|
General Electric And Pandora's Box
Summary
GE's ongoing troubles remind me of the myth of Pandora's Box.
The January 16 'Insurance Update' convinced me that GE is no longer a dividend growth opportunity.
I closed my GE position and redeployed those funds into more shares of 3 dividend stocks in the portfolio.
That was then...
I've written 3 articles about General Electric (GE). The first was a June 2017 article which asked if GE was in a position to succeed. If I had known then what I now know, I would have said, 'Possibly, but it will be a tough hill to climb.'
My October 2017 article, 'Clarity About The GE Dividend,' was an attempt to inject some humor into a difficult topic (the 50% dividend cut), and my bottom line was the I now viewed GE as 'cash available for deployment.' Several of my friends said I should have turned it into cash then. They were right. As other opportunities arose, I asked myself, 'Would I rather spend cash to buy this stock or would I rather sell some GE to buy this stock?' I sold 20% of my GE shares in mid-November at $18.28 and used that money to add more units of Magellan Midstream Partners (MMP) at $65.00.
A November 2017 article reviewed the November 13 Investor Update. I was more critical of GE (perhaps 'sober' is a better word). The seriousness of the situation was obvious, but I like the approach new CEO John Flannery is taking. I'm positive about the new CEO, Jamie Miller.
After that article, I sold 25% of my remaining GE shares at $18.41, and used the proceeds to add more shares of National Retail Properties (NNN) at $41.80.
...This is now.
General Electric CEO John Flannery and CFO Jamie Miller again appeared before investors and analysts on January 16 for an 'Insurance Update.' Here's the first paragraph from the press release:
'BOSTON – January 16, 2018 – GE (NYSE: GE) announced today that the comprehensive review and reserve testing for GE Capital’s run-off insurance portfolio, North American Life & Health (NALH), will result in an after-tax GAAP charge of $6.2 billion for the fourth quarter of 2017, and GE Capital expects to make statutory reserve contributions of ~$15 billion over seven years. The Kansas Insurance Department, NALH’s primary regulator, approved a phased contribution of ~$3 billion in 1Q’18 and ~$2 billion annually from 2019 through 2024.'
This, in effect, acknowledges that the company's insurance operation had already lost but not yet reported $6.2 billion (to be posted in Q4 2017). And, to try to make their North American Life & Health portfolio whole, GE Capital will make contributions to NALH's reserves of $3 billion in 2018 and $12 billion more from 2019 to 2024. In total, this is a $21.2 billion hit.
As I listened to this latest bad news, it became clear to me that at least for the next seven years, GE Capital will not be able to pay a 'dividend' to the GE parent company. This had been used as a 'cash cow' to help the parent company pay its dividend. As far as GE dividends are concerned, that 'cow' has now been put out to pasture.
For me, the 'Insurance Update' was the decisive blow to my GE investment thesis. I held on last June because I genuinely respect and like John Flannery. I held on in November because I thought I could see a way forward - tough, but possible.
Things (for me) are different now. The 'Insurance Update' also brought a hint that a breakup of GE may be more likely than was earlier indicated. Flannery's comprehensive review continues, but at this point, the decision about whether, or how, to break up the company or sell some of its parts is no longer relevant for me.
Pandora's Box
Greek literature provided us with an enduring metaphor for 'unexpected trouble.' The phrase, 'a can of worms' is a similar metaphor.
One dictionary defines Pandora's Box as 'a source of many troubles: something that will lead to many problems.'
In Greek mythology, Pandora was the first female, created as a joint venture by Hephaestus and Athena - following instructions from the CEO Zeus. (I'm telling this story in investor-speak.) Pandora had been given a jar (sometimes translated a 'box'). Pottery jars, prior to Amazon (AMZN), were the way many items were delivered in antiquity.
According to the myth, Pandora opened the container, thus inadvertently releasing 'all the evils of humanity,' leaving only Hope inside the container. In short, 'all hell broke loose.'
(Photo of cover of Pandora's Box, by Lisl Weil)
Don't blame Pandora - the messenger - for opening the container. The problems were already there, Pandora simply 'uncovered' them. She may have been the first investigative reporter. Think Rebecca Smith and John Emshwiller of the Wall Street Journal, or Bethany McLean of Fortune. Enron was already an empty shell. The reporters merely 'opened the lid.'
I don't blame John Flannery for taking the lid off GE's corporate container. It was long overdue. GE's lid, by all accounts, was 'well-sealed.'
GE may be a great value at the moment. It may be a 'value trap.' It has become quite clear to me that John Flannery had no idea that the situation at GE was as bad as it is - until he 'opened the box.' Analysts, as a group, didn't know. Surely, there were people at GE Capital and at the GE parent company who knew the insurance business was woefully undercapitalized.
It's of no comfort that I'm not alone in my failure to 'turn over all the rocks.' Those of you who are tempted to say, 'I told you so,' need not remind me. My failure to perform adequate due diligence on GE is ever before me.
I haven't had many losers, particularly in this generous bull market, but I missed this one. No need to whine or grovel. Just move on. If you are a former GE shareholder who was 'burned,' I suggest you move on, too. There are many people carrying around deep animosity toward Jeff Immelt. It won't hurt him if I carry around a grudge - but it will hurt me.
I'll remind you what I say to myself often: We do the best we can with the information available.
For me, the 'lid is off' GE's dividend prospects
With the disclosure of the insurance debacle, I had enough information to take action. Sometimes I must remind myself that 'I'm a dividend investor,' and 'This is a dividend portfolio.' If I was 27 instead of 67, I might choose to own GE as a speculative investment. But, GE has become irrelevant to me because I no longer see it as a dividend growth opportunity.
Flannery and Miller did an admirable job of trying to build a wall around GE Capital, maintaining that this will not torpedo their industrial business. But, the latest piece of news from the container that John Flannery has inherited - and now opened - convinces me that GE's dividend is in dire jeopardy. If the dividend survives as is, I'm not sure even Zeus could make GE a dividend growth company. The good news in the story is that Hope is the remaining item in the container. I hope I live to see GE back on David Fish's list of Dividend Champions, Contenders or Challengers, but I'm old and I'm not going to bet on it.
So, on January 18, I closed my GE position at $17.19. I used the proceeds to add to my positions in Dominion Energy (D) at $74.61, Duke Energy (DUK) at $77.49 and Hannon Armstrong Sustainable Infrastructure (HASI) at $21.88. Since I write almost exclusively about companies in my retirement income portfolio, I expect this to be my last article about GE. I wish the best for all remaining GE shareholders.
My goal is to write an average of at least one article a week, usually about a company in my retirement portfolio. I provide a complete portfolio review each quarter, such as my January 2, 2018 article, 'It Was A Very Good Year.'
===================================================================
I always learn from our Seeking Alpha conversations. I welcome your opinion. Your comments enrich our discussion.
You can access a list of previous articles here.
To be notified of future articles on a real-time basis, just click 'Follow' at the top of this article, then choose 'Follow this author' and 'Real-time alerts.' On January 6, I began writing a weekly (Saturday) blog, which recaps the week just past (with any portfolio changes) and looks ahead to the next week. You will receive notification of these weekly blog posts if you choose to receive 'Real-time alerts.'
It's not my intent to advocate the purchase or sale of any security. My purpose is to offer ideas for stocks to study and to share a journal of my effort to design and build a retirement portfolio that puts a priority on relative safety, a history of dividend growth and solid future prospects. Your goals and risk tolerance may differ, so please do your own due diligence.
Disclosure: I am/we are long JNJ, MRK, PFE, WMT, XOM, MSFT, PG, CSCO, AAPL, TD, MMM, PEP, ADP, RY, SPG, VTR, BCE, BEP, DUK, KMB, O, EPD, D, SKT, MMP, PPL, TGT, NNN, BIP, WPC, GPC, APLE, HASI, IBM, PEGI, KO, TXN, VFC, MRCC, HRL, VTI, VEA, VWO, VYM, VOE, VNQ, VPU.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
About this article:Expand
462,704 people have GE in their portfolio and get alerts
Recommended for you:
Giovanni DiMauro
General Electric Nearing Capitulation: Buy, Sell Or Hold?
Giovanni DiMauro • Jan. 21, 2018 4:30 AM ET
Michael Boyd
General Electric: Lessons In KISS Investing
Michael Boyd • Jan. 22, 2018 1:31 PM ET
Victor Dergunov
GE's $21 Billion Stumble: I Was Wrong, The Bottom Is Not In, And It Could Get Worse
Victor Dergunov • Jan. 22, 2018 3:43 AM ET
Achilles Research
General Electric: How Low Can It Go?
Achilles Research • Jan. 22, 2018 5:27 AM ET
---------------------------------------------------------------------
Comments 294 Add Comment
---------------------------------------------------------------------
Real Asset Investor
Comments (14) |+ Follow |Send Message |
Thank you for detailing your evolving thoughts on GE and for providing the Pandora’s Box metaphor. The latter provides an insightful way to frame an investor’s current dilemma.
19 Jan 2018, 11:28 PM Report Abuse Reply13Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Real Asset Investor, I appreciate your comment. It wasn't fun to write this one, but there was a therapeutic dimension to it. I truly want the best for GE. Enjoy your weekend!
20 Jan 2018, 12:47 AM Report Abuse Reply12Like
---------------------------------------------------------------------
jg0205
Comments (77) |+ Follow |Send Message |
Do you foresee GE getting around $13 in the near future? $13 per share is close to a PE ratio of 15. If you want to share how low GE will go, I would sincerely appreciate it.
20 Jan 2018, 07:50 AM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » jg0205, you've raised a great question. I'm no good at calling bottoms. If you're asking the question because you're 'bottom fishing' and looking for the lowest possible entry point, I think you'll have plenty of time to figure that out. I don't think GE will have a 'V-shaped' recovery. This is going to be a marathon. They just made a 7-year, $15 billion commitment with a Kansas regulatory agency, which in effect eliminates a crucial source of revenue to the parent company. It's hard to estimate property damage while the hurricane is still overhead!
20 Jan 2018, 08:49 AM Report Abuse Reply15Like
---------------------------------------------------------------------
jg0205
Comments (77) |+ Follow |Send Message |
Thank you for your response. I like the term 'bottom fishing', which I am. I would be more comfortable buying GE at around a PE of 15 or lower. Again, thanks.
20 Jan 2018, 08:53 AM Report Abuse Reply4Like
---------------------------------------------------------------------
DavidBaird
Comments (341) |+ Follow |Send Message |
Sold my last traunch of GE at $17 (basis $15). Don't believe they have a clear vision as to what is needed. Obviously GE has a lot of good businesses but they just do not seem to be properly organized... at the moment. Will watch from the sidelines for a while now.
20 Jan 2018, 09:09 AM Report Abuse Reply2Like
---------------------------------------------------------------------
capitalallocator
Comments (181) |+ Follow |Send Message |
ITS DARKEST .......
The article did not tell us when to buy or at what price. Picking the exact bottom is impossible so make two buys in the bottoming process.
20 Jan 2018, 09:20 AM Report Abuse Reply3Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » My pleasure. I think of sitting in a boat on a quiet lake, waiting for a catfish to hit the hook waiting at the bottom of the lake. :-)
20 Jan 2018, 09:59 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for joining the conversation, David. Happy investing!
20 Jan 2018, 10:00 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for your comment, capitalallocator. I believe you speak from experience!
20 Jan 2018, 10:01 AM Report Abuse Reply2Like
---------------------------------------------------------------------
Marquisce Martin
Comments (5) |+ Follow |Send Message |
The PE of 15 is based on current assumptions of earnings which are probably going to come down.
20 Jan 2018, 01:14 PM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good point, Marquisce. I think the big story in upcoming quarters (for a few years) will be free cash flow. My hunch is that earnings will fluctuate considerably.
20 Jan 2018, 01:20 PM Report Abuse Reply0Like
---------------------------------------------------------------------
ckarabin
Comments (4975) |+ Follow |Send Message |
The recent insurance news will certainly set off a selling wave as people run to redeploy what would be dead money out of GE and into other more fruitful near term investments. Just let it fall until it finds its low and builds a significant base. That could take quite some time, months, not days and surely many sellers are no queuing up.
20 Jan 2018, 01:59 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Well said, ckarabin. Thank you for your comment.
20 Jan 2018, 02:02 PM Report Abuse Reply1Like
---------------------------------------------------------------------
serndipity
Comments (281) |+ Follow |Send Message |
Dollars to doughnuts, despite the surprise in LTC liabilities that GE announced this week, will in the end, still will be grossly insufficient.
Due to the rapidly increasing cost of skilled care, all of the companies that sell LTC policies, have been dramatically and consistently increasing their coverage premiums.
To sweeten the Genworth IPO offering, GE fully retained all of the the policy liabilities, without getting any increase in premiums.
Go figure!
20 Jan 2018, 09:14 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for your comment. It's hard to find many serendipities in the GE story just now. :-)
20 Jan 2018, 09:27 PM Report Abuse Reply0Like
---------------------------------------------------------------------
bemylov@yahoo.com
Comments (7) |+ Follow |Send Message |
It
22 Jan 2018, 12:12 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
You are correct. GE as a dividend stock is, or will very soon be irrelevant. The few synergies between business units do not appear to be compelling enough to warrant a significant cost savings. Probably best to break up the company for the sake of the individual units. GE Aviation, as an example, would thrive without the non-value added attention of the corporate drones sticking their unwanted heads into David Joyce’s office asking for another contribution to their mismanagement.
19 Jan 2018, 11:33 PM Report Abuse Reply11Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, Felix. My uncle was a career-long welder for GE Aviation. He's now deceased and he would be heart-broken, or mad as hell (or both). There's grief in this for me and for countless others with much closer ties to GE. I think John Flannery will find his way out of the crisis, but it became apparent that after all the dust settles, there won't be much room left for a dividend (if the company stays together or if it's split up). All the best to you!
20 Jan 2018, 12:52 AM Report Abuse Reply8Like
---------------------------------------------------------------------
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
DS - Agree. The ongoing issue with GE is credibility. Immelt pretty much destroyed any financial credibility that GE once enjoyed. I NEVER did trust the guy. Always looked and acted like he had something to hide ....and indeed he did. Further testimony to the lack of credibility was their financial reporting which, quite honestly, I could never fully comprehend. It was a shell game to say the least.
