General Electric (GE)

It has broken out here in getting out of some of the financial services they were in. The resistance may be in the low to high $30s from ’08. He thinks their uptrend is based on their divestiture and not based on market trends.

This company has a lot of things going for it from the perspective of capital rationalization. Ultimately you will be left with something that is very representative of the US economy, which is not a bad thing right now. The chart looks fantastic and the capital actions have been born out. Dispositions have been really big stuff. He likes that as a prudent capital stewardship. This is also a stock that you can ride in an interest rate rally. Good tailwinds going into the new year. Just be mindful of what you are holding when all their dispositions are done.

Buy and Hold? This is a good name to put away for now. It has certainly turned the corner. They’ve had some tough times over a number of years, but in recent months they have done much better, partly because they have started to focus on their core business. Inexpensive valuation.

He would suggest hanging onto your GE-N shares if you are offered the financial spin off company’s shares instead. He prefers the industrial pure play nature of GE-N.

He owned this and then sold it on the back of a number of false starts, and wasn’t particularly enamoured with the Austin deal and what it would result in. Trades at a discount to the market, but for a reason. He would think of a number of other industrials before this one.

It is an industrial company with a catalyst. Over the next couple of years their divestiture will free up $80 to $90 Billion. It will remove a lot of regulation of what they can do with their capital. They can buy back shares. You are likely to get very good dividend growth.

This company seems to be on a pretty big tear of trying to get rid of any financial businesses. They seem to be more focused on the industrial businesses. He views this as a positive, where you are getting more of a pure play industrial company and none of the regulated financial services businesses.

GE-N has made it clear they are transitioning away from finance to industrial. The wild card is the integration of their largest acquisition. When you have two giants come together there are growing pains. He does not have enough clarity on which way it will go. He sees nothing specifically wrong with it, though.

He has hated this company for 10 years or more. It is one of the major transformations for one of the major companies in North America. It is a special situation. Upside is $31% lower than that of September 23’rd of this year. GE Capital`s balance sheet is so large it is weighing down the company. Put it away and in five years look at it again. When they take GE Capital off the balance sheet, his model price will skyrocket.

He is favourably disposed to it and almost made it a pick today. He likes the financial deconsolidation. You are going to get a re-rate in the industrial part of the company that will remain. They have been held back by some meaningful business in oil and gas. They have some weakness in their healthcare business. However, it can do well in this environment.

Buy a great company like GE-N when it has underperformed compared to the index. He would not chase it here.

It is going through a restructuring. They are selling off financial assets. You can buy it. They are getting good prices for their assets. It will be a tight walking rope. You could see GE-N start to spin off other businesses. It is out performing CMI-N and CAT-N.

They are finally transforming it back into an industrial company. They are undoing what was wrong when `08 hit. The market pays more for that type of earnings than financial services earnings. He thinks this is a great opportunity to buy this type of company. Great dividend that will go up.

They have been trying to restructure for the last half dozen years. They moved to oil and gas at the wrong time. They have been spinning their wheels. It just cannot get out of its own way. Prefers HON-N.

They are going back to their traditional industrial businesses. But it is harder to succeed at than financials. It would have to fall a lot further for him to consider. He would prefer Honeywell.