Who's Buying General Electric?

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Grt2bOutdoors
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Who's Buying General Electric?

Post by Grt2bOutdoors » Tue Oct 30, 2018 7:54 am

Dividend was slashed to a penny a share per quarter. Value or Value Trap?
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Alain_Investing
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Re: Who's Buying General Electric?

Post by Alain_Investing » Tue Oct 30, 2018 8:15 am

I can tell you I was looking to get in at $16 and did not. It is hard to understand the entire conglomerate and I can't say how much work remains to be done to restructure the Company.

donfairplay
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Re: Who's Buying General Electric?

Post by donfairplay » Tue Oct 30, 2018 8:20 am

They wrote down $22 billion in a quarter.

tim1999
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Re: Who's Buying General Electric?

Post by tim1999 » Tue Oct 30, 2018 8:20 am

Dead money.

jadedfalcons
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Re: Who's Buying General Electric?

Post by jadedfalcons » Tue Oct 30, 2018 8:38 am

I own a bit over 100 shares, so a tiny portion of my portfolio, but I think I'll still add some more. Interestingly, it's only down a bit over 1% as I write this, so maybe most of the bad news of the divvy cut was priced in. Having said that, if Culp is successful in reaching those higher targets, I'll probably dump it at that point.

runner3081
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Re: Who's Buying General Electric?

Post by runner3081 » Tue Oct 30, 2018 8:54 am

I am sure they are included somewhere in one of the indexes I purchase.

Bacchus01
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Re: Who's Buying General Electric?

Post by Bacchus01 » Tue Oct 30, 2018 8:59 am

I said when it was around $16 that the bottom was not yet in sight and I was chastised on this board.

The bottom is still not yet in sight. Sub $10, it might get interesting again.

farmecologist
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Re: Who's Buying General Electric?

Post by farmecologist » Tue Oct 30, 2018 11:15 am

I had 100K in this and was lucky to get out with a 3K loss. Very happy about that now of course! Part of the appeal *was* the dividend yield at the time. Well..don't have to worry about dividend calculation anymore now do we? :shock:

As for getting in lower....I may try to swing trade when it reaches a bottom. However, I just don't trust it long term.

Ugh..and just saw news about the expanded SEC/Justice dept investigation. That certianly isn't going to help things either. :oops:

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HueyLD
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Re: Who's Buying General Electric?

Post by HueyLD » Tue Oct 30, 2018 12:04 pm

With the ongoing criminal probe by the DOJ over their accounting practices, I don’t trust any of their numbers.

At this point, GE is a speculative vehicle for nano second professional traders.

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Re: Who's Buying General Electric?

Post by nisiprius » Tue Oct 30, 2018 3:50 pm

Image
Glassman and Hassett, Dow 36,000, 1999, explaining why GE was a perfect illustration of their theory.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Wakefield1
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Re: Who's Buying General Electric?

Post by Wakefield1 » Tue Oct 30, 2018 3:56 pm

"GE is superbly managed"
I think not
how is the whole worth so much less than the sum of the parts?
(I guess management has already sold off some of the crown jewels)

Snowjob
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Re: Who's Buying General Electric?

Post by Snowjob » Tue Oct 30, 2018 4:50 pm

Not sure much has changed since I looked at it 6 months / 1 year?? ago when they first cut the dividend in half. Anyone with half a brain looking at the cash flows of the company knew this needed to be a full cut so I avoided it then. Full cut was the first step to financial repair, but honestly the portfolio other then health care and Jet engines doesn't really look that attractive right now. I hate the Alstom acquisition -- seriously? coal generation? I'll pass, I'd rather own a diversified fund.

I came into this year with only three remaining individual equity positions. Express Scripts, Distribution Now, and Chipolte. Express Scripts and Distribution now were clear values at the time of purchase at various points in 2016 / 2017. I've since exited both given the very nice revaluations. On the other side of the ledger I tried to trade on some sentiment rebounds in Chipolte at various points and ended up taking a about a 15% overall loss over time. (sold out right before the massive rebound this spring -- terrible timing lol). I'm sure the latest carnage has produced a handful of names that have more upside than the market but GE is nowhere near that list for me. Unless its truly compelling, no reason to deviate from funds.