To thrive, or even survive, GE needs to regain credibility with investors. Unfortunately trust and credibility take time. Since Flannery is a lifetime GE clone, educated at the Crotonville school of business deception, credibility I’ll be very difficult in the near term. Already he is showing signs of deception as the GE narrative has unfolded since Nov 13 when he laid out his plan based on his entailed internal review. Obviously his review wasn’t detailed enough. It begs a few questions going forward. Seems like he has already dug himself a nice hole. All of this is very sad news for the thousands of great current GE employees and pensioners who dedicated their careers to GE (myself included) believing in all of their compliance and integrity standards. To finally learn that their CEO was either the most incompetent CEO in corporate US history or a flat out crook or some combination thereof is beyond disappointing.
20 Jan 2018, 07:17 AM Report Abuse Reply20Like
---------------------------------------------------------------------
bullbeartrader
Comments (590) |+ Follow |Send Message |
Immelt prospered with Board approval at the expense of shareholders and continues to do so. I don't trust current GE management or the BOD. Dumped GE at the end of December in the 17's.
20 Jan 2018, 07:22 AM Report Abuse Reply6Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Well said, Felix. I feel the pain and irony of cuts in benefits to pensioners and their survivors. I can understand the pain of al those with a direction connection to GE. I'm able to look at this somewhat dispassionately because GE was a small part of my portfolio. This sad saga illustrates the importance of diversification.
20 Jan 2018, 08:55 AM Report Abuse Reply3Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for sharing your perspective and experience, bullbeartrader.
20 Jan 2018, 09:01 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Crawfisher
Comments (17) |+ Follow |Send Message |
Immelt ran GE like the Democrats ran the gov't. He said payback last bonus.
20 Jan 2018, 10:32 AM Report Abuse Reply6Like
---------------------------------------------------------------------
Bob57
Comments (15) |+ Follow |Send Message |
I saw the accounting fakery first hand during my time at the meatball. The insurance bogey does not surprise me, but I don't believe for a moment that the cause, as has been widely reported, is that 'people are living longer'. Not that much longer over such a short period of time. The under-reserving was likely intentional.
Look for more of these 'oops' moments in the near future.
I never worked for any of the Flannery-run businesses, but I don't think he is the right guy to breathe life back into this dying colossus. His prescriptions for revitalization all consist of 'cost cutting'. The problems at GE are far greater than the cost of engineering and production. They're cultural. The GE culture has degenerated into one of extreme timidity. That doesn't work well in a crisis.
20 Jan 2018, 11:01 AM Report Abuse Reply7Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Bob57, thank you for your comment. I hadn't heard the 'living longer' rationale. That doesn't speak well for the folks doing the actuarial, mortality tables. It would be like NASA saying, 'That's where the moon was when we launched the thing. It must have moved!'
I had never heard of Flannery before he was appointed, so I have no pro or con bias. However, I've read and listened to his words very closely. He may not be saying or doing the right things, but he has made it clear (to me, at least) that GE has a major cultural problem. He affirms GE's tradition but not its recent practice and execution. Some CEOs pay lip service to the company culture, and I do not yet know if Flannery's words are all talk and no substance. But he has addressed the culture issue. As of Thursday, I have no dog in the hunt, but I wish only the best for GE and I hope Flannnery succeeds.
20 Jan 2018, 11:27 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
Bob57 - Could not Agree more that the culture at GE is the problem. Leading by intimidation breeds contempt. When others get rewarded for your hard work, the contempt grows. When engineers get axed instead of worthless executives who don’t understand the products, the customers, the competition, or basic business acumen, it destroys competitiveness. When these same worthless executives get their $1000/month car allowance when the overall “effect on payroll” is 2% year after year, people loose faith. Indeed, this is the culture that exists at GE today ....and it sucks. Changing it is the only hope.
20 Jan 2018, 11:36 AM Report Abuse Reply8Like
---------------------------------------------------------------------
Marquisce Martin
Comments (5) |+ Follow |Send Message |
One major issue with them trying to split up the business units is that there are huge liabilities that would have to be indirectly tied to the revenues and income of the stand alone unit. So the real decision would come down to how much would future pension and debt obligations could GE Aviation carry on it's own books and still thrive?
20 Jan 2018, 01:58 PM Report Abuse Reply3Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Marquisce, another aspect of this is the company's liability to the bondholders and how that would shake out in a breakup.
20 Jan 2018, 02:03 PM Report Abuse Reply2Like
---------------------------------------------------------------------
joeycool
Comments (599) |+ Follow |Send Message |
Crawfisher -
Thanks for your ignorant comment. You are aware the of the great Trump tax cut, which will increase the national deficit by an estimated 1.5 trillion dollars? Rethuglicans have shut the government down.
NEW | 22 Jan 2018, 10:45 AM Report Abuse Reply0Like
---------------------------------------------------------------------
rjroberts
Comments (750) |+ Follow |Send Message |
GE Industrial businesses and GE Money Broker businesses don't mix; NEVER DID!
19 Jan 2018, 11:54 PM Report Abuse Reply6Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment rjroberts. I can see a finance division (like Deere and many other industrial companies have), but this one ventured into some swampy ground.
20 Jan 2018, 12:53 AM Report Abuse Reply3Like
---------------------------------------------------------------------
ep0914
Comments (471) |+ Follow |Send Message |
I think GE is missing the GE capital business that was. That Capital dividend
sure would help these days. At one time they were as big as Industrials. Even the NBC revenues are missed. Don't bite the hand that feeds you.
Don't cut up the credit cards when you need them to pay the rent.
20 Jan 2018, 11:30 AM Report Abuse Reply2Like
---------------------------------------------------------------------
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To rjroberts -
There is a 'middle ground' and that is GE Capital, in its reduced size since April-15, is used solely to provide required funds to customers of GE's Industrial products.
This is a very practical, and desirable, function.
20 Jan 2018, 12:41 PM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for pointing that out, Mike. That was the original idea, right?
20 Jan 2018, 12:58 PM Report Abuse Reply1Like
---------------------------------------------------------------------
ep0914
Comments (471) |+ Follow |Send Message |
Stanger and Bossidy developed the business model in the 1970s.
I heard a story where John Stanger thought not doing the financing would be a lost opportunity. GE agreed and Capital took off.
20 Jan 2018, 02:25 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Dividend sleuth (author) -
Yes, that was the stated (in April-15) and direct intent of the 'new' GE Capital (called 'verticals') with everything else then to be sold off.
Why GE still has non-Industrial financial functions on the books is due to Immelt/Bornstein/Sherin collective mismanagement and deceptiveness and lack of accountability and transparency.
20 Jan 2018, 03:27 PM Report Abuse Reply1Like
---------------------------------------------------------------------
bemylov@yahoo.com
Comments (7) |+ Follow |Send Message |
Merry
22 Jan 2018, 12:15 AM Report Abuse Reply0Like
---------------------------------------------------------------------
wcrkp
Comments (75) |+ Follow |Send Message |
Easy to say now with hindsight bias but payout ratio using FCF foretold the events in this case.
19 Jan 2018, 11:59 PM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, wcrkp. I wish I could get some of that hindsight earlier! :-)
20 Jan 2018, 12:54 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Paper_stax
Comments (757) |+ Follow |Send Message |
You're not alone
20 Jan 2018, 04:33 AM Report Abuse Reply0Like
g.dimit
Comments (189) |+ Follow |Send Message |
You mention possibly this will be your last article about GE I certainly I can understand.
But before you do. must write an article explain The Rise & the present situation of this 127 years old Glorious Company
Causes:
MANAGEMENT
CULTURE
TIMES ETC. ?
20 Jan 2018, 06:38 AM Report Abuse Reply1Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
I think the situation can be summarized by saying that a culture of greed and arrogance took control from the previous culture of integrity and technical excellence. I witnessed the transition during my 30 year career as once well respected business leaders who defined relationships built on accomplishments and credibility were replaced with imposters promoted into positions beyond their understanding because of their phony and fraudulent Six Sigma corner cutting credentials. Unfortunately, many of those types now infest the Senior Executive ranks at GE. Removing that infestation will require a lot more than Orkin. It will require leadership with vision and an ability to recognize and reward real contributions to the business while demanding absolute integrity at all levels.
20 Jan 2018, 07:32 AM Report Abuse Reply19Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, g.dimit. I included a brief summary of GE's history in the first article (linked above). I'm sure more than one professional writer, and perhaps some former insiders will produce books about what went wrong.
I think you've identified some of the key themes. In my mind, it always comes down to management. Here's some food for thought from Bloomberg: https://bloom.bg/2EYBMiG.
GE's track record of acquisitions has been widely criticized. It appears that the main thing (industrial innovation) ceased to be the main thing (long term care insurance?).
There's been a chorus of voices asking, 'Where was GE's board?'
Maybe the takeaway for all of us is to be vigilant and never take for granted that today's giants will always be the giants. Our world is very fluid, changing with exponential speed, and there is less room today for a business to be less than great.
20 Jan 2018, 07:48 AM Report Abuse Reply3Like
cdgingrich
Comments (699) |+ Follow |Send Message |
I've never invested and only watched GE from afar, but this is a great post and, I think, hits the nail on the head.
20 Jan 2018, 08:25 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Felix, thank you for sharing these insights. It's helpful to hear from those who lived through it to get a fuller understanding of why, and how, a great company can encounter such a dramatic reversal of fortune.
20 Jan 2018, 09:07 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » I appreciate your comment, cdgingrich.
20 Jan 2018, 09:07 AM Report Abuse Reply0Like
franklja
Comments (842) |+ Follow |Send Message |
Well stated Felix. I too had a 30+ year career at the General and it's really sad to see what has happened of late. Two Jet Jeffy was definitely a flim-flam man. I saw it coming and have posted many warning comments on SA in the past, just as you have. The buzzards have definitely come home to roost on this carcass!
20 Jan 2018, 10:59 AM Report Abuse Reply5Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Felix Lumpe -
I like what you post about 'fraudulent Six Sigma corner-cutting credentials.' I've never worked at GE but in the late 90's, when I was working (since retired) at a large East-coast defense company, I saw first hand the idiocy and mismanagment that GE's vaunted 'Six Sigma' process could develop.
The company I was at then hired a former GE executive whose apparent only capability was to 'promote Six Sigma' wherever and whenever he could. Over the next 5 years, this 'vaunted GE executive Six Sigma 'Black Belt' ' drove the company downward.....and downward.....and downward until he was fortunately sacked by the company's BoD.
Since then, over the last 15 years, the company's stock has risen +640%!!! But not due to me....as I've said, I am (comfortably) retired now.
20 Jan 2018, 12:49 PM Report Abuse Reply4Like
Namron Damron
Comments (2466) |+ Follow |Send Message |
Mike, excellent comments. I too am retired but was always leery of the latest 'gimmick' to drive a business forward. Our President (a Fortune 200 company) liked to create his own models for adoption and each of the businesses adopted some of these outside the company programs.... 6 Sigma, TQ, etc. Needless to say, we had a lot of competing models in the company. The best one I used was one that defined all costs as waste and the process was to eliminate waste..... forgot the consultant. In order to be a team player, I fell into the teachings, led them, but was always concerned that they were simply quick-lived gimmicks.
My advice to younger people still working..... be leery of the gimmicks. The basic principles of: high quality and value, low costs, treating employees fairly, being open and transparent to all stakeholders, and allowing lots of creativity to drive the future of the business are still valid.
As an aside, neither of my kids like being told what to do, nor would they be good team players as I was and go along with gimmicks. They have their own businesses and have control of their own strategies. I guess my years of travel and climbing the corporate ladder was enough evidence for them of the life they didn't want to have or live. It served our family well but it wasn't for them. I always wanted to own my own business but couldn't break out of the comfort and success I was enjoying in a big company. It was a great ride. But with that said, I have never seen a better time for someone young enough to break out on their own. This new tax law is a windfall for business in general, especially small business.
20 Jan 2018, 01:15 PM Report Abuse Reply9Like
ckarabin
Comments (4975) |+ Follow |Send Message |
Welch brought in a culture more tolerant of chicanery and forced accounting (backing into desired results). if you didn't hit targets you got fired, so why not cook the books and delay the day of reckoning, hoping that something good might happen!
Immelt was not a business 'builder' but a serial acquirer, hoping to find a magic undervalued asset that someone else was willing to throw away at half price. Life doesn't work that way as sellers are smart too, leaving Immelt to buy several firms at peak valuations. Good riddance.
20 Jan 2018, 02:04 PM Report Abuse Reply3Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
Mike Slattery - Interesting. There is nothing wrong with the Six Sigma philosophy if it is deployed as intended. The science behind it is sound. The problem was how GE deployed it, forcing its use in every discipline within the company. Using it in a sales and marketing environment makes zero sense and is only counterproductive. Obviously it didn’t do much good with respect to the finance function at GE, would you agree?
Based on your exposure, you can only imagine how bad it was within GE. If however, you bought into the BS, you could become a Black Belt or Master Black Belt for two years and then be promoted into some position far beyond your knowledge level, but with your Six Sigma tool kit.
Indeed this became the only way to get promoted. Many posters here in SA have described this lunacy. I haven’t seen anyone defend it.
I’m trying to guess which East Coast Defense Company you were with. Boeing (philly)? General Dynamics? Sikorsky?
20 Jan 2018, 02:11 PM Report Abuse Reply5Like
farwest
Comments (396) |+ Follow |Send Message |
@Felix, glad you spoke up. Exactly right to say the flim flam culture infests GE. It was decades in the making and anyone thinking the current lifer-in-charge will dramatically change that culture is delusional. The rot is systemic.
20 Jan 2018, 03:34 PM Report Abuse Reply2Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Felix Lumpe -
I've sent you a private message on this.
