frcf

Is GE a Buy?

firstly, 1/3 of GE's earnings come from financial operations not the 40% the article states. That does not make GE - again as the article suggest - 'essentially a financial company'! In fact GE is essentially an infrastructure company. Furthermore, the businesses complement each other, allowing the cheap AAA rated debt to be used where ever there is more potential for growth.

When GE had a p/e of 30 everyone wanted to own it. Now at p/e 14, no one wants to know. I call that opportunity. What is amazing is that, GE's earnings yield is actually much higher than what their AAA rated debt will cost them after tax. So, as Immelt mentioned in the CC, they will keep buying back stock.

It's the most widely owned stock among value managers:
www.dataroma.com/m/hom...

As a side note Immelt is a personal friend of Buffett.

Is General Electric Overvalued?

What utter nonsense. Sorry to sound harsh but, shouldn’t evaluating a security involve at least some form of calculation (discounted cashflow maybe)? Or, should we just base our investment decisions on “…more cardholders might default…” or “… we may have a recession…”? And, the part about how the widening spreads will hurt them!!! If anything, the widening spreads will actually earn them more money since they will be one of only a few firms who can still borrow money relatively cheaply and lend it out at a even higher rate than before. Even if their AAA credit rating is revoked (which at this point does not seem likely), they will still have a high credit rating RELATIVE to others, so their profitability will remain intact. Tighter credit environments in fact benefit the strong well-managed firms who can gain market share at the expense of the capital starved lesser players.

General Electric: It's All About the Numbers

Great company. Stock is very cheap. I have been adding to my position. The lower share price will enable management to buyback more stocks with the same cash. Buffett recently commended Immelt for being one of the best ceo's.

GE's guru ownership for anyone interested: www.dataroma.com/m/sto...