General Electric: My Thoughts On The CNBC Interview And The BHGE Sale

Nov. 16, 2018 8:47 AM ETGeneral Electric Company (GE)BKR103 Comments
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WG Investment Research
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Summary

  • General Electric's new CEO, Mr. Larry Culp, recently had an interview with CNBC's David Faber. Two points stuck with me.
  • The Baker Hughes sale was announced and, in my opinion, it was a great/necessary decision.
  • I am long GE and I plan to stay long.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

I have written a lot about General Electric (NYSE:GE) lately, as this company is in the midst of major restructuring efforts that were first announced in November 2017. GE has changed course seven or eight times over the last two years (exaggerating, kind of) but the most recent change occurred when Mr. Larry Culp replaced Mr. John Flannery as CEO.

Mr. Culp has been on the job for only a few weeks now but he is already making himself available to the financial community. And more importantly, he is making structural decisions that will have a lastly impact on this once-great conglomerate.

The Interview

Mr. Culp sat down with CNBC's Mr. David Faber to answer questions and discuss the current state of General Electric. Before going any further, the interview is a must-watch (or read) for shareholders and prospective investors. Here is a transcript of the interview.

Mr. Culp and Mr. Faber discussed many different topics but two [related] points really stuck with me - (1) the focus should be leverage not liquidity, and (2) management has a sense of urgency but they will not panic.

Focus On Leverage Not Liquidity

Mr. Faber asked about several concerns that were raised after GE reported Q3 2018 results and, more specifically, he asked if investors should be concerned about liquidity or leverage.

Mr. Culp's response:

I think that's an important distinction that you just made relative to liquidity verses leverage. Two weeks ago, folks were I think understandably asking the liquidity question. I think we've put that to rest given the fact we've got 20 billion of cash. We have a robust here too CP program and $40 billion of bank lines. We've only tapped two. But I think that gives us a foundation.

He went on to say:

And again, whether it's

ChartBHGE data by YCharts

This article was written by

WG Investment Research profile picture
8.33K Followers
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long GE, BHGE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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