20 Jan 2018, 04:00 PM Report Abuse Reply0Like
Namron Damron
Comments (2466) |+ Follow |Send Message |
Dividend, thanks for sharing your thoughts and your decisiveness. I am a long term investor in GE with a cost on the low side. I am in a quandary about how we all were misled. Also, I am in a bit of a thought dilemma about GE's future. I am assessing and may or may not stay with the stock. I like dividends but am not strictly a dividend investor. I am a value investor and I need to make a decision on whether I can categorize GE as such. My opportunity losses are enormous, my actuals are not bad. Admittedly, I am a better buyer than seller but I try to study that buying and selling decision with the same kind of analysis and I take my time. As disappointed as I am with GE and all of the bad info we investors have been fed, I am still hanging in with a long posltion.
20 Jan 2018, 12:07 AM Report Abuse Reply11Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Namron Damron, I appreciate your response. I could make an argument for staying long GE if it weren't for the dividend issue. If the dividend was unimportant to me, I might hang on to see what happens. They've developed some skill in financial engineering and maybe they will find a buyer for GE Capital, or spin it off so they have no lingering liabilities, and maybe they will be effective in the other possible spinoffs. There are great assets in that 'box,' but obviously there are troubles as well. Whatever you decide, I hope it works out well for you.
20 Jan 2018, 12:59 AM Report Abuse Reply5Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
Seems like they’ve “spun off” most of GE Capital but retained all of the associated liabilities. Morons in action.
20 Jan 2018, 07:35 AM Report Abuse Reply15Like
cdgingrich
Comments (699) |+ Follow |Send Message |
See Felix Lumpe's post above. That may answer your q.
20 Jan 2018, 08:26 AM Report Abuse Reply1Like
JonBeGood
Comments (352) |+ Follow |Send Message |
I find myself in the same position and diversified enough to either hold on to GE or sell out and move on. I think it is important to decide re: GE on it's own merits rather than as a swap into another stock. One can even sell out of GE and gradually build a new position if desired. I think that breaking up GE is the best solution now with GE aviation and GE healthcare still very valuable assets. GE no more!
21 Jan 2018, 01:20 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, JonBeGood. I agree that each transaction should stand on its own merit. I had the cash to make the three purchases but I chose to keep the cash and close the GE position. This sort of situation requires me to let my rational mind overcome whatever emotion is involved. All the best to you!
21 Jan 2018, 06:24 AM Report Abuse Reply1Like
ARG1
Comments (2544) |+ Follow |Send Message |
JonBE,
It is not as simple to just break up GE. It appear the sum of the parts are less than the share price. Further, it might be very difficult to break up GE because of the $30B in pension and $15 long term health care liabilities. There are also now litigation liabilities for 10 years of of mismanagement. The 10 years of mismanagement comes from David Hero of the Oakmark Funds.
21 Jan 2018, 02:30 PM Report Abuse Reply0Like
futret
Comments (119) |+ Follow |Send Message |
My cost is about $22. I wish I had sold at 32. I will probably the same as you. Great article.
20 Jan 2018, 12:14 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, futret. Maybe the Q1 earnings call on Wednesday will bring some rays of sunshine!
20 Jan 2018, 01:01 AM Report Abuse Reply0Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Rays of sunshine?
Are you SERIOUS?
20 Jan 2018, 08:50 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » LOL. I was picking up on the Hope image in Pandora's Box. You've heard of 'Sunshine Laws.' GE can use a good dose of transparency that comes with letting some light into their operation. :-)
20 Jan 2018, 10:04 AM Report Abuse Reply1Like
Steve Rasher
Comments (7054) |+ Follow |Send Message |
Ted: Couldn't agree more. I have owned GE since 1980, but the only thing clear to me know is that, given all the problems it is having, the numerous unknowns, and lack of positive catalysts, the only investment thesis is hope. But hope is not an investment thesis. Thus, a short time ago I sold 2/3 of my position and finally sold the last portion today. Steve
20 Jan 2018, 12:26 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, Steve. Well said. When I closed the position I thought of the charges against earnings that Flannery has led them through in these first days at the helm. Selling GE felt like I was taking a charge against earnings.
Everything is an opportunity to learn. Unfortunately, this one came with a high tuition. :-)
20 Jan 2018, 01:08 AM Report Abuse Reply4Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
Steve Rasher - Was wondering if you were still holding GE stock. I always enjoyed the rational approach you took defending this stick. You were right up there with the likes of Mike Slattery, who I believe also finally threw in the towel after a long tenure of endorsement. I too was a big believer until 2014 when I dumped 99K shares at 28.38. Sounds like a lot of money but my opportunity costs were enormous during the time that I drank the Kool Aide and watched stocks like AAPL, AMZN, HON, MMM, LMT, GOOGL, and Costco soar in deference to GE’s corrupt narrative. I think GE has finally lost any semblance of investor credibility and will henceforth be treated similar to a game of roulette by only the most speculative investors. The “Blue Chip” label belongs elsewhere.
20 Jan 2018, 09:01 AM Report Abuse Reply3Like
Karl Kelly, Contributor
Comments (3522) |+ Follow |Send Message |
Felix I too was sold on GE til 2014 or so. things just started to not add up. I've been very vocal the past 12 months on how GE is not a good investment. I've had some arguments with Mike, who is a good guy, but as you said even he threw in the towel.
20 Jan 2018, 10:08 AM Report Abuse Reply2Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
Yep. Even the hard core guys have fled the scene.
20 Jan 2018, 10:11 AM Report Abuse Reply1Like
Karl Kelly, Contributor
Comments (3522) |+ Follow |Send Message |
indeed, a few, blood in the streets back up the truck fellows are still around.
I hope I stopped a few from buying, especially when it was going up past 30. I'm not wealthy, so losing a position is a big deal to me. I hope others were able to get out as well
20 Jan 2018, 10:18 AM Report Abuse Reply1Like
Fgh6789
Comments (140) |+ Follow |Send Message |
'I am a value investor and I need to make a decision on whether I can categorize GE as such.'
As the E falls the PE is rising. May be a high PE stock after Wednesday.
20 Jan 2018, 12:29 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Fgh6789, thank you for your comment. If there's a case to be made for GE, I think it would be the value case. Wednesday's earnings call may provide some clarity about that approach. All the best to you!
20 Jan 2018, 01:10 AM Report Abuse Reply2Like
Marquisce Martin
Comments (5) |+ Follow |Send Message |
Just remember you have to trust the E and they have already said that they will be selling units that drive the E. No one can predict the prices they will sell for but everyone offering a price can see the 'for sale' sign!
That said, if I see a 9 handle I'm buying 1000 shares. A temporary elimination of the dividend Wednesday might get it there.
20 Jan 2018, 02:02 PM Report Abuse Reply1Like
CarCraft
Comments (28) |+ Follow |Send Message |
My concern is whether your comment, repeated here, is correct:
'The good news in the story is that Hope is the remaining item in the container'
Are we sure the container only holds Hope at this point or might there be sloth-like demons yet to climb out?
Disclosure: No longer long, now holding a put option.
20 Jan 2018, 12:53 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » CarCraft, thank you for your comment. I love metaphors, but I'm aware that every metaphor has it's limits. I see hope in the box. I see some very strong businesses. My hunch is that Flannery's house-cleaning isn't over. There may well be more 'demons' in there. For me, as a dividend investor, once I gained clarity about the fragility of the dividend (and no visible catalyst for growth even if the reduced dividend can be maintained), suddenly none of the other issues mattered. If nothing else, this is a lesson in the importance of diversification!
20 Jan 2018, 01:14 AM Report Abuse Reply2Like
Windy Hill
Comments (812) |+ Follow |Send Message |
Carcraft: Still waiting for more bad news on underfunded pension liability.
20 Jan 2018, 09:54 AM Report Abuse Reply2Like
farwest
Comments (396) |+ Follow |Send Message |
@Windy - but didn't you hear they 'fixed' the pension problem. They're going to borrow $6B. It's not like GE isn't already drowning under a mountain of debt already, is it?
20 Jan 2018, 03:40 PM Report Abuse Reply0Like
whif
Comments (3) |+ Follow |Send Message |
I too closed my position in GE this week and I knew better but the insurance loss was the last straw. Never invest in a company whose balance sheet you don’t understand.
20 Jan 2018, 12:54 AM Report Abuse Reply6Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for your comment, whif. You've uttered some words of wisdom.
20 Jan 2018, 01:15 AM Report Abuse Reply1Like
Felix Lumpe
Comments (1824) |+ Follow |Send Message |
whif - Or in this case trust.....
20 Jan 2018, 07:38 AM Report Abuse Reply3Like
JohnP
Comments (118) |+ Follow |Send Message |
'Never invest in a company whose balance sheet you don’t understand.'
A corollary to the overarching law by Stevie Wonder:
'When you believe in things that you don't understand, then you suffer.'
20 Jan 2018, 10:42 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks, JohnP. I think you've just given us a theme song for the article. :-)
20 Jan 2018, 10:53 AM Report Abuse Reply1Like
alphaman
Comments (394) |+ Follow |Send Message |
Does anyone have any thoughts as to how such highly paid and reasonably intelligent people could mismanage a company to this degree? Was Immelt dishonest, lazy or indifferent?
20 Jan 2018, 01:26 AM Report Abuse Reply3Like
rgard64
Comments (278) |+ Follow |Send Message |
Hubris my friend
20 Jan 2018, 04:41 AM Report Abuse Reply2Like
realfood
Comments (241) |+ Follow |Send Message |
dishonest!
20 Jan 2018, 10:11 AM Report Abuse Reply0Like
JohnP
Comments (118) |+ Follow |Send Message |
The Peter Principle?
'Never ascribe to malice that which is adequately explained by incompetence.'
20 Jan 2018, 10:47 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Very good. I like this one.
The charge of malice implies that one has a way of knowing a person's inner motivation and temperament. Incompetence can be objectively observed and evaluated.
20 Jan 2018, 10:56 AM Report Abuse Reply0Like
franklja
Comments (842) |+ Follow |Send Message |
Yes to all!
20 Jan 2018, 11:03 AM Report Abuse Reply2Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To alphaman -
'Was Immelt dishonest, lazy, or indifferent?'
Yes, yes, yes.....and ignorant and overpaid and incompetent.
20 Jan 2018, 02:04 PM Report Abuse Reply1Like
Windy Hill
Comments (812) |+ Follow |Send Message |
JohnP--
HANLON’S RAZOR:
Never attribute to malice that which is adequately explained by stupidity.
The description “Hanlon’s Razor” was used because the creator was a computer programmer named Robert J. Hanlon.
20 Jan 2018, 04:49 PM Report Abuse Reply1Like
JohnP
Comments (118) |+ Follow |Send Message |
I had googled the phrase too, but chose the alternate version because I wasn't convinced that Immelt was stupid.
NEW | 22 Jan 2018, 11:04 AM Report Abuse Reply0Like
natb
Comments (143) |+ Follow |Send Message |
Perhaps he was just a thief, a well compensated one.
20 Jan 2018, 01:30 AM Report Abuse Reply7Like
N93143
Comments (364) |+ Follow |Send Message |
With everyone throwing in the towel, it must be a buy!
20 Jan 2018, 02:00 AM Report Abuse Reply8Like
Paper_stax
Comments (757) |+ Follow |Send Message |
N93143,
Not just yet, but that could also depend on your expectations. If it's income, I'd stay on the sidelines until direction is more clear.
20 Jan 2018, 04:39 AM Report Abuse Reply3Like
Skharpuri K
Comments (52) |+ Follow |Send Message |
any funny business between GE and their auditor KPMG?
20 Jan 2018, 02:08 AM Report Abuse Reply3Like
Amerlafrance
Comments (969) |+ Follow |Send Message |
And also ask if there was any funny business with the Kansas insurance regulator? How does the watchdog not notice that level of underfunding? It leads me to believe that there has been a massive misreporting to the regulators and that had to be by design. I want to hear of the heads that roll for the insurance issue, I want to hear the SEC go after Immelt or any others who knew of the misreporting. I think there is a culture here that needs to be wiped clean and that needs to be done publicly to restore credibility. Is the deal with the insurance regulator a final settlement for penalties and sanctions?
20 Jan 2018, 08:02 AM Report Abuse Reply6Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment and for your good questions, Ameriafrance. One of the questions I had as I wrote the article was, 'What ever happened to Sarbanes-Oxley?'
20 Jan 2018, 09:10 AM Report Abuse Reply1Like
Amerlafrance
Comments (969) |+ Follow |Send Message |
Yes, if the government can't figure out someone to charge here, then we know the fix is still in inside the beltway.
20 Jan 2018, 10:52 AM Report Abuse Reply1Like
greensgolf9@aol.com
Comments (99) |+ Follow |Send Message |
Amerlafrance,
Agree. Where is the SEC? If this was you or I, we would be behind bars crying for a lawyer.
20 Jan 2018, 12:53 PM Report Abuse Reply1Like
scoots
Comments (1913) |+ Follow |Send Message |
Greetings Sleuth,
You have listened to the Cellos !!
You have done well and benefited yourself. BRAVO.
How bright is the new CEO? Did he not realize that there were huge long term care deficiencies, that the pensions are much underfunded, etc. He is likely not as incompetent or devious as Immelt, but he does not appear to be the brightest bulb in the house.
Shalom,
scoots
PS. Now listen to the conductor--buy some TCEHY and BABA. Forget the dividends. Live a little on the edge, have some fun in your life, and you will prosper.
20 Jan 2018, 02:47 AM Report Abuse Reply4Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your ongoing advice, scoots. This time, the cello was silent. As Mr. Flannery spoke, all I heard was the overture from Phantom of the Opera. :-)
(http://bit.ly/2FVR0WK)
20 Jan 2018, 09:13 AM Report Abuse Reply2Like
bullbeartrader
Comments (590) |+ Follow |Send Message |
Flannery has been with GE for 30 years and has held very high level positions thoughout his career. Check his history. He had to know what was going on with shyster Immelt. It is because of this ongoing succession of corrupt GE management that this company will die a slow death while it splits up into several pieces.
GE would have been better off firing the entire board and bringing in an outsider as the new CEO.
20 Jan 2018, 09:54 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Never underestimate the human capacity to compartmentalize, rationalize, and to avoid raising questions if others were demoted or dismissed for doing so.
