GE An $ 8 stock by December?

[aja8888]

Here's a nice summary on what GE has done to itself over the last decade or so:

Shares of General Electric [GE] are down over 3% this beautiful Friday morning, trading at $9.20. If they close at this level, they would mark a new nine-year closing low.

https://wolfstreet.com/2018/11/02/w...id-question-when-will-ge-file-for-bankruptcy/

 

[bobandsherry]

Here's a nice summary on what GE has done to itself over the last decade or so:




https://wolfstreet.com/2018/11/02/w...id-question-when-will-ge-file-for-bankruptcy/

And for this run, Immelt was made $21 million the year before he was removed from turning GE into the Titanic ("only" received $8.1M comp the year he was booted) And the GE Exec's were paid a bonus last year but Flannery received $9 million in compensation as he was running this beast deeper under water.

GE did not pay bonuses to Flannery, top execs in 2017

And now GE pays Culp $21 million a year for next 4 years, either to right the ship or put it deep into the abyss of BK. And if he does turn the ship around, a 50% increase ($18.60 target) in GE by 2022 nets him $47 million more. And it gets more insane if the shares rise further.

New GE CEO Larry Culp signs stock-heavy contract worth up to $300 million if shares soar

Guess all those who were on pensions and were counting on GE dividend for the income must rest well knowing the Exec's who cost them their dividend has so richly been rewarded for a job well done.

 

[Lakewood90712]

Well, Flannery did some belt tightening. He ordered the corporate flight dept. shutdown after the " Phantom empty backup jet " sent on many executive flights story could not be buried.

https://www.businessinsider.com/jeff-immelt-plane-ge-board-did-not-know-ceo-extra-jet-wsj-2017-10

 

[audreyh1]

What is stunning is that GE spent 24 billion in 2016 and 2017 (average price about $30) - which is equivalent to all income made from 2012 to 2017 buying back their own stock and basically setting the stage for the company to potentially go under when they could have funded all of their issues with insurance and pensions but didn't because of prevailing wisdom of "providing return to investors".

This is what drives me bonkers about corporate buybacks. GE is an extreme example to be sure, but there are many large companies that have shrunk themselves yet bought stock at high prices desperately to keep the earnings per share up and thus the stock price elevated. It’s financial hocuspocus and can be ruinous to the underlying business. That money just goes “poof”.

There are companies who use buybacks prudently, but abuse seems widespread.

P.S. I can’t believe the first part of pocus gets starred out if written standalone. I vaguely remember a poster by that name......

 

[Spiff]

Were there a lot of insider sales while GE was buying back shares?

 

[Lakewood90712]

Out of 16 so called " Annalists" listed on one of the financial sites , in the past 30 days, one sell , has not changed............ 8 were "buy" 30 days ago , and now 10 are "buy".

Unfortunately , I don't think we have seen all the duct tape and bailing wire that was used on the weaker parts of the company for the last 2 decades. I think Immelt and associates should pay back dues to the Magicians Union Local 23.

IMO a lot of the foundations for these financial failures were under the Jack Welch era, but keeping the ship on the same course when rocks appear cant be tied to him.

 

[bobandsherry]

Out of 16 so called " Annalists" listed on one of the financial sites , in the past 30 days, one sell , has not changed............ 8 were "buy" 30 days ago , and now 10 are "buy".

Unfortunately , I don't think we have seen all the duct tape and bailing wire that was used on the weaker parts of the company for the last 2 decades. I think Immelt and associates should pay back dues to the Magicians Union Local 23.

IMO a lot of the foundations for these financial failures were under the Jack Welch era, but keeping the ship on the same course when rocks appear cant be tied to him.

Funny, he wrote books and many other exec's of other companies head him and his philosophy in high esteem. Guess history shows how well the "Welch Approach" worked.

 

[38Chevy454]

Funny, he wrote books and many other exec's of other companies head him and his philosophy in high esteem. Guess history shows how well the "Welch Approach" worked.