Bacchus01
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Re: Who's Buying General Electric?

Post by Bacchus01 » Tue Oct 30, 2018 4:56 pm

Wakefield1 wrote:
Tue Oct 30, 2018 3:56 pm
"GE is superbly managed"
I think not
how is the whole worth so much less than the sum of the parts?
(I guess management has already sold off some of the crown jewels)
But it was. 20 years ago

FrankLUSMC
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Re: Who's Buying General Electric?

Post by FrankLUSMC » Tue Oct 30, 2018 5:20 pm

I used to buy and hold individual stocks including GE. I have decided that fund managers can watch these stocks much better than I can.

Keepcalm
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Re: Who's Buying General Electric?

Post by Keepcalm » Tue Oct 30, 2018 8:01 pm

GE is too big to fail. No idea how long, but it will come back just as strong as it ever was.

No one ever won big on a single stock by following the current situation. Everyones running away right now, so if you wanted to take a shot at GE now is the time.

staythecourse
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Re: Who's Buying General Electric?

Post by staythecourse » Tue Oct 30, 2018 8:11 pm

Keepcalm wrote:
Tue Oct 30, 2018 8:01 pm
GE is too big to fail. No idea how long, but it will come back just as strong as it ever was.

No one ever won big on a single stock by following the current situation. Everyones running away right now, so if you wanted to take a shot at GE now is the time.
I do agree. IF one is going to pick individual stocks this is one I would go with. There is a better chance of it rebounding (mind you I say rebounding NOT getting back to its glory) in the next 5-10 years then going under (like Kodak). Then again that would be a bet and if I was so inclined I would have played the 1B lottery. I am not a gambler, but do agree it would be a good one.

Good luck.
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nisiprius
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Re: Who's Buying General Electric?

Post by nisiprius » Tue Oct 30, 2018 8:16 pm

Keepcalm wrote:
Tue Oct 30, 2018 8:01 pm
GE is too big to fail. No idea how long, but it will come back just as strong as it ever was.
Are you saying you expect the government to bail GE out? Or do you just mean that companies that are big enough never fail?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Nate79
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Re: Who's Buying General Electric?

Post by Nate79 » Tue Oct 30, 2018 9:34 pm

Too big to fail? LOL. :shock:

Independent George
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Re: Who's Buying General Electric?

Post by Independent George » Tue Oct 30, 2018 10:08 pm

Keepcalm wrote:
Tue Oct 30, 2018 8:01 pm
GE is too big to fail. No idea how long, but it will come back just as strong as it ever was.

No one ever won big on a single stock by following the current situation. Everyones running away right now, so if you wanted to take a shot at GE now is the time.
I don't think GE is going to disappear - but it might not be recognizable in a few years. I haven't looked too deeply into the corporate structure, but as I understand it, the various divisions range from damned fine to godawful. I think there's a high probability of bankruptcy followed by restructuring the failing divisions out of existence. Or they can be split up and the most profitable divisions being acquired by competitors, and the remainder dissolved.

And 'winning big on a single stock' is not the kind of thing people around here spend a lot of time thinking about.

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fortfun
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Re: Who's Buying General Electric?

Post by fortfun » Tue Oct 30, 2018 10:25 pm

I owned a GE TV once. It made it 91 days, 1 day past the warranty. I hope their airplane engines are better built but I prefer seeing RR (Royals Royce) on the planes I fly. I'll stick with the total index funds...

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whodidntante
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Re: Who's Buying General Electric?

Post by whodidntante » Tue Oct 30, 2018 10:27 pm

Grt2bOutdoors wrote:
Tue Oct 30, 2018 7:54 am
Dividend was slashed to a penny a share per quarter. Value or Value Trap?
A penny per share is not an issue. A penny per share representing a 2% dividend yield would be a gigantic issue.