20 Jan 2018, 10:08 AM Report Abuse Reply6Like
west281356
Comments (1096) |+ Follow |Send Message |
TECHY. 👍
20 Jan 2018, 12:55 PM Report Abuse Reply0Like
Stewart Foreman
Comments (901) |+ Follow |Send Message |
I don't quite understand the Pandora's Box analogy. But I have been wondering why the heck GE continues with a CEO that has worked for decades within the GE corporate culture that has proven to be broke. Now I'm beginning to think things are so bad at GE they have no choice.
It reminds me of Merril Lynch leading up to the financial crises. Stan O'Neal was asleep at the wheel as CEO. Merril Lynch never should have hired him to begin with. But ironically when he woke up to understand the disaster Merril Lynch was facing he was actually the best man for the job. He knew where all the bodies were, so to speak. It could be a similar situation at GE
Of course to appease shareholders Merril Lynch had to fire O'Neal. Thain made the deal to save the company so it worked out. But many weeks were wasted until Thain finally understood everything O'Neal understood and knew that he desperately need to sell the company to save it.
GE similarly had to fire Immelt. But perhaps they didn't want to take that chance of hiring an outside CEO when they are facing a disaster now
20 Jan 2018, 03:48 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, Stewart. Pandora's story came to mind when I started writing the article. Sometimes, we are surprised and saddened when we look inside something that had been hidden from view. Investors have learning piecemeal about GE's troubles as management works through a myriad of issues in the 'comprehensive review.'
Thank you for sharing your insights about Merrill Lynch. Your thesis about why Flannery was chosen makes sense to me. I appreciate his willingness to address some issues that obviously needed some serious attention.
In an earlier article I referred to him as a good choice because he seems to blend an 'outsider' willingness to clean house with an 'insider' understanding of where to begin. Several readers weren't satisfied, believing that only a complete outsider could pull it off. Your view of GE, in light of Merrill Lynch, seems very plausible.
20 Jan 2018, 08:00 AM Report Abuse Reply0Like
franklja
Comments (842) |+ Follow |Send Message |
Stewart: I agree with your logic and I have stated similar opinions in comments to other articles on SA. I think only an insider knows which closets to open to find the skeletons that Jeffy and his conspirators have been hiding. It would take an outsider a lot longer period of discovery before a solution can be initiated. However, I do believe that the CEO and Chairmen positions should be split and a Chairmen of the Board brought in from outside.
20 Jan 2018, 11:11 AM Report Abuse Reply1Like
Stewart Foreman
Comments (901) |+ Follow |Send Message |
fanklja,
To clarify the Merril Lynch analogy. I think the story was that O'Neal was discreetly putting out feelers to other banks about buying Merril Lynch. Because again, O'Neal realized it had to be done. The ML board got wind of it. They got upset with O'Neal going behind their back. That, along with the poor earnings, led them to firing O'Neal. The ML board itself was not aware how bad things were and didn't know O'Neal was doing the right thing.
I have no idea what is going on with the GE board but hopefully they are more enlightened to GE's problems than what happened with Merril Lynch. I am assuming they are.
20 Jan 2018, 06:32 PM Report Abuse Reply1Like
PHOTIOS
Comments (36) |+ Follow |Send Message |
Well done, fun reading Pandora , will probably sell my GE.
20 Jan 2018, 03:59 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » I appreciate your comment, Photios. All the best!
20 Jan 2018, 08:01 AM Report Abuse Reply1Like
coulstone
Comments (26) |+ Follow |Send Message |
Hope also escaped the jar, and was considered to be one of the worst evils. Why? Because it enables mankind to put up with all of the others in the expectation that things will change. Just like GE.
20 Jan 2018, 05:41 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, coulstone. The issue of Hope in the story is perhaps best discussed late into the night over some good wine. :-)
Here's an interesting take on it: http://bit.ly/2FZjQ90.
As Steve Rasher pointed out above, hope is not an investment thesis.
As I reflect on GE's situation, it seems that one of their issues has been complacency, perhaps becoming victims of their earlier successes.
20 Jan 2018, 08:10 AM Report Abuse Reply1Like
Alessandro Pasetti, Contributor
Comments (4714) |+ Follow |Send Message |
This is a great article about opportunity cost. Well done, DS.
20 Jan 2018, 05:41 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, Alessandro. You've connected an important 'dot' for sure!
20 Jan 2018, 08:10 AM Report Abuse Reply1Like
River Charles
Comments (82) |+ Follow |Send Message |
This was a very informative article with one exception. In my opinion, given John Flannery and Jamie Miller a pass as to what was in GE's Pandora's Box is being a wee bit shallow. Both gentlemen are long-time GE executives who have been involved in a myriad of high level meetings regarding the financials of this company. They knew what was in the box: unlike Jeff Immelt and Keith Sherin, they couldn't keep it closed any longer and had to allow it to be opened. More specifically, they and their fellow senior executives all benefitted during the years the box remained closed - salary increases, stock options, restricted stock options, special bonuses, etc. To give them a pass now is ludicrous. Their should be an outcry for an investigation as to what the hell KPM&G was doing with their annual audit reports. Additionally, where was the BofD Auidt Committee? Where was GE's Corporate Audit Staff? How many meetings were there, in the past five years, regarding the GE Capital financial condition? How much special compensation did Keith Sherin receive when he was moved over to GE Capital for his last two years? All of this is known by John Flannery and Jamie Millier - they should not be let off the hook. Something very sinister went on in this company over the past two decades (maybe even longer) that enabled it to be destroyed and someone should be demanding an investigation and, if necessary, serious claw backs of monies given to this collective group of thieves.
20 Jan 2018, 06:29 AM Report Abuse Reply13Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your excellent comment, River Charles. I agree with you on virtually all counts, with the exception of the 'shallow' part and Jamie Miller being a gentleman. She's female. Maybe she's the one who opened the lid.
The part of the Pandora story that fascinates me is that since she was the first female, it appears that evil was generated in an all-male universe!
It wasn't my intent to give John and Jamie (or anyone else) a pass. I think Stewart Foreman's comparison with Merrill Lynch makes sense. I can only render an opinion about Flannery and Miller based on their decisions as managers of their previous operations (Health and Transportation) and what they've done in these first months as CEO and CFO.
I agree with you (and many others) that litigation is an appropriate consideration. Where were the auditors? Where was the board? How widespread was the knowledge about GE Capital's finances? I agree than an investigation is in order. Serious claw backs seem appropriate to me in light of the damage that has been done. (I have power of attorney for my aunt, whose husband was a career GE employee. GE took away her insurance benefit shortly before Jeff Immelt's retirement package was announced.)
This is another illustration of why diversification is crucial for every investor!
20 Jan 2018, 08:35 AM Report Abuse Reply4Like
realfood
Comments (241) |+ Follow |Send Message |
Amen! someone needs to pay and/ or locked-up;I'm mad as hell!
20 Jan 2018, 10:23 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » I can see it now. One of the questions in the jury selection process will be, 'Have you ever commented on Seeking Alpha?' :-)
20 Jan 2018, 10:58 AM Report Abuse Reply1Like
Ivan is my Hero
Comments (80) |+ Follow |Send Message |
To Charles
No pass for Jamie!!! See below from the web:
Miller previously was vice president, controller and chief accounting officer for GE, where she led a globally distributed GE controllership team comprised of about 3,500 accountants. Prior to joining GE in 2008, she served as the senior vice president, chief accounting officer and controller of WellPoint, Inc. She was also a partner with PricewaterhouseCoopers LLP, where she served in a number of roles including Financial Services leader for the Chicago practice.
And here it comes..
Miller also served as vice president, corporate controller and chief accounting officer at Genworth Financial (formerly GE Financial Assurance).
Genworth being the shop that took over GE’s Insurance business but clearly not that one little portfolio!
She knew all along!
20 Jan 2018, 03:25 PM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Ivan is my Hero, that would make for a good question at Wednesday's earnings call about what has changed since she left Genworth.
20 Jan 2018, 03:47 PM Report Abuse Reply1Like
12812521
Comments (80) |+ Follow |Send Message |
Hi DS, what has changed is the disposition of capital. What happened to the debt equity ratios when the book was sold?
Also, GE management has stressed that this issue remains in (what remains) of Capital. So it’s Capitals balance sheet that has to take the liability and hit. The initial $7B outlay is painful (minus the $3B dividend that was going to go to the parent in 3Q17) however the $2B per annum after that is doable. Never underestimate the sheer scale of GE.
No matter what you think of the current leadership, I think candor and transparency are on the uptick.
21 Jan 2018, 01:07 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for a helpful comment, 128. I thought Flannery and Miller did an admirable job about the 'containment' issue. Once again, as a dividend investor, it isn't just that GE Capital is looking at a $15 billion outflow to the insurance reserve, it is the loss of a source of income for shareholders. Miller said she has known something like this would be coming. When she knew the scale, I don't know. My hunch is that the conversation with the Kansas regulatory group has been going on for awhile. Perhaps that will be a question in the earnings call.
I agree that GE's scale will help the company survive in whatever form it takes and that transparency is on the uptick. Flannery is the one who 'opened the jar.'
21 Jan 2018, 06:30 AM Report Abuse Reply1Like
D.M. Martins Research, Marketplace Contributor
Comments (1115) |+ Follow |Send Message |
This article illustrates very well why GE is looking more and more like dead money. Once a dividend investor darling, the stock is losing its appeal to income-seeking folks. I understand why one might choose to buy GE as a speculative play for capital appreciation in the long run (it could work out, who knows). But it does not make sense for people looking for a dividend check at the end of the month/quarter. As more of those investors head for the exits, more the stock will dip. It's not looking good.
20 Jan 2018, 06:29 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, DMMR. I believe you accurately expressed the dividend investors' dilemma and its consequences for the stock.
20 Jan 2018, 08:38 AM Report Abuse Reply1Like
Coaly1234
Comments (973) |+ Follow |Send Message |
What are thoughts on holding GE for the long term, so January 2018 price about $16 to $17 what will price be in 2022 under $10 or over $20?. Great article to make one think about 'pulling the trigger' to sell or hold and enjoy the roller coaster.
20 Jan 2018, 06:34 AM Report Abuse Reply0Like
bullbeartrader
Comments (590) |+ Follow |Send Message |
Coaly1234, Your will see $14's before over $20. Depending on which divisions they sell off GE stock could be in the single digits with whats left.
They would need to cut the divi again or eliminate it. Immelt DESTROYED General Electric.
20 Jan 2018, 07:25 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Coaly1234, you've raised a great question. The Insurance Update made my decision easy since I'm a dividend investor. I'll leave it to others to weigh in on your question about the relative value of the stock vis-a-vis the long term. Your phrase 'enjoy the roller coaster' is important. If you like excitement, GE may be a fun ride. If, however, a person is like me and prefers boredom, perhaps a redeployment of funds is in order. :-)
20 Jan 2018, 08:43 AM Report Abuse Reply3Like
gigaomhere
Comments (358) |+ Follow |Send Message |
It is iminent one of the following will happen soon due to investors pressure, Trian on board and falling Cash flow
1) Dividend is not sustainable. dividend elimination will lead to investors leaving by the billions
2) GE needs money and possible capital raise by selling stock. Stock will fall cause dilution
3) GE sells on of its divisions. Stock will fall due to reduce revenue.
Which poison GE will take ? we will know in a week. Non stop drama at GE
Neither Flannery nor Jamie and no one even on wall street has a clue but every time the bandaid is ripped there is a new scar.
20 Jan 2018, 08:53 PM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, gigaomhere. Everything you suggest is plausible. Even though I left the party on Thursday, I hope you're wrong about the dividend. My concern about the dividend wasn't immediate, but long term. And, even if it can be sustained, I don't see a way for it to grow. In my mind, the critical issue is whether they embark on a major breakup. Speculation about this has increased since the Insurance Update. Breakups have a way of resetting the dividend and that could happen here.
20 Jan 2018, 09:07 PM Report Abuse Reply1Like
ARG1
Comments (2544) |+ Follow |Send Message |
John Inch of DB said that GE will have to cut the dividend again and issue more stock to raise moe capital. John Inch called the first dividend cut.
Nobody has mentioned here the $22B spent by GE to buy back shares last year. That was approved by Brennan and the rest of the BOD.
21 Jan 2018, 02:54 PM Report Abuse Reply1Like
aaron rodgers
Comments (45) |+ Follow |Send Message |
River Charles- FYI-Jamie Miller is a female.
20 Jan 2018, 06:52 AM Report Abuse Reply2Like
G. Frieberg
Comments (961) |+ Follow |Send Message |
To author: Well written article ! Thanks ! And,that is an extremely diversified portfolio that you own. Congrats to you on your fine selection of stocks and ETF's.
I personally am speculating with GE; I am not a dividend investor per se, but simply having fun being able, at this point in my life, to afford speculation (i.e. I do not have to depend upon dividend income to sustain myself economically). I am incrementally adding to my position by using limit orders, on auto pilot, as the stock drops. While the doom and gloom is rampant, I figure now is the time to buy shares that others are throwing away as 'dead'. I personally think the aviation, medical, power (+ software), wind energy, Baker Hughes GE, and transportation have innate value that is being underestimated. Yes: GE Capital is indeed a train wreck, and will certainly be a drag on the company. That being said, I do have faith in both Flannery and the BOD at this point. In the price range under 17 bucks, I am a buyer. As they say: It takes a buyer AND a seller to make a market. Good luck to you, and keep up with your very creative writing !
20 Jan 2018, 07:39 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » G. Frieberg, thank you for your kind words and for sharing your perspective and strategy. There are many reasons for being in the market, and I hope you have some fun and some profits!
20 Jan 2018, 09:17 AM Report Abuse Reply1Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To G. Frieberg -
'I personally think the aviation, medical, power (+ software), wind energy, Baker Hughes GE, and transportation have innate value that is being underestimated.'
You make an excellent point!!