I worked for Generous Electric for 5 years under Welch. I was not impressed then and even less now. Although I feel bad for the retirees under the pension system that may get shafted, and for anyone holding large amounts of GE stock expecting the dividend; I do not have any sympathy for GE and feel they are getting what they deserve. Welch was absolutely not the wonderboy CEO that others made him to be. I doubt history will ever hold him responsible for what he actually did to break the foundation of GE and start the big fall. Welch was only good at keeping the stock price up because he sold the assets of GE, that had been built up over all of the years.



I am glad I took the buyout of my small pension that I had, as I have very low confidence that it would have been around for me in another 6 years. My current feeling about GE rhymes with "truck GE"

 

[ERD50]

.... I am glad I took the buyout of my small pension that I had, as I have very low confidence that it would have been around for me in another 6 years. ...

Wouldn't the PBGC cover your pension? A 'small pension' from 5 years work would be under the PBGC caps. So it shouldn't make any difference whether GE is around or not, there is insurance under PBGC.

-ERD50

 

[bobandsherry]

And for this run, Immelt was made $21 million the year before he was removed from turning GE into the Titanic ("only" received $8.1M comp the year he was booted) And the GE Exec's were paid a bonus last year but Flannery received $9 million in compensation as he was running this beast deeper under water.

GE did not pay bonuses to Flannery, top execs in 2017

And now GE pays Culp $21 million a year for next 4 years, either to right the ship or put it deep into the abyss of BK. And if he does turn the ship around, a 50% increase ($18.60 target) in GE by 2022 nets him $47 million more. And it gets more insane if the shares rise further.

New GE CEO Larry Culp signs stock-heavy contract worth up to $300 million if shares soar

Guess all those who were on pensions and were counting on GE dividend for the income must rest well knowing the Exec's who cost them their dividend has so richly been rewarded for a job well done.

And in addition to his compensation he was paid while he continued to run the company into the ground and was fired, Flannery is also receiving $4.3 million severance.

 

[Car-Guy]

The reason being given for the one cent dividend is so that GE will not cause forced liquidations by all ETF and indexes that require a dividend in order to hold.

Ah, interesting, I was wondering why just 1 cent. Now that makes some sense.

 

[bobandsherry]

This analyst now targeting $6/share.

https://www.cnbc.com/2018/11/09/jp-morgan-slashes-ge-stock-target-to-6.html

 

[Shanky]

I said last year when it hit $17, I was waiting for $8. Now I am not sure I am brave enough.

 

[2soon2tell]

When I was a broker in the early 90's some would ask If you could only own one stock which one would it be. My answer was always GE because of its diversified holdings and "perceived" excellent management.

My, how things have changed.

 

[bobandsherry]

When I was a broker in the early 90's some would ask If you could only own one stock which one would it be. My answer was always GE because of its diversified holdings and "perceived" excellent management.

My, how things have changed.

Illustrative as to why everyone should be diversified.

 

[aja8888]

GE has $263 Billion in liabilities.....please read and beware:

It (GE) now is buckling under $263 billion in liabilities, not counting any off-balance-sheet liabilities. Its accounting is being scrutinized by federal authorities, GE disclosed. And there are fears that some unknown unknowns might emerge. GE has been shedding divisions and assets to shrink itself to health, and as it is dismantling itself, there are fewer business units available to generate cash flow to pay for this debt.

https://wolfstreet.com/2018/11/09/ge-plunges-what-retail-investors-did-with-general-electric/

 

[Oz investor]

Warren Buffett explains why a good business is one 'your idiot nephew' could run

https://www.businessinsider.com.au/...siness-could-be-run-by-idiot-2016-3?r=US&IR=T

it seems GE will fail this test

( although there may be greater frauds at work here )

 

[Breedlove]

I worked for a company GE bought out yepper's largest build schedule in the business . They were going to take us to number Uno . Guess what four years later equipment that they had built to the tune of min. one million each were being sold at Ritchie Brothers in Houston Texas for less then 30K each . They did not know what they were doing . Their accountants used to write of equipment then take it as a profit .