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unclescrooge
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Re: Who's Buying General Electric?

Post by unclescrooge » Tue Oct 30, 2018 10:34 pm

My US large cap fund resents 25% if my portfolio. It reconstitutes every other quarter, and I was dismayed to learn it bought GE art the end of September.

It's 3.5% of the fund.

PinotGris
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Re: Who's Buying General Electric?

Post by PinotGris » Tue Oct 30, 2018 11:40 pm

What will happen to the pension that retirees are receiving now?

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dodecahedron
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Re: Who's Buying General Electric?

Post by dodecahedron » Wed Oct 31, 2018 12:12 am

Keepcalm wrote:
Tue Oct 30, 2018 8:01 pm
GE is too big to fail. No idea how long, but it will come back just as strong as it ever was.
GE is not intending to remain big.

GE is shrinking itself, selling off parts in a massive restructuring.

https://www.bostonglobe.com/business/20 ... story.html

TravelGeek
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Re: Who's Buying General Electric?

Post by TravelGeek » Wed Oct 31, 2018 12:40 am

fortfun wrote:
Tue Oct 30, 2018 10:25 pm
I owned a GE TV once. It made it 91 days, 1 day past the warranty. I hope their airplane engines are better built but I prefer seeing RR (Royals Royce) on the planes I fly. I'll stick with the total index funds...
Was the TV actually made by GE or just branded GE?

RR aircraft engines have been having problems in recent times, especially newer engines for the 787. Given the conglomerate that GE is/was, I don’t assume that reliability of one product line means anything for other product lines.

I don’t buy individual stocks, so no... I am not buying GE unless one of my fund happens to buy it. That said, I hope they recover. Have good friends working for GE.

drk
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Re: Who's Buying General Electric?

Post by drk » Wed Oct 31, 2018 1:15 am

Not a chance. It's a hulking shell at this point.

If somebody wanted to take a bet on a great business that's taken a big tumble, there's no shortage of options, but that list doesn't include the General.

Valuethinker
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Re: Who's Buying General Electric?

Post by Valuethinker » Wed Oct 31, 2018 4:29 am

All the comments I have seen so far in this ignore GE's Enterprise Value

EV = market capitalisation + net debt

If you include the pension fund deficit in net debt, as well as capitalized operating leases, you get to quite a big net debt number. Also there will be customer advances in that cash -- money which will flow out of the business, in time.

I have not looked at the Accounts Payable but I bet they are stretching their suppliers to the breaking point.

If you total up all the on and off balance sheet liabilities of GE, I suspect you would find the majority of value in the business is actually in the hands of the debt holders. For example their residual insurance liabilities to disposed businesses. The cost of environmental cleanups e.g. in New York.

What do the credit rating agencies think?

Bacchus01
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Re: Who's Buying General Electric?

Post by Bacchus01 » Wed Oct 31, 2018 5:27 am

Nate79 wrote:
Tue Oct 30, 2018 9:34 pm
Too big to fail? LOL. :shock:
That is an odd statement for someone to make. I don’t know how you can say that anymore, especially just a week after Sears filed bankruptcy. GE is going through exactly what Sears dis, a surgical dismantling.

likegarden
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Re: Who's Buying General Electric?

Post by likegarden » Wed Oct 31, 2018 5:46 am

I worked in GE Power Systems for many years, and nobody there could figure out why Immelt would buy Alsthom, which had low technology. Siemens did not buy Alsthom, but the French persuaded Immelt. The French and Siemens knew that wind and solar power were coming in Europe. Riding a train from Berlin, every German village seemed to have 3-6 wind mills.

Sinsji
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Re: Who's Buying General Electric?

Post by Sinsji » Wed Oct 31, 2018 6:04 am

The new CEO (Lawrence Culp Jr) doesn't do many interviews, which might be a positive :happy

Valuethinker
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Re: Who's Buying General Electric?