20 Jan 2018, 02:18 PM Report Abuse Reply0Like
Winning Formula, Contributor
Comments (1369) |+ Follow |Send Message |
DS, I'm licking my wounds from GE in my Dad's DGI portfolio, which I manage. GE continues to disappoint. I'm sorry to admit that I averaged down twice. I calculated an 'average down' scenario from the current price and have decided to hold for now. I may average down during the massacre of GE getting kicked out of the DOW. I hope GE gets broken up and acquired in pieces by companies that can manage its valuable assets!
20 Jan 2018, 07:44 AM Report Abuse Reply3Like
Winning Formula, Contributor
Comments (1369) |+ Follow |Send Message |
GE is a perfect example of why I choose invest in the Global Cap-weighted Equity Market Index (VT) for my retirement portfolio. GE is becoming less and less significant in the Global Index. Formerly ranked #1, it was recently ranked 38th in the ETF VT with only a 0.3% allocation. http://www.etf.com/VT If GE gets broken up and sold in pieces, even at at fire sale prices, I will not lose on my investment because I own my share of nearly every public company in the world that could purchase the pieces. What I lose on my share of GE, I gain by holding my share of the acquirer. It makes me no difference if GE goes out of existence and sells its assets at ten cents on the dollar, because I will benefit by holding my share of the well-run acquiring company.
20 Jan 2018, 07:47 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comments, WF. Before I read your second one, I was about to suggest that to avoid company risk you might try an ETF or two. :-)
Seriously, thank you for helping me design the ETF component of my portfolio and for helping me understand the importance of mitigating company risk.
20 Jan 2018, 09:19 AM Report Abuse Reply2Like
bullbeartrader
Comments (590) |+ Follow |Send Message |
Winning Formula, If there's anything worse than watching GE go down in your own portfolio it's having it go down in a loved ones portfolio that you manage. Try not to beat yourself up over it, sell and move on before more capital goes into the sewer.
20 Jan 2018, 09:59 AM Report Abuse Reply0Like
funfundvierzig
Comments (5267) |+ Follow |Send Message |
And the IMMELTdown at GE continues.
The old business model of the conglomerate dating from the 1960's just does not work so well in the 21st century. ITT, LTV, Gulf & Western, Penn-Central are all long gone.
Witness the demise of the long dysfunctional and disarrayed DuPont Company, subsumed by twice as large Dow Chemical into even a larger flailing conglomerate, DoDu Inc.
...funfun..
20 Jan 2018, 08:12 AM Report Abuse Reply0Like
arconley
Comments (67) |+ Follow |Send Message |
I think you might want to research this comment a bit. DWDP is the combination of Dow Chemical and DuPont, which were of about equal market cap with DuPont the slightly larger of the two.
It is expected that DWDP will break itself up into between three and five pieces in the next 2 years. Since the merger announcement, the stock has risen about 40%. If this is your idea of a failed conglomerate, send a few more my way, please.
20 Jan 2018, 08:45 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, funfundvierzig. Nice play on words!
Good insight about the conglomerates model. Somehow I can hear Edison saying, 'Long term care insurance?'
20 Jan 2018, 09:31 AM Report Abuse Reply1Like
Finici
Comments (4540) |+ Follow |Send Message |
funfund,
Do you bring up some interesting analogies. Why I unloaded DD. Actually, money was to be made from the old PennCentral bankruptcy. I Made some money off the PC cumulative preferreds and notes.
I suspect that there will be that opportunity with GE. I refer specifically to the fact that GE was and is still a large part of many portfolios, retirement funds, &c &c &c. Much like PennCentral 40 years ago, there are alot of institutions, retirement plans and funds and 'little old ladies' holding GE. I suspect that is sufficient to warrant the company a bit of protection going forward.
The persons I truly feel sympathy for are the folks who worked at GE and now depend upon a greater part of their income stream from GE.
Ted -
What an excellent analysis and overview. Perhaps the best point you make is to move on and not waste time grousing over who 'shot John'.
We all (well, not so much in my case as I inherited a chunk of GE with an insanely low cost basis) make investment decisions and should take responsibility accordingly. After all I could have sucked it up and taken a tax hit and chose not to. Am I any better than management? Hard telling.
Going after the company, per se, individually or via a class action will only cripple the company going forward and hamper its ability to dig out. Going forward, it is most important to think of the pensioners and remainder employees who deserve that consideration.
I have always enjoyed you rational approach to things.
All the best
Jay
20 Jan 2018, 11:07 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Jay, thank you for your comment. It's always good to hear from you.
'With malice toward none, and charity for all....'
20 Jan 2018, 11:32 AM Report Abuse Reply1Like
funfundvierzig
Comments (5267) |+ Follow |Send Message |
arconley.
At the time of this much touted 'Merger of Unequals', Dow had twice the assets, revenues, equity and net tangible assets as the much shrunken DuPont Company. The numbers are there for all to see.
...funfun..
20 Jan 2018, 04:47 PM Report Abuse Reply0Like
ARG1
Comments (2544) |+ Follow |Send Message |
Ah fun fun,
I remember you when you said to sell DuPont at 34. Now the shares are at 174. Isn't that wonderful?
20 Jan 2018, 06:17 PM Report Abuse Reply0Like
funfundvierzig
Comments (5267) |+ Follow |Send Message |
The undersigned has never given advice to buy, sell, or hold any individual stocks.
At the time of the merger between Dow and DuPont, DD shares were selling at circa 80, which is where DD was two decades ago, May 1998, when the shares of this sagging Delaware based conglomerate hit their all-time peak of 84.
...funfun..
21 Jan 2018, 08:04 AM Report Abuse Reply0Like
ARG1
Comments (2544) |+ Follow |Send Message |
FUN FUN was telling Dupont shareholders to sell before the merger. My shares are up 200% after the merger.
21 Jan 2018, 03:00 PM Report Abuse Reply0Like
ARG1
Comments (2544) |+ Follow |Send Message |
On the other hand I didn't sell and I am up 200%
21 Jan 2018, 03:01 PM Report Abuse Reply0Like
ARG1
Comments (2544) |+ Follow |Send Message |
You are here telling people to sell DuPont. Fun Fun, let it go. you made a mistake, no big deal. right.
21 Jan 2018, 03:04 PM Report Abuse Reply0Like
j2d2
Comments (475) |+ Follow |Send Message |
Excellent article. While I did get out of GE in the low 30’s, there have been others I patiently waited for while their recovery chances dwindled to near nothing. We all have them, hopefully on rare occasions. For those new to investing, your first loss is often your best loss. To those of us experienced though occasionally bruised, the advice to keep on keeping on is the key to success. Thanks so much for posting. Your finds are a treasure to those of us continually seeking a place to invest.
20 Jan 2018, 08:24 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you very much, j2d2. This is a joint venture. We learn from each other. I'm happy if I've been of some help. While it's important to learn from our mistakes, it's also important not to get bogged down in them.
We never know in advance which companies will surprise us with profits we could have never imagined, and which companies will disappoint. Diversification is our friend. Enjoy your weekend!
20 Jan 2018, 09:36 AM Report Abuse Reply0Like
weidi5
Comments (36) |+ Follow |Send Message |
I plan on keeping my 600 shares of GE and let it ride. The price is so low now that I basically now regard GE the stock as an option.. It is also an infinitesimal part of my portfolio - under 1/2 percent. GE has been in bad shape for many years. It is amazing to me that the analysts and the BOD let both Jack Welch and Jeff Immelt get away with using GE Capital to routinely exceed quarterly estimates by 1 cent.
I would like to know how in the world did GE manage to maintain a AAA credit rating until 2009
20 Jan 2018, 08:31 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for sharing your strategy, weidi5. You've illustrated the importance of diversification, which frees you to take risks. You've asked some excellent questions, about one-cent 'beats' and about the AAA credit rating.
GE came onto my investment radar after they were downgraded to AA+. That seems like decades ago, but it was quite recent. I cut my stake when they were downgraded two notches to AA-. Then, in '17, they were downgraded another two notches to A. I try to keep up with such things, but I actually missed the most recent downgrade. I watched MCE downgraded twice in a matter of months from A to BBB+. I watched T's get bumped down to BBB+, and it may slide another notch if the TWX deal closes. SO is on neg ative credit watch. It's easy to be lulled into complacency when a large company with a strong history begins to see the finances erode.
I'm determined to be more vigilant!
20 Jan 2018, 09:45 AM Report Abuse Reply3Like
daytonts
Comments (8) |+ Follow |Send Message |
New word to add to the lexicon and to avoid in practice: ...'InsuranceUpdate'.
20 Jan 2018, 08:39 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, daytonts. It helps to laugh occasionally!
20 Jan 2018, 09:46 AM Report Abuse Reply0Like
Coaly1234
Comments (973) |+ Follow |Send Message |
So does history need to be re-written on Welch, who a couple/few decades ago was the king of CEO's.?
20 Jan 2018, 08:42 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Coaly1234, many years ago I was visiting with a friend who was a mid-level GE manager. He mentioned his sadness over the death of a friend and co-worker who was a bit above him on the GE organizational chart. I asked what caused his friend's death. He said, 'Jack Welch killed him.' That led to a discussion about the pressure to perform, which certainly wasn't unique to Welch or to GE.
It's purely anecdotal, but I always remember that conversation when I read about Six Sigma and all the praise given to Jack.
I'm a mixed bag. Everyone I know is a mixed bag. Jack Welch is a mixed bag. Icons are for church windows and mosaics. Living humans need scrutiny and accountability. That's why a strong board of directors is vital.
20 Jan 2018, 09:52 AM Report Abuse Reply5Like
weidi5
Comments (36) |+ Follow |Send Message |
In a word yes. Welch mastered the art of one-penny beats which the analysts swallowed hook, line and sinker. He selected the disastrous Jeff Immelt to be CEO. Jeff Immelt continuously bought high and sold low. In another SA article on GE, one of the commenters who worked for the purchaser of a company that Welch sold, mentioned that Welch had hollowed out the research and development divisions.
20 Jan 2018, 10:10 AM Report Abuse Reply2Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Dividend Sleuth (author) -
Excellent comment that 'a strong BoD is vital'. And GE doesn't have one. I read recently that John Brennan, the lead Director at GE, stated in July-17 'We are very pleased with the positioning of the GE company under Jeff Immelt's legacy...'
Is Brennan serious?? Is he for real?? Is he dumb and stupid?? Or does Brennan just not know what is going on within GE??
Here is the link to the Bloomberg article (July-17) - https://bloom.bg/2EYBMiG
I would hope that Brennan gets to be one of the 9 Directors who are leaving GE in April-18.
20 Jan 2018, 02:28 PM Report Abuse Reply0Like
cycleforlife
Comments (144) |+ Follow |Send Message |
I’m pretty sure I recall Flannery saying in November that the lead director will not be leaving. I would have much preferred an outsider lead GE with a completely new BOD group. No credibility. Long term GE (disgruntled) shareholder.
20 Jan 2018, 02:53 PM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » My memory agrees with yours, cycleforlife.
20 Jan 2018, 03:41 PM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To cycleforlife -
Yopu're right....Flannery did say that Brennan gets to stay. But with the Brennan comments about Immelt's 'legacy' above, I am losing confidence in Flannery's ability to improve the BoD oversight that has been sorely lacking for at least the last 5 years.
20 Jan 2018, 04:04 PM Report Abuse Reply0Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Hello again Mike:
I posted a message WEEKS ago re my dismay that Flannery had clearly stated Brennan would stay and also referenced the Bloomberg article.
Thank you for providing the link to that article for SA readers.
As I'm sure you know Brennan is COB emeritus; as such he wields a lot of influence.
Also, at the annual s/h meeting, there will be a change in the BOD.
But as of now Flannery will be the Chairman. I believe, as others here have posted, GE NEEDS to cease and desist their practice (which started with Immelt I believe) that the GE pres. is also
CBOD.
BTW does anyone here think that the FACT Brennan's Vangard funds own a BOATLOAD of GE stock might have anything to do with Flannery's decision NOT to replace Brennan?
Be well Mike.
21 Jan 2018, 09:33 AM Report Abuse Reply1Like
franklja
Comments (842) |+ Follow |Send Message |
The combined Chairman and CEO of GE dates all the way back to Fred Borch who served from 1967-1972 and continued through Reg Jones, who preceded Welch and served from 1972-1981. See GE leaders here:
http://invent.ge/2G0X0h2
I think GE is overdue for a change in that tradition for sure!
21 Jan 2018, 02:36 PM Report Abuse Reply1Like
ARG1
Comments (2544) |+ Follow |Send Message |
Mike,
Brennan approved the $22B share buy back. That was no good.
21 Jan 2018, 03:05 PM Report Abuse Reply1Like
ARG1
Comments (2544) |+ Follow |Send Message |
Brennan and Flannery are friends. Brennan has to go.
21 Jan 2018, 03:08 PM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good info, franklja. Thanks!
21 Jan 2018, 04:34 PM Report Abuse Reply1Like
chuck12355
Comments (81) |+ Follow |Send Message |
The 'train wreck' known as General Electric (ironic isn't it)!
20 Jan 2018, 08:55 AM Report Abuse Reply1Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Yours is the first article I've read here with a heavy reference to Greek mythology.
I liken GE's present situation to Schrodinger's Cat.
MY biggest takeaway from your article is that you sold your GE position.
20 Jan 2018, 09:29 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » I hadn't thought of the Cat in a long time. Thanks for the reminder.
I appreciated your December article about GE (https://seekingalpha.c...).
Are you still looking at a $14.63 price target?
20 Jan 2018, 10:18 AM Report Abuse Reply0Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Hi Dividend:
Re the Cat, same here; most of what I learned about quantum superposition came from 'QUANTUM MECHANICS FOR DUMMIES.'
I sincerely appreciate your kind words re my 12/31/17 GE article which you so kindly linked in your message.
Re my $14.63 PT within 6 months comment, I'm waiting with bated breath** for the 1/24/18 webcast before I may make any revisions.
That said, subsequent events since 12/31/17, especially the BEAUCOUP impairment charges related to GE's 'insurance review'
the GUIDANCE Flannery et al give 1/24/18 becomes of increasing significance to me.
The AUDITED financials is where the rubber meets the road and
GE's 10-K isn't due to be filed at the SEC until 3/15/18.
