General Electric (GE)

The board bit the bullet and replaced the CEO. Things weren't working out with the latest CEO. He wouldn't touch this with a barge pole. Take your losses. This is too hard to work out.

It has been a painful stock. She is not a fan of catching the falling knifes. She is not sure if she would be selling necessarily. She would like to see the stock stabilized before buying.

He has a small short in it. There was a triple whammy. Poor price momentum, valuation is still not cheap enough and it has become quite volatile. It used to be a stable stock. ROE is okay. It tells you they have too much debt. 13 times earnings. He needs to see stabilization in the business. The yield does not justify him buying it here. The real problem is that they just have not recovered from the financial side of their business.

It is a bit of a mess of a company, he says. There is so much work that needs to be done, he sees better opportunity elsewhere and they have a lot to prove. They may need to segment off portions of their company to become successful again and this will take time.

It needs to do something other than what it has been. A big disappointment. It'll likely get broken up.

GE is a broken stock. It’s important for an investor to forget about the price they paid for a company and decide whether it represents good value at its current price. If not, look for a better opportunity. The difference between the market and a horse race is that investors can switch to a better horse mid-race. If it comes back, he will be willing to pay a lot more for it, later, when it demonstrates a level of security. But he does not recommend it, at this level of insecurity, even at this low price.

Avoid it. He doesn't want to be in any of their businesses: no growth. Can't sell their rail business which is deteriorating, which begs the question, How badly do they need capital? They have a lot of debt. What do they make that he'd want to invest in? Nothing.

(A Top Pick August 11, 2017. Down 45%). At its current price, he thinks this is a cheap story. Aviation has worked well for GE; energy has not. With the re-industrialization of the US, GE is likely to do better. Higher interest rates will work for GE Capital. The chart is not pretty but when you buy a marquee capital goods company, they tend to recover and the dividends come back.

Is it time to take profit on a short sale? The stock is leveling off following the restructuring and management change. The market will start to give them the benefit of the doubt at these valuations. He does not see much more downside. He would suggest taking profit on any short sales now.

They are spinning off their health care division, which is arguably their highest-growth area. They are also spinning off Baker Hughes. There will probably be a dividend cut later. She is waiting to see how the company evolves over the next 12-to-24 months before deciding whether it is a good business to invest in or not. Over the short term, it probably has more room to fall.

(A Top Pick July 25/17 Down 46%). He has been killed owing this in his portfolio, he says. The CEO has been removed and the new one is being cautious to take time to study the long term strategy. The market has been impatient and has sold the stock down. GE has been removed from the Dow Jones 30.

It got booted off the Dow today, but GE didn't have much impact on the Dow. GE also announced it would spin-off healthcare and divest 30% in Baker Hughes. They're on the right path and their CEO is doing a good job, but GE is uncertain--how long will this restructuring take? If this spin-off comes and you hold GE (as a Canadian), there could be tax consequences. If you own it, hold it.

It bounced a little today with its plan to spin off health care and oil. His model price for GE is $12.81 and the stock closed yesterday at $12.75. He expects the S&P to issue a negative review on GE’s debt as GE’s balance sheet changes. He would not buy here. He wants the balance sheet to shrink much more before considering it.

He usually does not buy stocks over $10 but he did this one. They have a lot of problems. There is a question about dividend sustainability. They just got kicked out of the DOW. Two other companies went up greatly after being kicked out of the DOW and taking a dip. He is being conservative on this one because there is a lot of risk. Don't buy more. They have a big pension liability to deal with as well.

Maybe this is finally the bottom. They’ve been watching it, because they’re value investors. Haven’t taken a position yet because lots of debt on balance sheet, lowered earnings guidance, trying to decide which assets to sell. Getting booted out of the Dow could cause selling pressure.