GE Hits 12-Year Low: Time To Stock Up

General Electric (GE) stock hasn't been this low since July 1, 1996. GE stock has gone as low as $14.66 per share today.

Yesterday, the stock tanked because the federal government suddenly reversed course and said it would not be buying up bad debts. GE issues commercial paper and other debt and also owns various financial subsidiaries, including insurance. However, GE immediately issued a press release indicating that the news wouldn't cause severe damage. GE noted that the Federal Deposit Insurance Corporation approved GE Capital Corp. to participate in the Temporary Liquidity Guarantee Program, meaning up to $139 billion in short- and long-term debt is guaranteed. (See AP article.)

Today, the stock tanked because of rumors that GE was cutting its dividend, which stands at a hefty 7%. GE denied the rumors, but its stock fell anyway.

I am a major buyer at these levels. I picked up three thousand shares yesterday and just bought another thousand shares today.

Disclosure: Long GE

Comments

[Rokjok777:]

sorry, mate, 4000 shares does not make you a "major buyer". If you had said 400,000 shares, that would fit the bill

2008 Nov 13 12:48 PM

[Joulie:]

I hope you are right, but I need more information. Here's my question:

Do GE capital contracts still have "triple-A puts" ? (These were common in the early '90s).

2008 Nov 13 01:04 PM

[UTC LOVER C...:]

I am looking at buying United Technologies stock because it is in a better financial position than GE. Also when the economy does turn around United Tech should take off much better than GE. OH buy the way UTX has just rasied their dividend by 20%. Good luck buy GE if you want but i will stay with United Tech.

2008 Nov 13 02:03 PM

[Jae Jun:]

as Chris617 has mentioned, UTX is a MUCH better buy.

2008 Nov 13 04:54 PM

[jdubrox:]

Hey Matt,

I understand what you mean about being a "major buyer." A poll would show that roughly $65,000 is a lot of money to about 99.8% of our population. I congratulate you on your major buy. You're right that you've put a lot of capital into GE. I surely hope this is the bottom... When the company released the statement today once-again guaranteeing their dividend through 2009, I myself picked up some shares too. Not quite as substantial a purchase, but I definitely bought big (in terms of my own goals and horizons).

I agree with previous commenters that UTX does seem more financially sound on paper. However, I, like yourself, will gladly take my almost 8% dividend on my GE shares and compound it for years to come. Not only that, the company will likely begin to raise the dividend again in 2011 at the latest. For sure, they won't lower it- GE has a reputation to maintain.

Investors and wannabe-investors alike have been giving GE quite a bad wrap lately because of its financial difficulties. Advice to them: get over it. Only 45% (at the most) of GE's revenue comes from their financial services business. GE's other business (Media, Infrastructure, Healthcare, etc.) are thriving, in general. Demand for nuclear power plants and jet turbines continues to grow at double-digit pace. Once GE gets its finances under control, investors will see the light and realize that all along the fundamentals have been there. GE has laid off very few workers, and maintains a healthy cash position, continuously gobbling up competitors (thanks partly to infusion from the Berkshire team).

Matt, you're a smart investor. As I bought GE today, I told myself, "people are going to look back on today and say, 'I watched GE sink to $14.75 a share that day, and I. sat. out. ..only to realize later on that it was one of the biggest mistakes of my life to have done so.'" I've seen the light and I know that you have too. Earnings growth will return... it will because GE is a solid company with solid leadership- they're already making the hard decisions (as evidenced by dumping certain divisions).

The fundamentals are there, but an irrational market abuses its only rational players. We're the rational players and it's time the irrationality ended. Buy.

Disclosure: Long GE, of course.

2008 Nov 14 01:26 AM

[Rex the robber:]

Hey Matt
I think you're a CNBC employee - the spin doctors of GE.

Decline in stock couldn't happen to a better bunch of idiots

Yes, I am an ex employee who saw the light and got out 18 months ago...and sold my shares hahahahaha

2008 Nov 18 04:27 AM