 

[Lakewood90712]

OP Here. Sorry everyone. I made a mistake on the thread title. Should have been $ 6 by December

 

[Car-Guy]

OP Here. Sorry everyone. I made a mistake on the thread title. Should have been $ 6 by December

You were correct. It hit 8 by (before) December. But $6 in (by) December certainly seems possible too.


Should have known when GE was taken off the DOW 30 that somebody knew something.

 

[njhowie]

What is stunning is that GE spent 24 billion in 2016 and 2017 (average price about $30) - which is equivalent to all income made from 2012 to 2017 buying back their own stock and basically setting the stage for the company to potentially go under when they could have funded all of their issues with insurance and pensions but didn't because of prevailing wisdom of "providing return to investors".

I have watched/studied this for some years, and in general, companies are terrible when it comes to buying back their own shares. All too often, instead of using it as a mechanism to repurchase shares when they are very low and not pricing in potential future success, they do it when the shares are high in an attempt to artificially keep them high.

It's not until the nails are put in the coffin that folks do a post mortem and say "Hey, you know if they didn't spend all that money on the buybacks, they'd have a nice cash hoard that would have allowed them to survive longer and have a shot at restructuring". One which I like to point to is Aeropostale. These fools repurchased $1 billion worth of their own stock at an average price of $16.50...all done for cash, and the company was carrying no debt at the time. When the shares were at pennies and they were paying loan shark rates for money to keep the doors open, I'm sure they reconsidered how they'd really prefer to have that $1B back instead of having used it on share repurchases.

Another that exemplifies my point - Macy's...during 2015, they repurchased $2B worth of their shares at an average of about $60. Today the shares are at $37, having visited sub-$20 at this time last year. How many shares have been purchased this past year as they've slowly been recovering from that sub-$20 price? None.

In the case of GE, the $24B in share repurchases you point to in 2016 and 2017 could have been used for better purposes, like paying down some of their $115B debt, or some of their mounting pension liability (at $31B at the end of 2016).

https://money.cnn.com/2018/01/18/investing/ge-pension-immelt-breakup/index.html

GE's pension shortfall is even more glaring when you consider that the company was sitting on a pension surplus of $14.6 billion in 2001, when Immelt replaced Jack Welch as CEO.

Then GE decided to put money into mergers and acquisitions instead of socking it away for what it owed its employees, Inch said. Many of those deals were poorly timed, contributing greatly to GE's current cash crunch.

By the end of 2008, GE's pension was running a deficit of $7 billion, and it exploded from there. Despite that shortfall, Immelt rewarded shareholders with stock buybacks, which are aimed at boosting the share price. Between 2010 and 2016, GE spent about $40 billion to buy back its own stock, according to FactSet.

 

[Texas Proud]

I have watched/studied this for some years, and in general, companies are terrible when it comes to buying back their own shares. All too often, instead of using it as a mechanism to repurchase shares when they are very low and not pricing in potential future success, they do it when the shares are high in an attempt to artificially keep them high.

It's not until the nails are put in the coffin that folks do a post mortem and say "Hey, you know if they didn't spend all that money on the buybacks, they'd have a nice cash hoard that would have allowed them to survive longer and have a shot at restructuring". One which I like to point to is Aeropostale. These fools repurchased $1 billion worth of their own stock at an average price of $16.50...all done for cash, and the company was carrying no debt at the time. When the shares were at pennies and they were paying loan shark rates for money to keep the doors open, I'm sure they reconsidered how they'd really prefer to have that $1B back instead of having used it on share repurchases.

