Recent Buy – General Electric $GE

am




Well, I bought 10 shares of $GE at $32, since then I’ve been averaging down on GE all the way to this week $12.xx.

Yep! GE is facing dividend cut again. Let’s walk through what happened.

The ex-CEO, Immelt should have cut the dividend prior to his leaving the company, instead, he continued to keep the share price up buy buying back $30B in stock. Normally, it would be a great idea, since it would artificially makes the earning per share looks good. However, it didn’t work for GE as they’ve spun off GE capital to synchronize financial. They should have spin off CNBC tv network, instead they sold it off. They kept the non-performing energy instead of spinning it off. Once they spun off synchronize financial, they should have cut dividend accordingly, thy didn’t. As the result the GE continued to bleed money.

Yes, GE aviation does well, but this year it’s facing so much competition so it didn’t make as much.

The new CEO hasn’t done anything productive, couldn’t deliver a positive image of the company. Investors lose trust in GE, while the DOW went from 19000 to 28000, GE lost 2/3 of its value from $40 to $12.xx. Now it’s facing a major dividend cut again. There is another rumor that $GE might have to create more stock to raise capital, the fancy name for it is dilution of its share price after buying the stock back at $35-25/share.

 

The one thing it has going is there is a rumor that Warren Buffet is buying GE. As he made a comment before that he would buy GE at the “right price”. Coming back to the level of 2009, is at great value. We can’t confirm this until the next quarter where the FCC report came out for big players such as Berkshire Hatherway. We’ll know soon enough though.

I bought 100 shares of GE during the massive sell off.

I was thinking GE was going to go down more, should GE is falling below $10, I’ll buy 1000 shares. That would happen once the CEO is forever fo preserve capital.

What’s about you? Did you manage to scoop up some GE at the sell off or waiting for the next sell off wave?

3 Comments

  1. Wow you are on a buying spree.

    GE is in the hot news right now because of Warren but I never quite like the business other than their healthcare.

    I dont think they have recovered from the gfc heydays and they are facing headwinds from their many divisions.

  2. I do not dabble in individual stocks…I only invest in mutual funds. I will compare with three different mutual funds to give you a different perspective.

    Consider the following three mutual funds:
    + VHDYX high, current dividends
    + VDIGX: dividend growth i.e. in future, stock dividends will grow
    + VTSAX: total market fund…some current and some future dividend stocks and some no dividend stocks also.

    I compared GE with all of the above three funds using google finance over “max” years. And somehow GE loses against all three i.e. it loses against stocks with pay high dividends today (VHDYX), loses against stocks which promise to pay higher dividends in future (VDIGX) and also loses against a basket of large, mid and small cap us stocks (VTSAX).

    So, what is your justification for buying GE? Something to ponder about….

Leave a Reply

Your email address will not be published.


*