No Moss

What Does Warren Buffett See in General Electric?

Actually, Buprestid, Warren Buffett does own a significant position in GE from previous purchases (7.8 million shares). You can view his (actually Berkshire Hathaway's ) holdings as of 6/30/2008 at this web-site:

www.marketfolly.com/20...

His largest single holding is Coca-Cola.

What Does Warren Buffett See in General Electric?

This is the second article in which this author, who holds a short position, has postulated a drop from $21 to $10, without supporting his position. Well, I believe the stock will be $30 next year. I have no support for that position either. I am long the stock.

If I were short the stock, I would certainly be making unsupported statements to the effect the stock will halve in value by next year. Flog if long, flame if short.

Be Like Buffett: Get Off the Roller Coaster

Curbs-In and I disagree on the idea of brands. Brands like Gillette or Johnny Walker are virtually impossible to replace or displace. In the case of Gillette, they have virtually no competition and are able to charge premium prices for their top-end products. Getting and keeping shelf space is easy to do for a proven seller, and difficult to do for a beginning product.

GE's main problem, to nobody's surprise, is that it's vulnerable to the credit crisis and to the real estate market. Secondarily, it's vulnerable to a worldwide slowdown. I wish I hadn't bought it, but at $22 and change it's on sale. AAA rating, solid businesses, and sufficient income to at least maintain the dividend and work through the crisis. I don't see what's not to like with GE at this price.

Be Like Buffett: Get Off the Roller Coaster

I would generally agree. Diageo has been down ever since I bought it last year (at $87), but I have hopes it will rise at some point. Like GE, from $37 to the low twenties. I think these are both solid buying opportunities. GE in particular will come roaring back when it gets over the credit crisis.

Stock Analysis: General Electric

The dividend puts a floor under this stock. We have arrived at a point where we think the economy of the developed world will never return to normal, which is a ridiculous proposition. This stock will probably sell at 35 sometime in the next 12 months, which will give it a 25% return from today's price of $29.05, including dividends.

Oversold, low downside risk, significant insider purchases, dividend yielding an all-time high.

GE, Microsoft on New Low List

I'm stunned by the market's aggressive write-down of GE, now approaching $29 from a 52-week high of $42, a loss of about $130 billion in market cap. Does anybody think their credit losses will be that high?

I'm still waiting for info on the tanker thing. The Senate seems happy with the Northrop-GE contract, while the House seems to want to flip it to Boeing.

Airplane engines, airline leasing, and financial--OK, they could have some problems ahead. But GE is going to get huge slices of the 21st century's energy restructuring. Maybe Immelt isn't so dumb after all.

Are High-Profile CEOs Effective?

Great article! Fascinating insight. I will say in Immelt's defense that the EPS are up by 50% (2007 vs. 2001). That's not huge growth, but it is something. And in the year immediately prior to Welch's departure (Sept. '00 to Sept '01) the stock fell from $57 to $37.

Time Warner Cable Spinoff and NBC Universal Rumors

Thanks for the article. You might want to change "complimentary", meaning "free", to "complementary", meaning "adding to something already existing".

Yeah, Jeff Immelt doesn't want to tip his hand concerning NBCU, since that might damage his bargaining power, but he's got to be thinking about getting rid of a business that is not performing at a double digit rate and is really unrelated to the core GE business.

Do you have any idea what NBCU is worth?

Blood in the Streets: Buy and Hold GE, For Now

Well, I'm optomistic about GE both short-term and long-term. It does face the problems well-stated above about being a financial company. It also faces the problem of being a big company and a conglomerate, hence making it hard to move the stock price. You could compare it to Johnson & Johnson in that respect.

Short-term, the government has allowed it to reopen its Utah manufacturing facility, and it is seeing opportunities in both airplane engines and airplane leasing, the latter of which is benefiting from GE's deep pockets and cheap financing costs.

It is well-positioned to benefit from power and water needs, too.

I hope and trust it will be a beneficiary or the change to fluorescent lightbulbs, and eventually to LED lighting.

I think GE is a long-term beneficiary of the weak dollar, too, since there are few players of its scale in the world, and the most notable is Siemens, which is caught in a Euro trap. Think of it as roughly analogous to Boeing/AirBus, both prospering when demand is high, but the European versions looking nervously at what will happen when demand is lower.

Finally, the energy need/environmental concern thing plays into GE's hands, and this could reach a fevered pitch when we start to substitute electrical energy for petroleum energy.

I like this stock now and for the future. The financial industry is getting a big dose of discipline and deleveraging, but better days are ahead in terms of loan quality, and GE, even more than investment banks, will probably be allowed to remained leveraged in an environment where both loan quality and interest spreads are going up.

