General Electric (GE)

He does not think it will go up a lot. They are getting out of GE capital. It is back to its roots as an industrial company. He thinks you will get increasing dividends and share buybacks. It is not a bad story, but he does not see it trading at huge multiples like it used to.

Have decided to scale down about 40%, to less than 10%, on their financial services side over the next few years. Stock popped on that news. Hadn’t own this in the past because financial services was such a large component. They are going to do a significant buyback on shares with the proceeds. She prefers some other industrial names.

He does not look at the headlines before looking at valuation. He sees a potential to earn $5-6 per share. They have rising free cash flow. He feels the headline risk is already priced in. He will continue to buy it.

Sold his holdings about a year ago. They recently made a huge announcement in terms of selling off the assets of GE Capital. This had been a problem through the 2008 time period because it was a financial hiding out as an industrial. The selloff is going to hurt earnings because GE Capital is a big contributor to earnings. They are offsetting that in large part with a huge buyback.

This company is going to do what the market does. It is a very diversified company, but it is not a defensive stock. If the economy turns down, this company will turn down as well. In 2014-2015, the stock really hasn’t gone anywhere. It has been in a trading range. This is the period when industrials tend to be weaker.

It was a play on large cap industrial and it did well. Then it did not do a lot. They are breaking up the company and selling off the real estate assets, for example. He would buy the story. There is a dividend and you will probably get special dividends. The company is excellent.

(A Top Pick May 2/14. Up 5.22%.) Moved up over $28 on the news on their financial side, which is what he thought would happen. They have basically said they are giving back $90 billion back to shareholders over the next 3 years. He is going to hold it because he thinks it is worth $32-$33.

(Top Pick Apr 16/14, Up 8.39%) They had two areas that did not perform. Merchant banking and oil. The other divisions were quite good. He has not sold any. It has plenty of upside. They look very interesting going forward. It has a reasonable yield.

Have proposed selling GE Capital, which is a transformative thing for them. They are going to largely get out of financial services and become a purely industrial company. Have said they will be doing a huge share buyback. Believes they are going to increase the dividends again on a regular basis. Also, make transformative acquisitions in the industrial space. Thinks that all of this will lead to a much higher stock price.

Have been trying to move to become more of an industrial focused business. They are doing this by divesting their GE Capital business. Recently sold a huge chunk of it and are almost completely out of it. He is not convinced that this is the time to buy this. His primary concern is the acquisition they did last year, where they spent $17 billion on an engineering company. 3.3% dividend yield.

General Electric (GE-N) or Visa (V-N)? This is an industrial company. They are spinning off their GE Capital business. You are really buying a well diversified industrial company that is global that is hopefully going to grow. Between the 2, he would probably pick Visa because it is a much better longer-term growth story. He wouldn’t buy this because you are not going to get a bump on the multiple anymore.

Had a nice 10% bump on Friday when they announced the massive sale of their financial products division. They are hoping to have it down below 10% of revenue by 2018. Has this on her radar, but doesn’t see a pressing need to get into it right now. It will still be a couple of years in transformation. Prefers United Technologies (UTX-N).

He still likes the name. Stock has not been very robust in terms of performance, but this is a proxy to the US economy. They are doing a lot of things in terms of divesting out of the things that don’t make them a lot of money. Growth rate is still in the high single digits at 8% -9%. You are paying about 14X forward earnings, so it is not extremely cheap, but looking at the industrial space, a lot of these names are in the higher PEG ratio type of area. Dividend yield of about 3.5%.

Sold his holdings. One of the top down influences that he felt was that he didn’t want to favour his portfolios with companies that were exposed to non-US denominated revenues because they would be averting by a stronger US$, which has sort of come to pass. The French government got involved with their negotiations and started to extract concessions from GE, and this didn’t leave a very good taste in his mouth.

They have a big energy exposure, and international business weighs on them. Their industrial business is doing well and they have a huge cash pile off shore. It may not get a fast move in the stock price but it could be a good long term hold.