CFO Keith Sherin had some very interesting things to say..
Now, before we start remember we have a GE employee interviewing his employer.
Here is a follow up to it…
What to think? First, GE is not going under. BUT, that also does not mean that an investment in it today might not fall another 50% or more in the coming months. Back in January I did a post in which I quoted a trader saying GE could go to “$7 or $8” a share. When it hit people said he was crazy…turns out with shares at %6 and change, he was too optimistic.
We also do not know if GE in its present form will be the same GE in 6 months. It was just a months ago management said the dividend was safe and then cut it 70% spurring a lawsuit from investors who bought shares based on that statement. The suit does have merit and bear a very close watch. Cutting the dividend so soon after the public support for it is a problem. We are not talking 6 months later, we are talking 10 business days.
The bottom line in GE will make it through this…..eventually… I just think buyers are likely to get a far better price shortly.
Disclosure (“none” means no position):Long GE
Visit the ValuePlays Bookstore for Great Investing Books
9 replies on “GE CFO Addresses Rumors”
If I recall, Immelt said it was safe for now but that they regularly reviewed it. I would suppose legal wrote that line for him
True……but 10 business days later? I believe he will have to prove that there was a material change in those days…there wasn’t
GE’s management currently has less than zero credibility. The loss of credibility started last year when GE missed earnings two weeks after Immelt confirmed GE was on track. Late last year, Immelt said the dividend was safe through 2009. Now they GE is saying they are well capitalized.
Unfortunately, GE’s situation and comments sure look, sound like and smell like Lehman’s situation and comments before their demise.
If you believe in GE’s long-term profitability and you believe current prices offer an above-average rate of return, why speculate over the short-term movement of the price when you can get an attractive price now?
You often seem to take a trader’s perspective in analyzing opportunities, yet your blog’s title is “Value Plays.” Are you a trader or an investor? I want to make sure I’m clear on your framework…
Thanks,
Charlie
Charlie,
GE is moving +/- 20% a week now. Trader rule the market right now and their outlook murky near term. that means a fantastic price is likely in the future. I’m happy as an investor to sit and wait for traders to take it down to an unbelievable price before buying. BUT to ignore traders currently control the market is to look left only when crossing the street
I understand your viewpoint here, but I don’t think it’s correct to assume that GE will continue moving +/- 20% a week. Extrapolating the future based on the recent past is always a dangerous proposition. You may be able to calculate a hockey puck’s trajectory based on the angle at which it hit the wall in an ice rink, but your extrapolation will go completely out the door if there’s a bump in the ice along the way…
i don’t assume it will. traders do rule the market though right now, just look at the intraday swings. that means wild price fluctuations for GE due to their weighting.
it isn’t dangerous for me because i do not trade it. looking for an entry. if i do not get it, nothing lost
Okay, so the linchpin here is that you’re waiting for a lower price than what’s been offered in the market so far, right?
sure…i think we may get one, may….