jimmy smith

What Does Warren Buffett See in General Electric?

GE is really three businesses: a bank, an industrial, and NBC. To analyze the company you MUST examine each independently.

When you do this you see that GE's bank is extraordinarily conservative relative to other banks (1/7 leverage vs. 1/11 and higher for well capitalized banks).

You see that the industrial business is the best in the world, exhibiting the highest returns on assets and growth out there, with a excellent portfolio of businesses including everything from train engines, to water infrastructure which are going to be huge for the next several decades.

Then you've got NBC, while I think it has become an embarrassment to GE's name and should be spun off, it nevertheless is generates enormous amounts of free cash flow.

At $20 a share and a dividend yield of 6.2%, its a massive buy if you have a year or so time horizon.