But I foresee that there will be (almost) ad infinitum footnotes to
dissect.
And as I and my former colleagues used to say- REAL accountants
START by reading the comments.
CAVEAT: Re GE, it is recommended to be proficient in Swahili-
can any Bantus here help me?
Re GE's Q-4 consensus earnings # comment in my article, I have
done some work in this regard. Based on my admitted 'back of the envelope' calculations, I'm more convinced that GE will not beat.
Finally what GE says re FCF is #1 with me
AND also whether Jamie Miller's 1/16/18 statement re GE CAPITAL's 12/31/17 CASH balance was $31 Billion was an accurate statement, a GAFFE or who knows what?
Bets accepted here or via DM.
**mea culpa re THE MERCHANT OF VENICE reference.
20 Jan 2018, 12:34 PM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » My pleasure. I hope you'll write a follow-up GE article after the earnings call. I yield the floor to you. :-)
20 Jan 2018, 01:03 PM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To James Coleman -
Why is there a question about Miller's $31 Billion 'cash + short-term investments' at GE Capital as of Dec. 30th??
I interpret this as comparable to the 'Cash + equivalents' ($27 Billion) and 'High-quality investments' ($5 Billion) for a total of $32 Billion that GE Capital had as of Sept 30th. This data is in the 3Q17 'Press Release' (page 7).
If the above is so, this shows GE Capital went down by -($1 Billion) in 4Q17....which is reasonable.
IMO the above does not represent 'Marketable securities' which is another confusing term that GE uses and which were $38.4 Billion (Sept 30th) and includes the $5 Billion I've noted.
20 Jan 2018, 04:11 PM Report Abuse Reply1Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Thank you again Dividend Sleuth.
The 1/24/18 earnings call is of great interest to me in 2 regards:
1) ANY/ALL financial info- Q4 cash and inventory
Sales- esp. Power
2) Depending on #1, GE's guidance will at least be 'interesting.'
In all probability, I'll likely wait until the 10-K is filed with the SEC
on or before 3/15/18 given my obsession with AUDITED financials
and associated footnotes.
But something tells me that there will be no shortage of articles re GE on 1/24 and thereafter.
Be well.
20 Jan 2018, 09:17 PM Report Abuse Reply0Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
Hi Mike:
Thank you for your questions and for all the good work re GE that you do for us SAer's.
My #1 interest is GE's 12/31/17 AUDITED cash balance which we know will be contained in the 10-K to be filed with the SEC on or before 3/15/18.
In my view, the firefight that's ensued regarding what Jamie Miller said re GE Capital on 1/16/18 and whether she meant what (the transcript shows) she said is collateral damage and not germane to my interest in GE.
Hope this helps.
Regards.
20 Jan 2018, 10:02 PM Report Abuse Reply2Like
lazyday
Comments (164) |+ Follow |Send Message |
Just like GE found out - if you a technology company and get rid of your high paid technical people to try and save a few bucks during a downturn, you have essentially sealed your fate for the recovery. Those that were let go will never come back to the GE nest, those that were let go will smile and watch GEs demise. I will.
20 Jan 2018, 09:30 AM Report Abuse Reply5Like
Dmax1
Comments (5) |+ Follow |Send Message |
DS, could you comment on the Domestic players who would be in a position to buy and successfully Manage the parts that would be sold off? GEBH to XOM, for instance? Aviation power to who? Or perhaps GS could buy the Capital division...🤥
Thanks everyone for your thoughts...
20 Jan 2018, 09:31 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Dmax1, as I get older I must ration my brain cells. Your good question deserves a much better answer than I could muster. GE is so widely followed, my hunch is that an Internet search might reveal some already-published ideas by people who are in the know. Put CNBC's David Faber on your watch list. He may be the one to break that story. Thanks for joining in the conversation. Perhaps some of our readers will venture an opinion.
20 Jan 2018, 10:27 AM Report Abuse Reply0Like
capemd1994
Comments (6) |+ Follow |Send Message |
DS,
I truly enjoy your well balanced analysis. Every experienced investor has a few losers. Having the humility to admit and learn from our missteps allows each one of us to grow and prosper. Keep up the great work, and keep growing your knowledge base.
20 Jan 2018, 09:31 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your kind comment, capemd1994. This reminds me of that '86 pickup truck I bought on eBay 15 years ago. After I reworked the engine and replaced the alternator for the third time, I decided I had made a mistake. :-)
20 Jan 2018, 10:31 AM Report Abuse Reply0Like
Dmax1
Comments (5) |+ Follow |Send Message |
And then there's Buffet.... capital and credibility...
20 Jan 2018, 09:36 AM Report Abuse Reply1Like
Amerlafrance
Comments (969) |+ Follow |Send Message |
and do you think Buffet may look at this is a whale for his capital that can pick up many industrial businesses, clean out the deadwood, and have this be a new GE. Buffet has lots of insurance savy and I dare say a lot of the capital going into the insurance update will be float. I think it would be a good fit; as a Berkshire holder I would just hope that Buffet does not turn out to be Captain Ahab.
20 Jan 2018, 11:06 AM Report Abuse Reply1Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Dmax1 -
A quick analysis shows that Buffett's 'right price' to buy all of GE is about $10 per share based on EBIT data in 2017 at $9.0 Billion.
I'm not suggesting that Buffett would (or could) buy all of GE. The point is that the whole GE company, in Buffett's eyes, would only be valued down at that level.
Separately, i've posted the $10 number based on Buffett's view of 10X 'pretax earnings'. I've interpreted 'pretax earnings' as EBIT.
Question - Would anyone know if I should be using EBITDA (which is much higher)??
20 Jan 2018, 02:48 PM Report Abuse Reply2Like
Buyandhold 2012
Comments (10547) |+ Follow |Send Message |
Dividend Sleuth,
For 48 years I have been a hardcore buy and hold dividend growth stock investor.
But GE has fallen by 46.7% in the past 12 months.
I wish I had sold GE when it was at 60 back in 2000.
There. I said it. I said the S-word.
My horrible experience with GE since the year 2000 has turned me from a hardcore buy and hold dividend growth stock investor to an investor who on rare occasions wishes that he had sold.
I hope I will not be struck by lightning. Don't tell my mother.
At least my cost basis in GE is not that high. I began buying it in the 1980's and bought more during the financial crisis when the price was below 10.
But TWO dividend cuts? Not one, but TWO. Extremely disappointing for a company like GE that had a stellar reputation until things began to fall apart after the year 2000.
If GE could turn a hardcore buy and hold dividend growth stock investor like me into an investor who would on rare occasions consider selling, it must be a truly awful stock.
Is it a good value at 16 or a value trap? Who knows?
I just know that I will not even consider buying more shares unless the price falls below 15 or possibly even below 10.
Remember the old ad? I should have had a V-8?
Whenever I think about GE, I always think that I should have bought Home Depot instead.
GE was a good investment from 1980 to 2000. From 2000 until now it has been a dog.
Home Depot has been a great investment since 1981.
20 Jan 2018, 09:38 AM Report Abuse Reply3Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Buyandhold, thank you for sharing your comment. I know it wasn't easy.
Don't worry. We won't tell your mother. What happens at SA stays at SA.
As for lightning, you may want to keep a 1-iron with you for awhile.
Lee Trevino said if you are on a golf course during a storm, hold up a 1-iron. Not even God can hit a 1-iron. :-)
20 Jan 2018, 10:36 AM Report Abuse Reply5Like
fatboy2014
Comments (712) |+ Follow |Send Message |
'GE was a good investment from 1980 to 2000. From 2000 until now it has been a dog.'- Lots of great stocks were dead money in the 1970's. For instance, Disney was $2.46 in December 1972. In December 1984 it was $1.25. Guess what? It eventually came back...not saying GE will though...
20 Jan 2018, 10:38 AM Report Abuse Reply2Like
Buyandhold 2012
Comments (10547) |+ Follow |Send Message |
fatboy2014,
'Guess what? It eventually came back....not saying GE will though......'
GE coming back would be like Lazarus rising from the dead.
So many problems at GE.
If it ever goes back up to 60, I plan to sell it. And you know I never sell anything. It would take an intervention to prevent me from selling GE at 60.
20 Jan 2018, 10:42 AM Report Abuse Reply2Like
fatboy2014
Comments (712) |+ Follow |Send Message |
'If it ever goes back up to 60, I plan to sell it. And you know I never sell anything. It would take an intervention to prevent me from selling GE at 60.'- You mean like your mom giving you a whoopin'? :)
20 Jan 2018, 12:08 PM Report Abuse Reply1Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
or the Phoenix
20 Jan 2018, 12:36 PM Report Abuse Reply1Like
wdchil
Comments (2737) |+ Follow |Send Message |
'GE coming back would be like Lazarus rising from the dead.'
That is about right.
During Welch's incumbency GE had operational discipline from top to bottom. That was apparently lost during Immelt's time although I think it was lost before that in the method of CEO selection under Welch. Under Immelt major acquisitions were made without proper due diligence. One example is the acquisition of Invision, which was later sold at a fraction of the original purchase price (as part of a package). The effect of these acquisitions was to immediately inject dead wood into the company under the pretense of 'visionary management'.
The company is now a very complex mess and lacks disciplined management. Perhaps the aviation group is still pretty good but it doesn't justify GE's valuation. Splitting the company will result in a sum of the parts worth about $15 according to one estimate I saw. Keeping it together would be best, but I am doubtful as to whether the CEO is up to the task of implementing discipline while preserving what is left of the intellectual property.
WD
20 Jan 2018, 02:20 PM Report Abuse Reply2Like
farwest
Comments (396) |+ Follow |Send Message |
Makes me cringe when people say GE was a good investment until 2000. We all know GE was a charade and earnings were fictitious under Welch. He (and Immelt) buried true costs of GE Capital and reaped undeserved 'profits' from the scam accounting. If there was any genius about Welch is that he was able to obfuscate what was really going on inside GE - it was a
20 Jan 2018, 04:09 PM Report Abuse Reply2Like
cunhajose
Comments (109) |+ Follow |Send Message |
BuyandHold 2012,
I purchased both GE and HD on the same day 12/31/2002. I am also a buy and hold with a rare sell (welcome to the club ) but I sold GE on 12/29/2017 after a small loss. On the other hand HD is up over 700%. I will move on !
NEW | 22 Jan 2018, 08:54 PM Report Abuse Reply0Like
Peter Burgess
Comments (9) |+ Follow
A very thought provoking article. I am reminded of the GoGo fever of the late 1960s when conglomerates were all the rage and several major industrial companies acquired financial (insurance) companies and then consumed their cash to fund all sorts of new growth opportunities. The 'financial engineering' of the day delivered profits for a while, but eventually there was a day of reckoning and everything fell apart. There is a reason that insurance companies have a lot of cash ... from time to time they need it!
GE is one of my favorite companies ... not because of its financial shenanigans, but because it is a great industrial company that makes a lot of things that are world class and very much needed in the real economy. I worry that the preoccupation that the US (and UK) have with corporate financial performance is going to result in a massive diminution of the performance of these countries simply because too much investment is going into making financial wealth and far too little into the real economy that is essential to economic efficiency. The US has one of the most inefficient economies in the world in terms of carbon emissions per capita and carbon emissions per unit of GDP. This is an existential threat for the whole world and one has to wonder where the emergency fund for this can be found when the climate change day of reckoning happens!
Peter Burgess http://bit.ly/2FZ8SQK
20 Jan 2018, 09:42 AM Edit/Delete Reply4Like
G. Frieberg
Comments (961) |+ Follow |Send Message |
Peter Burgess: GE too is one of my favorite companies. Agree with your comments about being world class in terms of manufacturing prowess (just look at the locomotives, jet engines, med equip, power generating turbines alone: BEST that money can buy). I, however, do not ascribe to the draconian 'carbon emissions' theory of global apocalypse. I think this is an emotionally charged and overly exaggerated position steeped in 'environmental 'green' politics'. GLTY in 2018.
20 Jan 2018, 10:07 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Peter, thank you for your thoughtful comment. In the midst of the financial chaos, it would be easy to miss this important reality that you named:
GE is 'a great industrial company that makes a lot of things that are world class and very much needed in the real economy.'
20 Jan 2018, 10:39 AM Report Abuse Reply1Like
cycleforlife
Comments (144) |+ Follow |Send Message |
My plan: GE capital is off line for the next 5 years. Eliminate the dividend and free up another 4 billion. Industrial cash flow going to be 7+ billion for next couple years and hopefully growing after that. Instead of borrowing to fund the pension, allocate 2 billion per year for the pension until fully funded(maybe 2.5-3).
Use remaining 4 billion fcf to reinvest in the core 3 businesses and/or reduce debt if needed. Reinstate a dividend once the balance sheet is rock solid.
20 Jan 2018, 09:45 AM Report Abuse Reply2Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Cycleforlife, thank you for summarizing a potential way forward. Good food for thought!
20 Jan 2018, 10:40 AM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To cycleforlife -
There are 3 pensions - Item (1) GE Pension Plan, Item (2) GE Supplemental Plan, Item (3) Other Plans. These are listed in the 2016 10-K (page 70).
The pension numbers change every year but in 2016 GE put in funding at $0.3 Billion for Item (1), no funding for Item (2) (it's planned that way....not clear why??), and $0.8 Billion for item (3).
Even with the total pension funding at $1.1 Billion, the pension 'shortfall' went UP by $4.0 Billion to the $31.1 Billion number.
Clearly it says that more than $3 Billion per year is needed to stabilize the pension plans. More data will be in the 2017 10-K to be issued in Feb-18.
20 Jan 2018, 03:01 PM Report Abuse Reply0Like
FrankIII
Comments (22) |+ Follow |Send Message |
Very possible the assumptions regarding annual investment returns on Plan assets used by the Plan were too high. Many Plans have been using a 7 1/2% return assumption and ( perhaps with the exception of the past 12 months) considering how Plan assets are typically invested ( with a significant short and long term bond allocation) many plans should probably be using a long term assumption for investment returns much less than 7 1/2%. I am not sure what GE’s plans have been assuming
20 Jan 2018, 05:54 PM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good point, FrankIII. Thank you.
20 Jan 2018, 06:06 PM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
GE's pension plans have been assuming a 7.50% per year return for each of the last 3 years (2014 - 2016). This is shown in the 2016 10-K (page 168). Latest data will next be in the 2017 10-K to be issued at the end of Feb-18.
