General Electric (GE)

They are getting back to their core business. A big industrial leader. They make hydro turbines, jet engines, etc. Getting out of the money business, which is hugely competitive. Dividend yield of 3.71%.

Sold his holdings on the basis of the Alstom deal which he thought was diluted down. Governments were involved and forced the hand of GE. When a CEO is in a position for 15 years and makes a number of moves and they just don’t work out, he thinks it is time for a change.

One of the attractions is that management is trying to make it into what it once was. It had been made largely into a financial company instead of an industrial company. Have been getting out of financials and buying back into the industrial and health care type of area. The market is still waiting to see the results of unwinding the financial.

Their dividend finally went up after a very long time. He thinks it is a terrific company and a leader in many in many industries. The problem is that the American economy is growing very slowly. They are finding it hard to get traction and move ahead. If you have owned for a long time he might stick with it. He thinks they eventually might make money.

They want to divest assets and focus on the industrial energy side. Have done a great job of doing that in a pretty short period of time. The question is, how are they going to reinvest those dollars and how will that transition go. We are in the early stages of the transition and it is too early to say how well it is going. Also, they have made the largest acquisition that they have ever made in history. Spent $17 billion acquiring Alstom, the French engineering firm and there is some integration risks. He likes the name. It is high-quality, well-established and pays a great dividend, but at a time when they are going through such a profound transition, he would wait to get some evidence that progress is taking place. Trading at 18X earnings.

You need patience. It is a great company. It used to be a big global with a lot of different businesses. Today they are focusing on their core of industrial. They have 100 billion of assets up for sale. They are focusing on power, oil and gas, and aviation. Good dividend so you get paid to wait. There is some good upside. It takes time to refocus this huge company.

They are spinning out businesses. Made an announcement about 2 months ago about spinning out a big part of their business, and the stock jumped from $23-$28 in the course of a day. Very often when a chart does that, it leaves a gap in the chart. Over the next number of days, weeks and months, it will often come back and fill that gap, which it has just done in the last few days. Thinks the long-term picture is very positive. This is an industrial and industrials are going through some pressures, but technically it looks quite good. You are not going to get hurt. Pays just under 4%.

Have started shedding assets and are getting down to more of a core operation. For a longer-term safe hold, they are good. Getting out of the old-style conglomerate of multiple businesses and getting more focused on industrial companies, which ultimately probably gives a higher multiple on the stock. For the long-term it will be fine, but it has just had a tremendous run off the bottom, and he doesn’t find it particularly cheap.

It was a very good industrial based company. It was transformed to financial just in time for the financial crisis. They are in the process of disposing of their financial exposure. It is trying to transform itself back into an industrial conglomerate. He thinks this is very positive.

It is a black box and it is hard for analysts to know what is inside of it. The root cause of a lot of that was GE Capital, which they recently announced they are selling 90% of. By 2018 their earnings will be 90% industrial activities. They will get cash from selling those businesses. They are going to buy back $50 Billion in stock during that time. A third of the stock price will be returned to you by 2018. It looks very good. The dividend yield is very attractive. LII-N is his favourite company in this space. The air conditioners from 2006 now need replacement. The Furnaces have a life expectancy 5 years longer. It is a great replacement cycle.

Nice dividend at 3.4%, which should grow by about 4%-5% on a yearly basis. Trading at about 19X forward earnings, with a decent growth rate in the high single digit/low double-digit. Valuations are getting a bit stretched, but technically it is breaking out a little bit and is above the 50 day moving average.

For the 1^st time in 25 years he is positive on this company, and only because they are divesting GE Capital. It could easily double if they just got rid of GE Capital. His model price is $21.14, a -22%. Paying a 3.4% dividend.

(Market Call Minute) Prefers HON-N, as it is the company that GE-N wants to be.

This is part of the industrial sector and historically its period of seasonal strength is from around the middle of October right through until the end of April. The stock is now starting to roll over. Technically the trend is still on the upside, but the strength relative to the market is slightly negative and looks like it is moving below its 20 day moving average as well.

Covers the world. Management has refocused their efforts and got out of several lines. They really cleaned up their act. They are THE industrial play in the world. They have good technology.