General Electric (Symbol-GE)

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Michael D
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Post by Michael D »

But what of the debt, risk, and uncertainty tied to the financial arm? It could sink the whole thing.
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Post by WishingWealth »

Longing for the good old days when GE just made stuff you could hold in your hands... or haul on a truck or...

@ Bloomberg.
http://www.bloomberg.com/apps/news?pid= ... refer=home
Warren Buffett and Jeffrey Immelt are among a handful of chief executive officers whose companies are rated AAA. Yet Buffett’s Berkshire Hathaway Inc. and Immelt’s General Electric Co. are being treated like junk in the market for credit-default swaps.

Contracts that protect investors against a default on bonds of Omaha, Nebraska-based Berkshire, which has $25.5 billion in cash, cost as much as those of KB Home, the homebuilder that lost money for seven consecutive quarters. Credit-default swaps on the finance arm of GE, which holds $45 billion of cash, are about as expensive as those for building materials-maker Louisiana-Pacific Corp., which posted nine straight quarterly losses.
...
Swaps on Nashville-based Louisiana-Pacific, rated BB by S&P, or 12 steps lower than GE Capital, trade at about 18 percent upfront, according to London-based CMA DataVision.

GE Chief Financial Officer Keith Sherin said in an interview on the GE-owned CNBC television network yesterday that the surge in credit-default swaps on his company’s finance unit “is overdone” and worsened by below-average trading volume.

“We looked at the actual CDS trades on Monday and Tuesday,” he said. “It was a total of $35 million over the two- day period. Normally, it’s $100 million a day. Was that really market fundamentals or was it just some sort of disruption based on very narrow trades in a volatile time?”

Shrinking Finance

Immelt said he intends to shrink the finance arm to 30 percent of total earnings this year from about half in 2007. GE’s profit from continuing operations was $18.1 billion last year as finance made $8.6 billion. The company projected the unit will earn $5 billion this year.

GE has still lost about $266 billion in market value in the 12 months through yesterday, while Berkshire has declined by $120.3 billion since peaking at $231.06 billion on Dec. 10, 2007.
...
WW
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Post by lystgl »

I have a friend who has a friend who is investing big time in GE. This friend of a friend is a multi-millionaire and does not throw away his money. If I hadn't already taken such a bath with everything else and feeling so poor, I think I'd be buying some too.
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Post by Michael D »

lystgl wrote:I have a friend who has a friend who is investing big time in GE. .
Upside risk is high. Downside risk is also high. :shock:
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Post by brad911 »

lystgl wrote:I have a friend who has a friend who is investing big time in GE. This friend of a friend is a multi-millionaire and does not throw away his money. If I hadn't already taken such a bath with everything else and feeling so poor, I think I'd be buying some too.
Common equity? Bonds? Unsecured Debt?.....each of those makes a big difference. I wouldn't touch the common right now, but after a credit rating cut the yields on GE's debt will be hard for a lot of investors to avoid considering that even at AA (AA+, AA or AA-) you're still getting a good deal.
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Mike Schimek
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Post by Mike Schimek »

Just checked out the Peter Schiff vid from March 5th. There's a text message in the back near the end superimposed on the video that says he's bearish on GM and... GE.

No clue if he would still be bearish at these prices, or if Jim Rogers covered his shorts since the price is incredibly cheap now compared to before (11.50ish).
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Post by lystgl »

brad911 wrote:
lystgl wrote:I have a friend who has a friend who is investing big time in GE. This friend of a friend is a multi-millionaire and does not throw away his money. If I hadn't already taken such a bath with everything else and feeling so poor, I think I'd be buying some too.
Common equity? Bonds? Unsecured Debt?.....each of those makes a big difference. I wouldn't touch the common right now, but after a credit rating cut the yields on GE's debt will be hard for a lot of investors to avoid considering that even at AA (AA+, AA or AA-) you're still getting a good deal.
Common I'm told. It's actually up to $7.50+. Don't know when he started buying but if he bought at $6, he's already up 25%. Still, it's nothing I can afford to play with.
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Post by Peculiar_Investor »