GE: Quintessential American Finance Company

Well, I have to agree with Joe that GE, through GECS and GE Money, have gone way beyound the financing of purchases of things that GE produces. Here's that GE model:

GE produces complex stuff, like wind and gas turbines, power plants, airplane engines, diagnostic equipment etc. They make a profit on the sale, and they make profits on servicing and supplying spare parts for those businesses. Further, they make money by financing the purchase of this equipment, usually through what are know as capitalized leases, or leases where the ownership of the property passes to the customer upon full payment of the lease. Although the last is not without risk, at least GE has a relationship with the customer that at least keeps them abreast of the customer's credit quality.

This model exists in infrastructure, healthcare, and in the enterprise solutions part of consumer & industrial.

But in addition, GE finances commercial loans and leases (Commercial Finance) and consumer credit cards, auto loans, and other debt (GE Money, which is ex-US for everything except credit card & installment debt).

Joe has a great point. Because of its great credit rating and reputation, GE has been able to issue commercial paper, a market that has dried up for a lot of companies. That's short-term paper and well over half of GE's short-term borrowings. The other thing is that GE has been able to securitize and sell debt. They get an origination fee for this, of course.

They got caught with this in Q1, because some of their debt was "in the warehouse", i.e., between having been securitized and sold; it had to be written down. As is usual, the markdown was more than necessary; they'll make it back when they sell it.

But if GE's finance model failed, it would heavily impact GE, requiring releveraging, that is, selling loans on the open market with the consequent losses on the sale that every financial company dreads.

That's not likely to happen, fortunately. GE has taken steps to get out of the US mortgage lending market (they sold WMC in 2007) and the insurance business (likewise sold), and the Japanese portion of their credit business. They're planning to sell private label credit cards (PLCC) this year.

On the other hand, they just bought CitiCapital (commercial lending and leasing). Hope they got a good price.

Hope they can further reduce the consumer side of lending and also get rid of NBCU. They need to clear the decks and concentrate.

Goldman Sachs Analyst Expects GE to Remain Range-Bound

I'm curious how an analyst can say that the 2008 earnings will be $2.22 per share. The best that GE can do is say between $2.20 and $2.30 per share, and obviously they can't even predict their current earnings exactly, based on Q1 results.

GE can be drug down by a deep recession or pushed up by a recovery in the US and world economy. We're just now getting economists to agree that we're in a recession, which has been a good historical indicator that we're about to ascend again.

I'd rather look at GE from a macroeconomic point of view than try to second-guess their numbers, which is largely an exercise in pseudo-finance. The world has to change quickly to build an infrastructure that is more efficient, less polluting, and can provide for the rising expectations of huge, formerly poor populations. Very few companies have the scale to do that. GE is one.

Is General Electric Overvalued?

Well, let me start by saying that GE is the biggest position in my portfolio. I don't expect it to slay dragons, but I do expect steady growth in EPS and dividends. It's selling at a reasonable valuation re: projected 2008 earnings. We'll see how dependable those earnings are this Friday, when GE reports earnings.

I think it's clear that GE has upped borrowing while rates are low. They have a backlog of orders in some of their key businesses, including infrastructure work in power plants, water, and airplane engines.

Their size is a big advantage in that they have adequate financial and personnel resources to do things. They're selling in dollars, which is a decided advantage when competing against that other giant, Siemens.

I don't expect rapid growth because of its size. Neither do I expect any significant downside in a business that is benefiting significantly from globalism and from further entrenchment in the financial markets, with increasing interest spreads.

General Electric, Berkshire Hathaway: Winners in a Losing Market

I think GE's value will be realized fairly soon now. It has been flat for many years despite a record of increasing earnings and dividends. If it breaks out, it could be a large breakout, perhaps up to $40 by year end. It should be trading at a multiple of at least 17, which would give it a price of $41 on concensus earnings of 2.43 for 2008.

I don't know enough to make recommendations, but I'm sort of surprised that they keep NBC Universal. It just doesn't seem to be congruent with their other holdings.

Water, power, transportation, medical devices--good stuff. Siemens got their tail kicked. Maybe it's hard to compete in Euros with GE quoting in dollars.

Dividend Analysis of General Electric

Agree. It's called the rules of 72s (72/12=6 years). A lot of big stocks have the problem of slow to no growth--look at Johnson & Johnson. They raise their divvies every year, with no apparent affect on their stock price, which is lower than it was at its peak in 2001. But the return is good, and it's safe, for both stocks.

Broadcast TV's Demise - More Fiction Than Fact

Well, Mr. Rayburn is quite right, despite the fact that he doesn't know the difference between compliment and complement. (Sorry, I'm an English teacher.) The Internet is much more of a threat to magazines and newspapers than it is to broadcast TV, at least in the immediate future. We haven't caught up to bandwidth problems for regular TV, much less for high-definition TV. It's one thing to download an occasional show, and quite another to shift the medium to the Internet.

Newpapers and magazines, well, I don't see how they can survive the Internet. The content will survive, but the medium is obsolete. I wish it weren't, but it's a matter of currency (being current).