General Electric (Symbol-GE)

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Mike Schimek
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Post by Mike Schimek »

I'd made a mental note to bring up this factoid for fellow FWF people, but hadn't remembered it until now:

Last week (+/-) I listened to one of the Bloomberg Jim Rogers interviews. At some point during the interview the newscaster pressed him on naming names of stocks he was shorting. He said he was currently short General Electric, IBM and one other stock (don't recall the name).

I thought I'd mention this because some FWF members hold GE.

Jim Rogers track record on shorting stocks, from what I know is this:

* He shorted Fannie and Freddie
* He shorted the investment banks
* He shorted citigroup (and another large bank, don't recall which)

All these can be validated based on his historical bloomberg interviews.

Observation: His track record on results when it comes to shorting stocks looks pretty impressive and might be something to consider when one of the stocks he is shorting is one that is owned.

This fellow ran a hedge fund with George Soros for 10 years and got a 4000% return out of it. It might not be wise to bet against him.

GE is trading around 11.50ish at this time. Hard to believe he'd be shorting it at this level, but he is. Guess we'll see what happens over the next few months.

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Post by augustabound »

Mike Schimek wrote: He said he was currently short General Electric, IBM and one other stock (don't recall the name).
From his interview on Bloomberg, his third was J P Morgan.
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Post by brad911 »

Mike Schimek wrote:Observation: His track record on results when it comes to shorting stocks looks pretty impressive and might be something to consider when one of the stocks he is shorting is one that is owned
Impressive from the perspective that he has rarely (if ever) revealed what stocks he shorted failed? :wink:
Mike Schimek wrote:This fellow ran a hedge fund with George Soros for 10 years and got a 4000% return out of it. It might not be wise to bet against him.
10 years with 30x leverage acheiving a 4000% return isn't that impressive. I doubt in this environment, without leverage, he could achieve anything close to his past performance regardless of what he shorted.
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Post by sc101 »

Jim is quite good for his performance record. Yet nobody is perfect in all picks. In one of Jim's earlier interviews with Bloomberg in 2008, he admitted he shorted U.S. Treasury, and did badly.
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Post by Mike Schimek »

Impressive from the perspective that he has rarely (if ever) revealed what stocks he shorted failed?
I think the shorts he revealed were revealed before/as the stocks went down, not after the fact.

His Fannie/Freddie shorts are from a long time ago, as were his investment banks. He didn't pop out of nowhere and say "oh btw 6 months ago I shorted all these stocks that dropped"; he made the calls while the stocks were at certain levels, then they dropped after wards.


On his failed tbill short he lost out because he started shorting before Ben Bernanke said the fed would consider printing money to buy tbills.

:shock:

Some (including myself) view this as a default on the U.S. national debt.

At this point tbills rallied because speculators started buying them in anticipation of selling them to the government at a higher price. He stopped shorting them at this point and took his losses.


Now that my memory is bouncing around with Jim Rogers, in another interview about a year ago (+/-), when asked by an interviewer at what price might it make sense to short General motors, he told the interviewer in typical Jim Rogers style that they could short General Motors at ANY PRICE(!) and make money.

I guess he can't be right ALL the time. He just has to be right MOST of the time to make money.
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Mike Schimek
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Post by Mike Schimek »

Well... 10 days later.

GE has gone from 11.50 to to 8.51 per share, a 26% drop.

I'm curious if anyone read the above posted warnings from 10 days ago and sold their shares or change their mind about buying some? Or is it ...

<insert crickets chirping sound> ?

:shock:

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Post by Norbert Schlenker »

Surely this is another blow to the dividend aristocrat theory.
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Post by chinamansteve »

GE announced theyre cutting their dividend from 31 cents to 10 cents....dont have link. oh well i guess everyone was expecting it anyways.
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Post by scomac »

Norbert Schlenker wrote:Surely this is another blow to the dividend aristocrat theory.
Or does this fall under the category of when a strategy appears to no longer work it is just about the time that it will work once again. :wink:
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Post by Studebaker Hawk »

Norbert Schlenker wrote:Surely this is another blow to the dividend aristocrat theory.
And what theory is that? That stocks with a 25 year history of dividend increases never cut their dividends. That stocks with a 25 year history have mystical powers that make them depression proof? That stocks with a 25 year history of dividend allow you to blindly buy and hold. That financial stocks with a 25 year history of dividend are immune to a financial depression.