21 Jan 2018, 04:45 PM Report Abuse Reply0Like
carloslogging
Comments (12) |+ Follow |Send Message |
DS great article that make me wonder is actually de Pandora’s box is completely open, who would put the hands on the fire that no other surprise will come?, anyway I don’t think the issue was the different or too many acquisitions it was the execution of integrating those into one financial system and getting the synergies that those acquisitions should has brought .
20 Jan 2018, 09:51 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Carloslogging, thank you for your comment. I think a solid strategy is always important, but I agree that the big issue seems to have been a failure of execution.
20 Jan 2018, 10:43 AM Report Abuse Reply1Like
'Billg
Comments (24) |+ Follow |Send Message |
so what's consensus thought on fraud and impact litigation on profitability ... a distraction and minor or more serious?
20 Jan 2018, 09:52 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good question, 'Billg. It's hard to imagine GE spending less rather than more on attorneys in the coming years.
20 Jan 2018, 10:44 AM Report Abuse Reply1Like
Seeking Sigma
Comments (103) |+ Follow |Send Message |
Investors whose invested so long in GE that's why GE want to clean them out to end their profit
20 Jan 2018, 10:22 AM Report Abuse Reply0Like
Tim Mc
Comments (256) |+ Follow |Send Message |
Thanks Ted...I always enjoy your work. I own some GE and fortunately didn't average down, choosing to build up other positions instead. I violated one of my rules and held on after the dividend cut - my bad. Oh well, GE is my only loser for now among BA, CMI, EMR, ETN, LMT, MMM, UNP & UTX. Our diversification within the industrial sector makes GE a minor bump instead of a big loss. Lessons: Stick to your rules and diversify within sectors.
One thing I hope comes from the GE mess is that it encourages leadership at other corporations to do a better job of knowing their business. It would help send a message if GE tried to claw back excessive executive pay, or hold them accountable for mismanagement, but I'm not holding my breath.
20 Jan 2018, 10:24 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Tim Mc, thank you for your comment. I'm currently down to one industrial company in the portfolio--MMM. I bought EMR, CMI and UNP when their prices were depressed, but I let them go after they made their runs--selling too soon, which I am prone to do. I need to do some industrial homework.
I appreciate your last paragraph. As I mentioned earlier today, 'What ever happened to Sarbanes-Oxley?'
20 Jan 2018, 11:03 AM Report Abuse Reply0Like
gman1253
Comments (565) |+ Follow |Send Message |
I have been warning readers about GE for over a year. While I have only been a employee for about 3 1/2 years, I have worked in numerous large firms for over 40 years in accounting, finance & systems. Here are my observations when comparing GE to other firms:
- Constant strutting how great we are within GE.
- Obsession with Powerpoint pitches.
- A sickening amount of systems - totally against the standardization of systems to reduce costs, increase efficiency, ease maintenance and increase mobility to employees.
- Overpaying for acquisitions.
- Over reliance on Indian IT resources. While cheap, they ignore quality & communication deficiencies.
- Over paying for senior management.
- Too many senior managers that are long time GE employees. They believed the constant GE BS & lack exposure to alternative processes.
- Moving HQ to Boston from CT ? Try to figure out how that was a cost savings, unless of course you largely reduce the HQ staff.
Wonder what JP Morgan would think.
All the best -
20 Jan 2018, 10:34 AM Report Abuse Reply6Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Gman123, thank you for your insightful, boots on the ground comment!
20 Jan 2018, 11:05 AM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To gman1253 -
Do you have a specific example of 'overpaying for acquisitions'?? I'm not looking for 'inside info' but would want to learn your opinion on any of the acquisitions made by Immelt in the last 10 years......and what you think the price should have been?? Based on what??
Alstom ($9.5 Billion)?? LM Wind ($1.7 Billion)?? Avio ($4.4 Billion)??
20 Jan 2018, 03:13 PM Report Abuse Reply0Like
gman1253
Comments (565) |+ Follow |Send Message |
Alstom was a clear dopey move. Dealing with France & the EU alone should be a red flag to anyone.
Baker Hughes - overpaid & bad timing as icing.
While Digital was not an acquisition - they had tried a move into software years ago, which of course failed.
I also forgot to mention the seriously underfunded pension.
20 Jan 2018, 04:31 PM Report Abuse Reply2Like
franklja
Comments (842) |+ Follow |Send Message |
gman1253: GE has tried to be in IT at least three times before by my count...early 70's when they tried to be a computer company, early 80's during Jack Welch's infamous 'Factory of the Future' and then late 90's when GE tried to become a dotcom. Their attempt to become a top 10 software provider of the IIoT with Predix will likely be just as successful as the past attempts. GE's culture and operating metrics don't fit with the fast paced IT space.
21 Jan 2018, 02:51 PM Report Abuse Reply1Like
ARG1
Comments (2544) |+ Follow |Send Message |
Immelt said he wanted the move to Boston because he was bored in the current headquarters office. He said he watched the deers from his office window. He should have been doing work instead of looking out the window on shareholder dime.
21 Jan 2018, 04:54 PM Report Abuse Reply1Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To gman1253 -
I was looking for some (any??) specific numerical numbers....not just more words 'overpaid' 'dopey move' 'bad timing'.
You certainly are entitled to your opinion and I am not defending any of GE's acquisitions listed above. But I have yet to find anyone who has an opinion on 'overpaid' to be able to back it up with any numbers.
BTW 'bad timing' on the BHI merger is based on what?? The facts are in Sept-16 when the merger was first announced, Oil was at $50 per barrel.
When you have a moment, check out Oil price today. I'll give you a clue ....it's ABOVE $60!!! You may want to reconsider the 'bad timing' statement which IMO is not correct.
21 Jan 2018, 05:00 PM Report Abuse Reply0Like
ARG1
Comments (2544) |+ Follow |Send Message |
Mike,
I was a GE shareholder up until January 17th. I am wondering what your concern is with man1253 when John Inch the DB analyst said very clearly that there are big problems at GE. I am thinking you are beating a dead horse.
21 Jan 2018, 05:10 PM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To ARG1 -
Yes, to many SA commenters like yourself GE is a 'dead horse'. My interest in GE's management acquisitions as 'overpaid' is to learn what factual basis the opinion is based on.
As an example, I was aware in Nov-15 when GE bought Alstom for $10 Billion. GE (Immelt/Bornstein) provided limited data on the transaction. And if Nov-15 was 'overpaid' I would want to learn for the future how to recognize such a situation in time to make more valid investment decisions.
NEW | 22 Jan 2018, 11:21 AM Report Abuse Reply0Like
liampaulg
Comments (26) |+ Follow |Send Message |
Has no-one considered GE being removed from the DJIA?
20 Jan 2018, 10:37 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for your good question, liampaulg. I hadn't thought about it, though I would expect that the managers of the index have had those conversations around the coffee pot.
20 Jan 2018, 11:07 AM Report Abuse Reply1Like
James Coleman, Contributor
Comments (242) |+ Follow |Send Message |
I have considered it thoroughly.
But it's not up to me LOL
20 Jan 2018, 12:40 PM Report Abuse Reply0Like
liampaulg
Comments (26) |+ Follow |Send Message |
Any thoughts on where the resulting forced liquidation would drive the share price?
20 Jan 2018, 12:47 PM Report Abuse Reply0Like
carolinabjg@aol.com
Comments (38) |+ Follow |Send Message |
D slueth why no mortgage reits in your dividend portfolio's
20 Jan 2018, 10:45 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Hello, carolinabjg. That's a good question. I once owned NLY when Mike Farrell was the CEO. After his death, I lost confidence.
I was an early shareholder of STWD. I like Barry Sternlicht. I know he's been frustrated about Mr. Market's unwillingness to give it the market valuation he thinks it deserves. I sold STWD after I became more conscious of S&P credit ratings. I was influenced by Lowell Miller's advice (in the Single Best Investment) to stick with BBB+ or better companies. When PEGI (in the utility sector) was rated, it came in at BB-, and I'm still holding. I wouldn't have bought it if I had known that's where it would land, but I'm not a purist.
I currently hold shares of HASI, which is yet to be rated. It is a hybrid eREIT and mREIT. It is usually grouped with the mREITs because much of their book is in the form of loans to governments (Louisville, KY for example) and/or corporations that invest in infrastructure efficiency projects. They own hard, real estate assets, but their loan book is growing.
As the bull market kept moving higher, I became more conservative and more focused on higher credit ratings. I've consciously chosen to have a lower yield and a higher SWAN factor.
Do you have a recommendation? :-)
20 Jan 2018, 11:17 AM Report Abuse Reply0Like
carolinabjg@aol.com
Comments (38) |+ Follow |Send Message |
holding A G N C pays monthly dividend of 18 cents for 11+dividend and C Y S pays 25 cents quarterly for 12 %dividend
20 Jan 2018, 11:31 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, carolina. I'm not familiar with these, so you've given me something to research.
20 Jan 2018, 11:47 AM Report Abuse Reply0Like
bullbeartrader
Comments (590) |+ Follow |Send Message |
liampaulg that is very possible and would result in another big dump.
20 Jan 2018, 10:51 AM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To bullbeartrader -
I don't have the specific data and am not trying to prove a point.....but my understanding is that when a stock gets removed from the DOW, it generally (always??) rises in the following year(s).
20 Jan 2018, 03:16 PM Report Abuse Reply1Like
dennym7
Comments (31) |+ Follow |Send Message |
'This, in effect, acknowledges that the company's insurance operation had already lost but not yet reported $6.2 billion (to be posted in Q4 2017). And, to try to make their North American Life & Health portfolio whole, GE Capital will make contributions to NALH's reserves of $3 billion in 2018 and $12 billion more from 2019 to 2024. In total, this is a $21.2 billion hit.'
1. Is this the same as paying 21.2 billion to a creditor?
2. Could any of this be due to a change in reserve requirements?
20 Jan 2018, 11:26 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good questions, dennym7. I think a ratings agency would view the infusion of money to the insurance business as more positive than paying out that money in a dividend to shareholders (because it shores up their ability to cover any eventual financial liabilities).
I don't know if there were changes in reserve requirements. Perhaps that will come out in the Q&A during Wednesday's earnings call. I would say that if they were compliant with reserve requirements and suddenly they had this much of a shortage, the regulators made some very hefty changes!
20 Jan 2018, 11:51 AM Report Abuse Reply0Like
19Larry42
Comments (36) |+ Follow |Send Message |
I manage a couple of accounts for grand kids. One of them has a little GE. There is a very long time horizon so I've decided to keep the GE. I'm thinking the company will be broken up and current investors will get a little piece of a new, better company. if it is sold as bankrupt, oh well. I think a bunch of lawyers is going to make a lot of $ on this one. The regulators, many levels of management, accountants and I suspect politicians are probably all looking for ways to cover their a... Much covering, destroying of information is probably going on right now. I haven't looked at insider stock transactions, that could be telling.
20 Jan 2018, 11:43 AM Report Abuse Reply0Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for sharing your experience and strategy, 19Larry42. That makes sense to me. You and the kids have time to see how it plays out.
20 Jan 2018, 11:52 AM Report Abuse Reply0Like
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To 19Larry42 -
The web site http://bit.ly/1isM2SN presents daily info on GE insider transactions. There have been no direct selling (other than option exercises and journal entries) since Vice-Chair Elizabeth Comstock sold 25,000 shares in Aug-17 at $25.4 per share. She has since left GE at the end of Dec-17.
For reference, the latest 'Buy' was Director James Tisch for 3 Million shares at $17.9 ( = $53 Million) in Nov-17.
20 Jan 2018, 12:32 PM Report Abuse Reply0Like
proud cdn
Comments (2) |+ Follow |Send Message |
I sold my GE in Dec 16 for $31. Why? Because it was a company in turmoil, with businesses bought, businesses sold and making the results difficult to follow. Having worked through a few mergers in my career and seeing how they never create real synergies or incremental profits but lots of turmoil and loss of talented people, when a company is in merger mode, I head for an exit. Sad that a company that makes lots of very good products can be brought down by a lack of focus and ill conceived financial 'engineering'.
I believe in companies that know what they do, focus on what they do and do it well. If it is difficult to analyze, then it is even more difficult to manage. Keep it simple is the best answer.
20 Jan 2018, 11:44 AM Report Abuse Reply1Like
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Well said, proud cdn. Thanks for sharing your philosophy with us!
20 Jan 2018, 11:52 AM Report Abuse Reply0Like
franklja
Comments (842) |+ Follow |Send Message |
proud: I love your comment...'I believe in companies that know what they do, focus on what they do and do it well.' This describes what GE once was when I joined it over 40 years ago! The high priced acquisitions and financial engineering that started under Welch and continued under Immelt have finally resulted in a day of reckoning for this once great company. You were smart to exit when you did.
20 Jan 2018, 11:57 AM Report Abuse Reply2Like
---------------------------------------------------------------------
Mike Slattery
Comments (4867) |+ Follow |Send Message |
To Dividend Sleuth (author) -
This is a great article on investing and how to learn from mistakes like GE. I especially liked 'We do the best we can with the information available.'
It's unfortunate that Immelt/Bornstein were so adept at hiding the true info on the long-term-care (LTC) business.....or maybe they were just ignorant or sloppy in their financial management.
Regarding, your post '...the 'lid is off' GE's dividend prospects....because I no longer see it as a dividend growth opportunity.........but, the latest piece of news from the container that John Flannery has inherited - and now opened - convinces me that GE's dividend is in dire jeopardy.'
How can GE's dividend.....already cut down to $4.2 Billion per year.....be in 'dire jeopardy'??
For 2018 GE (Flannery/Miller) are estimating Industrial 'Free Cash Flow' (FCF) at $6 - $7 Billion which is more than adequate to fund the dividend. Payout ratio in the range of 65%.
