General Electric
After hitting bottom in the Great Recession, General Electric stock enjoyed a nice run through the end of 2016. What happened to change the situation for GE? Disappointment after disappointment for the huge industrial conglomerate.
In January, GE reported mediocre revenue growth for the fourth quarter of 2016. The company followed that up with weaker-than-expected industrial cash flow from operations (CFOA) in the first quarter of this year and lowered its industrial CFOA outlook for full-year 2017 in second quarter. Longtime CEO Jeffrey Immelt also announced in June that he was retiring, a move that made some investors happy after lackluster financial performance during Immelt's watch.
Even Warren Buffett, known for his buy-and-hold investing philosophy, threw in the towel by selling his entire stake in GE in the second quarter. With the company's revenue and earnings falling and no end in sight to GE's problems, Buffett clearly saw better places to put his investors' money.
GE stock trades at 14 times expected earnings. It also offers a dividend yield just below 4%. Is it a bargain or a bust? Perhaps both. Over the short term, GE's woes could continue. However, the company should be able to grow over the long run, particularly under the new leadership of John Flannery.
My idea is GE, will continue to drop and might go back down to $8:00 a share. Continue to trade with Trend, which this year has been BEARISH.
ALSO, ALWAYS REMEMBER BAILOUT THE GE GOT FROM TAXPAYERS IN 2009 OF $49.5 BILLION DOLLARS. Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. The vast bulk of the bailout money was transferred to GM through the purchase of 60.8 percent equity stake in the company—arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7 percent equity stake. The U.S. and Canadian government together own 72.5 percent of the company.)In short, GM is using government money to pay back government money to get more government money. And at a 2 percent lower interest rate at that. This is a nifty scheme to refinance GM's government debt—not pay it back! * Remember it is not what you know in life, but who you know or politically with, to maintain power.
After hitting bottom in the Great Recession, General Electric stock enjoyed a nice run through the end of 2016. What happened to change the situation for GE? Disappointment after disappointment for the huge industrial conglomerate.
In January, GE reported mediocre revenue growth for the fourth quarter of 2016. The company followed that up with weaker-than-expected industrial cash flow from operations (CFOA) in the first quarter of this year and lowered its industrial CFOA outlook for full-year 2017 in second quarter. Longtime CEO Jeffrey Immelt also announced in June that he was retiring, a move that made some investors happy after lackluster financial performance during Immelt's watch.
Even Warren Buffett, known for his buy-and-hold investing philosophy, threw in the towel by selling his entire stake in GE in the second quarter. With the company's revenue and earnings falling and no end in sight to GE's problems, Buffett clearly saw better places to put his investors' money.
GE stock trades at 14 times expected earnings. It also offers a dividend yield just below 4%. Is it a bargain or a bust? Perhaps both. Over the short term, GE's woes could continue. However, the company should be able to grow over the long run, particularly under the new leadership of John Flannery.
My idea is GE, will continue to drop and might go back down to $8:00 a share. Continue to trade with Trend, which this year has been BEARISH.
ALSO, ALWAYS REMEMBER BAILOUT THE GE GOT FROM TAXPAYERS IN 2009 OF $49.5 BILLION DOLLARS. Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. The vast bulk of the bailout money was transferred to GM through the purchase of 60.8 percent equity stake in the company—arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7 percent equity stake. The U.S. and Canadian government together own 72.5 percent of the company.)In short, GM is using government money to pay back government money to get more government money. And at a 2 percent lower interest rate at that. This is a nifty scheme to refinance GM's government debt—not pay it back! * Remember it is not what you know in life, but who you know or politically with, to maintain power.