S&P finally cut the ratings to AA+, see WSJ GE Statement on S&P Ratings Action
Standard & Poor's (S&P) today announced a single-notch downgrade of General Electric Company's and General Electric Capital Corporation's (GECC) long-term ratings from AAA to AA+, with a "stable" outlook. The ratings downgrade does not affect GE's and GECC's short-term funding ratings of A-1+, which was affirmed by S&P. The action follows a thorough review of GE's portfolio by S&P.
Does this mean the stock will go up today?
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Post by investor99 »

Apparently yes.
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Post by dreamcatcher »

I bought 1000 shares at 6.55 and got out at 8.8 on Tuesday
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Post by hotgo »

dreamcatcher wrote:I bought 1000 shares at 6.55 and got out at 8.8 on Tuesday
Nicely done...
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Post by George$ »

hotgo wrote:
dreamcatcher wrote:I bought 1000 shares at 6.55 and got out at 8.8 on Tuesday
Nicely done...
I'm inclined to see this as casino luck - not investing as I understand it.
:wink: (nothing personal)
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Post by dreamcatcher »

George$ wrote:
hotgo wrote:
dreamcatcher wrote:I bought 1000 shares at 6.55 and got out at 8.8 on Tuesday
Nicely done...
I'm inclined to see this as casino luck - not investing as I understand it.
:wink: (nothing personal)
You are right. In this choppy environment where "Buy and Hold"ers, such as myself, have been badly hurt, it is better to take profits off the table before it gets too late.
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Post by deaddog »

George$ wrote: I'm inclined to see this as casino luck - not investing as I understand it.
:wink: (nothing personal)
It's kind of like the tax loss harvesting you do except you end up with a taxable profit. :wink: :)
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Post by Sensei »

Hi,

This is to you buy and holders. I sold out my position in GE last week close to its low price in the last month or so. Am I crying in my beer? Not at all. I'm a buy and hold guy too. There are so many bargains out there, why do we need GE? GE Capital has been floundering around for over a year driving the price of what is otherwise not a bad company down and down. Then they cut the dividend. Now it is down to 40 cents or a 4.5% yield. Not bad if you are buying now. However, IMHO GE is a bad buy and hold stock and, as such, it has failed on just about every level. Their core competence is building high tech stuff and infrastructure. The moves made buy GE Capital, once a very minor part of the company designed to support customers for purchase of hardware and expertise, have overshadowed and damaged every other part of the business.

I've been setting some guidelines for myself. A company in my portfolio has to meet MY specifications. One new guideline, a company has to have increased dividends or EPS for 10 straight years. GE no longer meets that criteria. Good bye.

BTW, I replaced it with CAT as what I think is a suitable replacement in a similar sector. CAT does meet my criteria. Also, if anything that has happened in the last three days matters (which it probably doesn't), CAT has gone up $4 a share.

Cheers
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Post by hboy43 »

Hi:

Well, I have been buying GE of late.

It seems to me that there is a huge disconnect in so called "facts". As I see it either the ratings agencies are completely useless and unreliable and GE going from AAA to AA+ is absolutely meaningless, or GE drifting from $40 to < $6 is wildly off base. In any world that isn't completely bonkers, both these things just can't be true at the same time.

Many here I think take the first supposition, but then are inconsistent in that they actually pay attention to ANYTHING ratings agencies say, as in being concerned if and when GE gets downgraded.

I could be wrong and could be somewhat wiped out one day, but distressed buying has worked handsomely for me once of late and I am betting on GE and a few other companies that it will work again.

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Post by Michael D »

If the risk of GE Capital has already been priced into the stock, great. But the debt remains.

I am a holder, simply because I've lost so much that it doesn't make sense for me to incurr the brokerage fees to sell it and buy something else! If I was starting now and looking at it, I would take a small position because of the potential of the technologies. 4.5% yield and the dividend will grow when things pick up.

So looking at my portfolio, I already have a small position. Thus I continue to hold long. :?
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Post by George$ »

We have held GE stock for some two decades. No regrets here.