Post by Valuethinker » Wed Oct 31, 2018 6:33 am

likegarden wrote:
Wed Oct 31, 2018 5:46 am
I worked in GE Power Systems for many years, and nobody there could figure out why Immelt would buy Alsthom, which had low technology. Siemens did not buy Alsthom, but the French persuaded Immelt. The French and Siemens knew that wind and solar power were coming in Europe. Riding a train from Berlin, every German village seemed to have 3-6 wind mills.
Financial engineering. To show earnings growth via synergies (cost cuts). Thus justifying GE's PE rating in the stock market.

They will have gained access to a long "tail" of spare parts and service contracts which should be highly profitable (whereas OEM business is not).

Also to try to combine market shares and put the orders through a smaller number of slimmed down production lines- but you usually lose customers doing this.

It's fine to be an industry consolidator (for example the tobacco industry) but:

- if you overpay for the acquisitions you never make that cost of capital back (and are tempted to play with the metrics to justify the acquisitions)

- if the market drops away too fast then you wind up having more capacity idle than you started with - someone else loaded their pain on top of you

GE was in acquisition mode and I expect the seller's advisers saw them coming and were adept at presenting the investment case and thus justifying the purchase price. GE then made the mistake internally of believing it.

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Re: Who's Buying General Electric?

Post by z3r0c00l » Wed Oct 31, 2018 6:40 am

Imagine all the employees who loaded up on GE stock!

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Re: Who's Buying General Electric?

Post by nisiprius » Wed Oct 31, 2018 6:54 am

Independent George wrote:
Tue Oct 30, 2018 10:08 pm
...I don't think GE is going to disappear - but it might not be recognizable in a few years...
Try to figure out the answer to this question: "can you still buy a Rolls-Royce?"

I'll bet the GE "meatball" logo will survive and be recognizable (perhaps deceptive). That logo must worth something and will probably end up on some company's products... just like "Pan American" and "Crosley" and "Packard-Bell." Irrelevant to the stock price, though, it's not that valuable!

But the GE logo is one of the great logos of all time. It's just perfect. It has the company identity in the letters, yet they look like part of the design, and the design is somehow just vaguely suggestive enough of generators or rotors (or turbines!) while at the same time being abstract enough that it isn't limited to a single business. And remarkably stable--ever since it got put into the circle in 1900, logo designers have been able to get their jollies from minor tweeks--polishing it, and adjusting the Pantone color, and switching it back and forth between flat-looking and solid-looking, and playing peek-a-boo with it (for some years they seemed to like making it too big for all of it to show on whatever it was on... weird...)

Image

The shape of the script "G" and the "E" seem like a century-ahead anticipation of the work of Scott Kim... well, their logo looks good upside down...

Image

...even though it doesn't read as a "G" and an "E". But as "3G," maybe?

Image
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Re: Who's Buying General Electric?

Post by nedsaid » Wed Oct 31, 2018 11:19 am

GE, otherwise known as Our Lady of Perpetual Disappointment, remains a part of my portfolio. I keep GE mainly to have something to write about on the Boglehead's Forum and as a reminder not to buy overhyped stocks. I do like their new CEO, if he can't turn this thing around, no one can. I keep it around so that I can maintain my "anti-index" otherwise known as the Four Horsemen of Underperformance which are AIG, Ford, GE, and Pfizer. Ford replaced Comtech Communications which in turn replaced Microsoft. Microsoft has become a very good investment. So hope springs eternal, it is possible to graduate from investment purgatory. Perhaps this can happen for GE too.
A fool and his money are good for business.

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peterinjapan
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Re: Who's Buying General Electric?

Post by peterinjapan » Wed Oct 31, 2018 11:39 am

I owned some, but somehow, I managed that it "smelled bad" and got out at $30. One of the best moves I've ever made. Sadly smelling my stocks doesn't usually work.