FWIW, as preserving-cash-when-lenders-aren't-lending becomes an increasingly important corporate strategy, there will be more cuts among the 25-year club before this is over.
scomac wrote:Or does this fall under the category of when a strategy appears to no longer work it is just about the time that it will work once again.
And what strategy is that? Not to buy stocks with a strong record of earnings that are shared with investors continuouly over a long period of time?
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Post by scomac »

Studebaker Hawk wrote:
scomac wrote:Or does this fall under the category of when a strategy appears to no longer work it is just about the time that it will work once again.
And what strategy is that? Not to buy stocks with a strong record of earnings that are shared with investors continuouly over a long period of time?
Read what I wrote again. :?
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Post by Studebaker Hawk »

scomac wrote:
Studebaker Hawk wrote:
scomac wrote:Or does this fall under the category of when a strategy appears to no longer work it is just about the time that it will work once again.
And what strategy is that? Not to buy stocks with a strong record of earnings that are shared with investors continuouly over a long period of time?
Read what I wrote again. :?
I did. And I ask the question again: "What is the strategy?"
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Post by scomac »

My comment was simply pointing out that any given investment strategy won't work 100% of the time. When you see comments being made that that this or that strategy doesn't work anymore based on recent results that could be an indicator that the particular strategy will begin to work again as investors abandon it. As a practical example, the Dogs of the Dow strategy has gone through alternating periods of when it worked (delivering index beating performance) and when it hasn't worked.
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Post by Peculiar_Investor »

scomac wrote:My comment was simply pointing out that any given investment strategy won't work 100% of the time. When you see comments being made that that this or that strategy doesn't work anymore based on recent results that could be an indicator that the particular strategy will begin to work again as investors abandon it. As a practical example, the Dogs of the Dow strategy has gone through alternating periods of when it worked (delivering index beating performance) and when it hasn't worked.
In my experience, these "cute" investing theories tend to work until:

a) the financial press starts talking about them and tout their merits. The Dividend Aristocrat's is last years Super Bowl indicator, or was it the January Effect, or maybe the Hemline effect.

b) they don't work anymore.
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Post by augustabound »

James O'Shaunnessy made it clear in his book "What Works....." that most theories work if you follow them as they are laid out. The Dogs theory was an example. Those who trashed the theory had altered them, by either omitting a company or not following it through by only using it for a couple of years rather than multiple market cycles.
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Post by investor99 »

Capitulation?
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Post by jabney »

Ok, now I know they have cut the dividend and there is a high probability that they may lose their triple-A credit rating, but seriously, I'm 25 years old, I have a 25 year time frame at least. Is there any reason not to buy this right now?

I have to think that in 25 years that the stock will be worth substantially more than 6 bucks, and the dividends collected along the way will be aplenty.
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Post by Michael D »

Can you value the company and remove the financial arm? Looking at the technologies, etc., what is the book-value of the viable business units?

I'm thinking this is similar to Bombardier, whose price values the aerospace at zilch; you can buy a rail company and get aerospace for free.
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Post by investor99 »

45% of their profit comes from finance. Let's pretend this fell right off.

Their 2007 EPS was 2.20 per share. Remove 45% = 1.21/share.

Remove 40% due to the brutal economy = 0.73/share x a multiple of 10 = $7.30 share price.
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Post by carnet »

it could get better and it could get worse.

be careful...it was looking cheap 10$'s ago where i bought it

Even At $7, GE's Not Cheap (GE)
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Post by Michael D »

Debt-to-Equity ratio is brutal at 5.0.
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Post by investor99 »

My math also assumes the finance unit doesn't LOSE $XX.X Billion
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Post by investor99 »

NEW YORK -(Dow Jones)- A shareholder has sued General Electric Co. (GE) and several top executives, including Chief Executive Jeffrey Immelt, over statements made regarding GE's dividend before it was slashed last month.

The lawsuit, filed Tuesday in U.S. District Court in Manhattan, alleges Immelt and others deceived investors regarding the payment of GE's quarterly dividend and caused investors to purchase the company's shares at artificially inflated prices.

The complaint claims Immelt touted the company's strong commitment to investors in a Jan. 23 interview on CNBC, stating the company had made dividend payments for 100 years, had $48 billion in cash and its operating model would assure continued dividend payments at the same rate.

"Immelt further stated that, from a capital standpoint, he believed payment of dividends to shareholders is the best thing to do for investors in view of GE's cash position," the lawsuit said.

On Feb. 27, GE cut its quarterly dividend to 10 cents a share from 31 cents - the first time its dividend was reduced in 71 years.

The lawsuit is seeking class-action status on behalf of all purchasers of GE stock between Jan. 23 and Feb. 27.
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Post by DavidR »

O'Leary on GE in today's Globe - good for a chuckle? He figures that no matter what Immelt does, they'll lose the AAA rating before long. Buy the debt after the downgrade...but not the stock
...investors in GE common stock will learn the true meaning of the word “zombie” as they watch in horror as their common stock wanders around aimlessly for years.
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Post by investor99 »

Deutsche Bank on Thursday valued GE Industrials at $12 a share, saying the market was factoring the unit of General Electric at a negative valuation of as much as $60 billion.

The firm is inclined to be much more positive, it said, since GE's industrial businesses are "clearly worth" more than the current share price.
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