It may be time to consider adding to our 1,800 shares.

My take is that their management is probably ok and in the end I think that is what counts.

I know this will change but the current yield number is very attractive.
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Post by Mike Schimek »

Well I guess the "the time to buy" would have been at $6.00. I wonder if Jim Rogers closed out his short at that level or if he's still holding.

* Personally I wouldn't risk buying it now at $9.50ish because I can't see anything that has changed since it went from 11.50 to 6 besides sentiment. Arguably however the same can be said about its drop.

* There's no reason it can't go back to $6 after a bunch of people get sucked into buying at $9.50.

* If Jim Rogers shorted at around $11.50 (that's when he was talking about it on Bloomberg, so he probably started shorting before that at even higher levels), and still held his short at $11.50, I'd think he felt it was worth much less than that, with much being quantified as less than $9.50. This guy is more often right than wrong. Why take the chance?

* In my "buy/sell" checklist; one element is "Am I buying after the stock had a run up in price"; and if so... think about it twice. Like an idiot who knows what to do but doesn't follow it, I bought some Valero recently at 24.50 and watched it drop back down to 17ish (I've bought more). If I'd re-read and followed my rules, I might have skipped that pain, even though I'm comfy with the stock at anything < $30

Just thoughts being tossed out, not advocating buying or selling GE, I don't know the stock well enough, however I'm sure Jim Rogers does.
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Post by George$ »

Mike Schimek wrote:Well I guess the "the time to buy" would have been at $6.00. I wonder if Jim Rogers closed out his short at that level or if he's still holding.
....
We live in different investment solitudes.
I'm not chasing the bottom dips. I'm looking for a good investments for the next 20 years and on that time scale a $3 price change at this low level is not that compelling for me. The recent GE annual dividends alone have been over $1.
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Post by adrian2 »

Mike Schimek wrote:Just thoughts being tossed out, not advocating buying or selling GE, I don't know the stock well enough
Hopefully then you won't complain that GE is not currently present in the anti-Mike hedge fund. :wink:
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Mike Schimek
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Post by Mike Schimek »

Hopefully then you won't complain that GE is not currently present in the anti-Mike hedge fund.
Well if you want to take on my 800lb investment gorilla "Jim Rogers", at his 11.50 short price, be my guest, I'll happily sit in Jim Roger's corner and bet my money on him. I feel that the odds he is right are far more than 50/50.

If your research and knowledge of GE exceeds his, and you wish to bet against him, by all means give it a shot.

:wink:
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Post by DavidR »

Mike Schimek wrote: I'll happily sit in Jim Roger's corner and bet my money on him. I feel that the odds he is right are far more than 50/50.

If your research and knowledge of GE exceeds his, and you wish to bet against him, by all means give it a shot. :wink:
Does he do Twitter? The trouble with hitching your wagon to an investment star is that sometimes you don't find out if he's moved on...
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Mike Schimek
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Post by Mike Schimek »

Does he do Twitter? The trouble with hitching your wagon to an investment star is that sometimes you don't find out if he's moved on...
Very, very true.
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Post by adrian2 »

Mike Schimek wrote:Well if you want to take on my 800lb investment gorilla "Jim Rogers", at his 11.50 short price, be my guest, I'll happily sit in Jim Roger's corner and bet my money on him. I feel that the odds he is right are far more than 50/50.
So far, I manage the anti-Mike hedge fund and the Long Banks Short Sprott hedge fund, which happens to be sitting in the silver medal position currently, among 22 FWF participants. I'll pass on the offer of managing an anti Jim Rogers fund.
Mike Schimek wrote:If your research and knowledge of GE exceeds his, and you wish to bet against him, by all means give it a shot.
My signature line appears only in The Lounge forum, and is far from "Investment Strategy: Research till your head hurts, then scream Banzai! and charge fearlessly to victory or death". I have told you in the past I have a fundamental problem with your statement; as "victory or death" may be fine for the battlefield, but a wrong motto IMO for an investment strategy.
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