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Earl Lemongrab
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Re: Who's Buying General Electric?

Post by Earl Lemongrab » Wed Oct 31, 2018 11:51 am

Yes, GE has a lot of problems. But anything you know about the problems are known to everyone else. Is there a reason to think it's not fairly priced? If not, then you could make good money shorting the stock.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: Who's Buying General Electric?

Post by Bacchus01 » Wed Oct 31, 2018 7:59 pm

Earl Lemongrab wrote:
Wed Oct 31, 2018 11:51 am
Yes, GE has a lot of problems. But anything you know about the problems are known to everyone else. Is there a reason to think it's not fairly priced? If not, then you could make good money shorting the stock.
Wait, so you knew they were going to take a $22B charge last quarter and you knew they were going to slash their dividend to basically zero?

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Earl Lemongrab
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Re: Who's Buying General Electric?

Post by Earl Lemongrab » Wed Oct 31, 2018 11:40 pm

Bacchus01 wrote:
Wed Oct 31, 2018 7:59 pm
Earl Lemongrab wrote:
Wed Oct 31, 2018 11:51 am
Yes, GE has a lot of problems. But anything you know about the problems are known to everyone else. Is there a reason to think it's not fairly priced? If not, then you could make good money shorting the stock.
Wait, so you knew they were going to take a $22B charge last quarter and you knew they were going to slash their dividend to basically zero?
I don't understand the question. Did you?
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Bacchus01
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Re: Who's Buying General Electric?

Post by Bacchus01 » Thu Nov 01, 2018 7:16 am

Earl Lemongrab wrote:
Wed Oct 31, 2018 11:40 pm
Bacchus01 wrote:
Wed Oct 31, 2018 7:59 pm
Earl Lemongrab wrote:
Wed Oct 31, 2018 11:51 am
Yes, GE has a lot of problems. But anything you know about the problems are known to everyone else. Is there a reason to think it's not fairly priced? If not, then you could make good money shorting the stock.
Wait, so you knew they were going to take a $22B charge last quarter and you knew they were going to slash their dividend to basically zero?
I don't understand the question. Did you?
I guess I interpreted your message to be “all is known” when in fact all is clearly not known. If you are asking if it’s priced effectively based on public info, sure. But, as we’ve seen very recently, the risk of massive issues with unknown information is higher here than other places. Thus, I’d say that no, it is not priced effectively for me with that risk.

I’m in the camp that believes GE will be financially dismantled in a way that returns little to no value to shareholders.

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Earl Lemongrab
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Re: Who's Buying General Electric?

Post by Earl Lemongrab » Thu Nov 01, 2018 10:11 am

Bacchus01 wrote:
Thu Nov 01, 2018 7:16 am
Earl Lemongrab wrote:
Wed Oct 31, 2018 11:40 pm
Bacchus01 wrote:
Wed Oct 31, 2018 7:59 pm
Earl Lemongrab wrote:
Wed Oct 31, 2018 11:51 am
Yes, GE has a lot of problems. But anything you know about the problems are known to everyone else. Is there a reason to think it's not fairly priced? If not, then you could make good money shorting the stock.
Wait, so you knew they were going to take a $22B charge last quarter and you knew they were going to slash their dividend to basically zero?
I don't understand the question. Did you?
I guess I interpreted your message to be “all is known” when in fact all is clearly not known. If you are asking if it’s priced effectively based on public info, sure. But, as we’ve seen very recently, the risk of massive issues with unknown information is higher here than other places. Thus, I’d say that no, it is not priced effectively for me with that risk.

I’m in the camp that believes GE will be financially dismantled in a way that returns little to no value to shareholders.
Sure, there's always the chance of unknown information that changes the future direction. The problem is, most people don't know that, and those that do aren't supposed to be using it. Now, that doesn't always work out, but this is the sort of situation that they look at for insider information.

I just don't feel like I have any talent at making these guesses.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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