Another that exemplifies my point - Macy's...during 2015, they repurchased $2B worth of their shares at an average of about $60. Today the shares are at $37, having visited sub-$20 at this time last year. How many shares have been purchased this past year as they've slowly been recovering from that sub-$20 price? None.

In the case of GE, the $24B in share repurchases you point to in 2016 and 2017 could have been used for better purposes, like paying down some of their $115B debt, or some of their mounting pension liability (at $31B at the end of 2016).

https://money.cnn.com/2018/01/18/investing/ge-pension-immelt-breakup/index.html

Have you seen any evidence of your stmt about share buyback? You usually only hear about the bad share buybacks after a company goes under... not the ones that happen where the stocks keep going up...


I just looked at a list of to 10 share buybacks for 2018 at Kiplinger (click bait so I did not put it here, you can look it up)... all 10 companies are doing just fine...


I am surprised I did not see Apple or JPMorgan on the list as I had heard they were doing some really big ones...






From an article CNBC....https://www.cnbc.com/2018/06/04/com...llion-into-buybacks-dividends-ma-in-2018.html

When all is said and done for 2018, UBS expects dividend issuance to top $500 billion, buybacks to range from $700 billion to $800 billion, and M&A to constitute about $1.3 trillion.
​

https://www.nytimes.com/2018/05/01/technology/apple-stock-buyback-earnings.html

 

[njhowie]

Have you seen any evidence of your stmt about share buyback? You usually only hear about the bad share buybacks after a company goes under... not the ones that happen where the stocks keep going up...

Well, when you have a market that's been hitting new highs for the past few years and all these buybacks happening when the shares are at all-time highs, you're not going to realize which ones are bad right away. A year or two or three from now, when some of the high-fliers fall by 50% or more, and they're no longer buying shares, then we can look back and ask "What are/were they thinking"?

A company does not have to go under for a buyback to be bad. Simply the fact that they are doing it when they have other, more important/practical uses for the money is a good indicator. GE was a good example - why weren't they paying down debt or chipping away at the underfunded pension?

 

[Oz investor]

Well, when you have a market that's been hitting new highs for the past few years and all these buybacks happening when the shares are at all-time highs, you're not going to realize which ones are bad right away. A year or two or three from now, when some of the high-fliers fall by 50% or more, and they're no longer buying shares, then we can look back and ask "What are/were they thinking"?

A company does not have to go under for a buyback to be bad. Simply the fact that they are doing it when they have other, more important/practical uses for the money is a good indicator. GE was a good example - why weren't they paying down debt or chipping away at the underfunded pension?

+1

we are seeing less obvious ( but similar ) examples in Australia

mind you some fund managers are very vocal in the begging for more buy-backs ( in BHP for example ) so one might also ask about their agenda

 

[Texas Proud]

Well, when you have a market that's been hitting new highs for the past few years and all these buybacks happening when the shares are at all-time highs, you're not going to realize which ones are bad right away. A year or two or three from now, when some of the high-fliers fall by 50% or more, and they're no longer buying shares, then we can look back and ask "What are/were they thinking"?

A company does not have to go under for a buyback to be bad. Simply the fact that they are doing it when they have other, more important/practical uses for the money is a good indicator. GE was a good example - why weren't they paying down debt or chipping away at the underfunded pension?

GE happens to be a slow moving wreck, kinda like Sears... mgmt just could not see the problems and let them keep going... but that is not always the same for the vast majority of companies....



As an example, when I was looking for my last post I saw an article of the bad repurchases Apple made... the spent may billions on buy backs at an avg of $115 per share... and then the stock dropped to $95... well, it is now over $200... so was it a bad buy at the time or not? The same can be said for other companies... say in 2005 a bank that was making lots of extra cash was doing buybacks.... was it a bad move to do so at that time. Maybe not... but by 2009 it was pretty clear it was...


BTW, most buyback are due to the company making a lot of cash... when a company makes cash their stock price is usually high... very few companies are buying back when there is no extra cash and the stock price is low...