 
brucethebroker said:
So, if GE is busted up, what is the valuation of its assets (real property, intellectual property, etc.). Can't think of the term: liquidation price?

How close is the current stock price to that range?
Click to expand...

Book value of GE is around $9. In 2014 it was $14. GE basically sells for 2X book. Every asset they sell needs to sell for more than 2X book after tax in order to be favorable to shareholders. They have been unable to do so.

This is the problem with their strategy of a turnaround, with the money from asset sales they buy shares and pay dividends. The strategy is a liquidation strategy and has been so since 2011, they have spent about 35 billion buying shares back. GE also retired shares in exchange for purging themselves of Synchrony financial. This meant GE retired 670 million shares of stock in exchange for a division in 2015. Since then GE share price has fallen 33% while Synchrony has risen 50%. On the 18 Billion the stock was worth at the time GE has now lost 6 billion investing in themselves - without reporting a dime paid for stock while Synchrony increased by 9 Billion. And that money is gone for GE shareholders, they are now borrowing just to be able to have maintenance capital for remaining divisions. They also have lost an additional 12 Billion in enterprise value on share buybacks while the pension debt has soared by 32 billion.

This is not a CAT situation where CAT was in the midst of a downturn and had invested heavily in themselves and didn’t get the results expected. See the CAT thread from a couple years ago for a true Dogs of the Dow situation. This is the opposite, shrinking productive assets in hopes of clarity because apparently management doesn’t know how to manage current asset base…DUH!

They borrow for capital investment and pension expense which is becoming an albatross around their neck. You end up with a gradually smaller company with less revenues and more debt, hence less valuable and share price and enterprise value falling faster than share count— hence a destruction of value less the distribution of assets via dividend, the dividend the past few years and apparently going forward is a slow liquidation dividend. In the last 5 years you have about $5 in dividends, $11 in share price reduction and $5 in book value reduction. Going forward the path should be about $3 in dividends over the next 6 years and $6 in share price destruction along with another $2 in book value reduction yielding a stock around $12-13 and book value of $6-7. No thank you. Any five-seven year bond though should be perfectly safe as financing will continue to be able to make all the debt payments at the time.

Remember all those annoying commercials about GE being a software company and needing those new high tech grads? Was a big push for the modernization of GE… this is one of the main divisions being downsized because their software of the future division has been a disaster

Furthermore, this thread was started as if GE was a Dogs of the Dow candidate. It is not.. the dividend is just average now it’s dividend is about the same now as JNJ and almost certain to be cut again, unless corporate performance turns around rapidly. And when GE is pushed out of the Dow index in 2019 which I think is a near certainty with their continued shrinking focus as no longer a relevant company does that strategy still hold?
 
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brucethebroker said:
So, if GE is busted up, what is the valuation of its assets (real property, intellectual property, etc.). Can't think of the term: liquidation price?

How close is the current stock price to that range?
Click to expand...
That outcome is not even remotely possible. If GE were to be broken up, an extremely unlikely outcome, then the separate businesses would be marketed as going concerns.

Ha
 
Buy now. It is in the Total US Stock Market index fund. I buy that monthly. So I am buying GE and all the others. It is in there. I don't buy individual stocks.
 
brucethebroker said:
So, if GE is busted up, what is the valuation of its assets (real property, intellectual property, etc.). Can't think of the term: liquidation price?

How close is the current stock price to that range?
Click to expand...
From MarketWatch.com:
A widely followed Cowen analyst recently calculated a valuation for GE stock, giving it a total price tag of $11 to $15 per share if the company was parceled off and sold for parts. That’s an ugly 25% to 45% downside from here, and doesn’t show a lot of value to be had from selling off lesser parts of the business.
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Saw on news today that GE is going out of the light bulb business.
 
Running_Man said:
Book value of GE is around $9. In 2014 it was $14. GE basically sells for 2X book. Every asset they sell needs to sell for more than 2X book after tax in order to be favorable to shareholders. They have been unable to do so.

Furthermore, this thread was started as if GE was a Dogs of the Dow candidate. It is not.. the dividend is just average now it’s dividend is about the same now as JNJ and almost certain to be cut again, unless corporate performance turns around rapidly. And when GE is pushed out of the Dow index in 2019 which I think is a near certainty with their continued shrinking focus as no longer a relevant company does that strategy still hold?
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Great response to my questions, thank you.
 
Just curious...any takers at $17 & change?

finance.yahoo.com/video/worst-company-2017-according-yahoo-223340812.html
 
brucethebroker said:
Just curious...any takers at $17 & change?

finance.yahoo.com/video/worst-company-2017-according-yahoo-223340812.html
Click to expand...

I took a flyer on them this week. To me, their current predicament is similar to what IBM went through in early 90s. They need to remake themselves. I'm betting Flannery can do it, but it will take a few years. Will admit my buying philosophy a lot of the time is to buy when many are afraid to. :D
 
brucethebroker said:
Just curious...any takers at $17 & change?

finance.yahoo.com/video/worst-company-2017-according-yahoo-223340812.html
Click to expand...

Analysts were talking about GE and that the 2018 tax reduction puts GE in a worse position. GE is one of the Dogs of the Dow and may be poised for bounce in 2018, but I'm steering clear for now. I think it can go below $16 and may test $15, but I've been on wrong side of bet before.
 
Sounds like a possible pick for my 2018 for my speculation bucket. Maybe dollar cost average it for a few months...
 
That shareholder value added BS isn't working out so well... Probably time for a new batch of MBAs.
 
With a whole week behind us, GE is the top Dow stock of 2018. Just sayin'.
 
GrayHare said:
With a whole week behind us, GE is the top Dow stock of 2018. Just sayin'.
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This makes sense to me because the folks / fund managers who sold back in 2017 for tax-loss harvesting and to dress up their year-end portfolios to show they didn't have that dog GE are buying it back again.

Wasn't the 52-week low reached at the end of December? So it is still a little too early for taxable investors who sold then to have bought it back.

It is trading below the price it had before the big dump in mid-November, so there may be some selling for TLH purposes still.
 
Recently Buffett expressed interest in buying GE, though he didn't reveal at what price.
 
In over-night trading, GE took a huge beating. Going to open decidedly down.
 
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