It may turn out that the FCF estimate is faulty but from what I've read over the past few months, Flannery has a tactic of 'underpromising and overdelivering'. Some call this 'sandbagging'. I hope these optimistic posters are right.
20 Jan 2018, 11:49 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Mike, I appreciate your comment. I hope the optimists are right, too.
I want Flannery and GE to succeed. As I've said to some others, were it not for my focus on dividends, I might maintain a stake as a speculation.
Perhaps Wednesday's earnings call will give some insight about the future of the company and the dividend. I hope they will be able to maintain the dividend. Given the importance of GE Capital's dividend to GE parent, the new announcement basically says, 'GE Capital can no longer afford to pay a dividend to GE Parent.' Given Flannery's statements that all the businesses are under review, and his more recent statement that gives the impression he is more seriously considering a thorough break-up, this casts new uncertainty of which components would be left, how a dividend might look, and from whom. And, I don't have confidence that all the previous unknowns have been identified. I think it's at least possible that there will be other major surprises. Pension liabilities may be one area. I'm aware that they've cut retiree benefits (to a family member). Maybe 'dire jeopardy' is too strong. I would be willing to accept an amendment to delete the word 'dire.' :-)
20 Jan 2018, 12:03 PM Report Abuse Reply1Like
---------------------------------------------------------------------
bullbeartrader
Comments (590) |+ Follow |Send Message |
Rosen Law Firm, a global investor rights law firm, announces the filing of a class action lawsuit on behalf of purchasers of the securities of General Electric Company (NYSE: GE) from February 26, 2013 through January 12, 2018, inclusive (the “Class Period”). The lawsuit seeks to recover damages for General Electric investors under the federal securities laws.
To join the General Electric class action, go to http://bit.ly/2FYxCZx or call Phillip Kim, Esq. or Daniel Sadeh, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or dsadeh@rosenlegal.com for information on the class action.
NO CLASS HAS YET BEEN CERTIFIED IN THE ABOVE ACTION. UNTIL A CLASS IS CERTIFIED, YOU ARE NOT REPRESENTED BY COUNSEL UNLESS YOU RETAIN ONE. YOU MAY ALSO REMAIN AN ABSENT CLASS MEMBER AND DO NOTHING AT THIS POINT. YOU MAY RETAIN COUNSEL OF YOUR CHOICE.
According to the lawsuit, defendants during the Class Period made materially false and/or misleading statements and/or failed to disclose: (1) General Electric was failing to allocate sufficient reserves with respect to premium deficiencies and other risks associated with GE Capital’s legacy reinsurance business; (2) these risks were then accruing billions of dollars in unreported impairment charges for General Electric; (3) consequently, the value of General Electric was overstated during the Class Period and additional undisclosed impairments were necessary; and (4) as a result, General Electric’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
20 Jan 2018, 12:26 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » And so it begins....
20 Jan 2018, 12:28 PM Report Abuse Reply1Like
---------------------------------------------------------------------
rocketjs
Comments (472) |+ Follow |Send Message |
I got blasted earlier in 2008 with GE so I got out. Got “Kindered”, so I’m more attuned to BS these days. Now a lot of folks are getting “Welched”. He was /is a big blowhard. Immelt just carried on the practices he learned under the Master. Shame on them both.
20 Jan 2018, 12:43 PM Report Abuse Reply2Like
---------------------------------------------------------------------
jstratt
Comments (4690) |+ Follow |Send Message |
At least the author doesnt have to wait for 4Q earnings to be released next week. My guess in this orchestration is as follows.
- the dividend will not be cut again
- the Industrial Internet effort is pared back to conserve cash
- health care should do well
- Aviation should do well
- GE Capital we already know is worth less than nothing
- GE needs more capital to keep its credit ratings
Lets assume Inch is correct and GE issued more equity. GE shares would dive but the future might be much brighter from there. Implicit in Inch's thesis is that GE cannot issue more debt.
It is hard to believe that Inch is incorrect and GE doesnt need more capital. However GE appears to have slashed costs and both health care and aviation could generate much larger cash flows.
I started with the dividend will not be cut again because in most spheres a company would not simultaneously issue stock and pay a dividend. However in a GE warped reality lots of unusual things happen.
20 Jan 2018, 01:28 PM Report Abuse Reply3Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Good points, jstratt. Thank you for your comment. John Inch, the analyst at Deutsche Bank, was interviewed on CNBC in November:
http://cnb.cx/2FYr1y0.
And this: https://seekingalpha.c...
20 Jan 2018, 01:43 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Mike Slattery
Comments (4867) |+ Follow |Send Message |
Would anyone be able to post what are the numbers of a 'cash squeeze'??
My understanding is that GE Industrial 'Free Cash Flow' (FCF) will be in the $6 - $7 Billion range (as estimated by Flannery in Nov-17) which is more than adequate to fund the dividend.
20 Jan 2018, 04:18 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Ivan is my Hero
Comments (80) |+ Follow |Send Message |
To Jstratt
You’d think Inch has something we dont see yet but...WHO would impose additionAl equity on GE? It is no longer regulated, and Kansas is happy with separating 15b over 7 yrs. IF Kansas requires more equity...Flannery would have announced this last week?
The only event I can think of is an less solvent GE flowing from large write offs on some of their deals that are now up for sale.
21 Jan 2018, 03:48 AM Report Abuse Reply0Like
---------------------------------------------------------------------
XGEmployee
Comments (4) |+ Follow |Send Message |
Guys .. I was with GE a long time and closely able to see what was happening the last few years. Immelt and the head of digital were actively working together to bleed money from GE through questionable acquisitions that had a back end. If you are wondering why digital never delivered anything, the plan was to keep it in a constant state of redirection and chaos so nobody would question the money being spent on the outside. All the comments that have a questionmark on if Immelt was a crook .. can save themselves a symbol. Some others were clearly on the take as well .. which explains why Flannery has retained the head of digital so far. These guys will finish the bleeding of GE and leave. Take that into consideration as you form your investing thesis.
20 Jan 2018, 02:29 PM Report Abuse Reply6Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » XGEmployee, you've made some serious accusations. I'm sure the Rosen Law Firm (see bullbeartrader's comment) would enjoy interviewing you.
20 Jan 2018, 03:40 PM Report Abuse Reply1Like
---------------------------------------------------------------------
XGEmployee
Comments (4) |+ Follow |Send Message |
What is serious is the total meltdown of the company in less than six months. While the intellectual investorati hem and haw over 'incompetence' and potential 'mismanagement' and wishful 'long' GE proclamations, consider for a minute that this was not incompetence but orchestrated. The contributors are retired with full pensions in the name of management change.
What else needs to happen to awaken the investor base to this disaster ... a dividend cut, $100b+ market value lost, earnings cut in half, unfunded liabilities in the billions ... you really think this is just incompetence of a single person.
21 Jan 2018, 02:58 AM Report Abuse Reply3Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » XGEmployee, you make a good point. Many decisions by many people (either by actions or by silence) over a number of years have contributed to the present situation.
21 Jan 2018, 06:34 AM Report Abuse Reply1Like
---------------------------------------------------------------------
jstratt
Comments (4690) |+ Follow |Send Message |
XGEmployee
I have made many negative comments about GE for a decade generally finding them the worst excuse for an investment. I do want to state however that I have never thought Immelt was a crook.
I think most suspect that huge amounts of cash flow have been drained trying to invent the industrial internet. Tell us what you mean by 'acquisitions that had a back end'?
NEW | 22 Jan 2018, 09:30 PM Report Abuse Reply0Like
---------------------------------------------------------------------
peace 2 u
Comments (1260) |+ Follow |Send Message |
Dividend--
At what time do all of the 'oops' and other bad information lead to a SEC investigation?
At what time do class action lawyers arrive with lawsuits alleging securities fraud?
Just a thought or two.
20 Jan 2018, 02:38 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Peace2u, bullbeartrader (above) let us know about what may be the first class action suit. Given the disorganization in DC at present, and the movement toward less regulation and a more 'hands off' attitude, I would be surprised to see the SEC or the Justice Department get involved.
20 Jan 2018, 03:38 PM Report Abuse Reply0Like
---------------------------------------------------------------------
somedata1
Comments (4065) |+ Follow |Send Message |
I will buy GE at $5 bucks a share. I love GE at a price.
20 Jan 2018, 02:44 PM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for joining the conversation, somedata1.
20 Jan 2018, 03:34 PM Report Abuse Reply0Like
---------------------------------------------------------------------
markmendlovitz
Comments (4) |+ Follow |Send Message |
GE is a solid company with a VERY high threshold to competition. Its problems are financial, not business related. Sears is an example of the latter. (Never buy a stock with business related problems.) Buffett said to buy when there's blood in the streets. I'm doing just that. http://bit.ly/2EYlxBZ
20 Jan 2018, 02:51 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Welcome aboard, markmorendlovitz. You underscore the reality that GE has some great strengths. Thank you for your comment.
20 Jan 2018, 03:32 PM Report Abuse Reply0Like
---------------------------------------------------------------------
ARG1
Comments (2544) |+ Follow |Send Message |
Dividend,
I invest like you and sold GE for similar reasons on the same day.
20 Jan 2018, 04:16 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your comment, ARG1. So, we move on. I'll enjoy collaborating with you about future possibilities. Enjoy your weekend!
20 Jan 2018, 04:19 PM Report Abuse Reply0Like
---------------------------------------------------------------------
tzeilbe
Comments (116) |+ Follow |Send Message |
Pension liability is huge. A good solution for GE is to declare bankruptcy. Very similar path to GM.
20 Jan 2018, 08:03 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » That would be a memorable press conference!
20 Jan 2018, 08:24 PM Report Abuse Reply1Like
---------------------------------------------------------------------
gigaomhere
Comments (358) |+ Follow |Send Message |
That would be a tragedy
20 Jan 2018, 11:18 PM Report Abuse Reply1Like
---------------------------------------------------------------------
User 1012015503300356003
Comments (82) |+ Follow |Send Message |
GE is in VERY serious trouble! Check out the P & F Chart:
http://bit.ly/2G0K8rs
It doesn't lie - there was a double bottom breakdown on the chart that can be clearly seen. This means GE is going MUCH lower before a possible turnaround takes hold...... look out below!
20 Jan 2018, 09:44 PM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you, 101, for your comment and the link to the chart. It's clear by your study and your screen name that you are good with numbers!
21 Jan 2018, 06:38 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Vandooman
Comments (2754) |+ Follow |Send Message |
Charlie Munger once said you don't spend your time looking for reasons for buying a stock. You look at reasons not to buy it. If you don't find any, you buy. I have been trying to tell people on SA for the last 2 years to sell GE. GE is like a muddy puddle. You never find out how deep it is until you step in it. GE isn't the only stock out there. You would think the IBM debacle would have warned people about large companies trying to turn around.
Instead the hold community was blathering about the high yield. Friends, high yields are often the result of a low PE ratio. A low PE ratio tells you it is viewed as a damaged company with no growth prospects. When the dividend is cut, your yield goes out the window. GE has less than optimal businesses it cannot soon turn around. Welch left GE with a financial house of cards and they are still paying for it 10 years later. The company was then run by an Imperial management who never saw a shop floor.
If you want to get wealthy investing you have to learn when to hold and when to fold. You don't hold on to a stock to justify why you bought it in the first place. Some purchases will not work out no matter how good the original decision was to buy. There is a whole list of great companies you could have bought after selling GE. Even this year you could have been up 30% on Target or Lowes or Walmart. You could be up 50% with Facebook.
I sold GE long ago at $35 and reinvested in great companies like Microsoft, PPG, ITW and Honeywell. They have all doubled or tripled in value. Home Depot is up almost 800%. Invest in companies with great franchises, great management and the wind at their backs, not some turnaround fantasy with a high dividend yield.
21 Jan 2018, 12:58 AM Report Abuse Reply4Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Vandooman, you've gleaned some wisdom through the years and I appreciate your comment.
21 Jan 2018, 06:42 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Pablo Kelly
Comments (75) |+ Follow |Send Message |
Succinct!
Applauding - 'never saw a shop floor'
21 Jan 2018, 03:23 PM Report Abuse Reply1Like
---------------------------------------------------------------------
jpeak1016
Comments (3) |+ Follow |Send Message |
GE management and the BOD are a national disgrace. With the the latest revelation of a $15B insurance charge, my take is that it is now a forgone conclusion that this company is removed from the DJIA.
21 Jan 2018, 02:56 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » jpeak1016, thank you for sharing your perspective on the DJIA. Until it was mentioned earlier in this comment thread, I hadn't given it much thought. If GE is removed, for me it would be an interesting historic item due to GE's tenure in the index. But, I'm not sure it would make much difference for the stock. With the rise of the S&P 500 in ETFs, etc. being dropped from the DJIA seems more symbolic than practical.
21 Jan 2018, 06:47 AM Report Abuse Reply0Like
---------------------------------------------------------------------
hogfanmd
Comments (2) |+ Follow |Send Message |
#1-If you believe GE goes bankrupt-don't buy
#2- If you may need the money in the next 2 -3 years - don't buy
If you have a long term horizon and have time to wait and #1 and #2 don't apply to your beliefs then buy and if goes down buy
Some more.
I bought Macy's the same way in the teens.
Maybe right. Maybe wrong. We will see.
21 Jan 2018, 02:57 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for giving us your view of the situation. I'm not into M, but I'm pleased that they haven't cut the dividend and seem to be moving forward. They have some nice real estate as a foundation. I hope that and GE work out for you. I would add one other reason to sell, and that was my reason: With the Insurance Update, in my opinion GE in its present configuration no longer qualifies as a relatively safe and (potentially) growing dividend. But, I agree with you that someone looking for a potential turnaround and is willing to speculate, GE is worth considering (along with M).
21 Jan 2018, 06:52 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Vandooman
Comments (2754) |+ Follow |Send Message |
Given changes in retailing I see no reason why Macys will succeed, They just announced more store closings. The only reason more are not being shuttered are the low rents negotiated when Macys was an anchor tenant in most large malls. In other words Macys is doing poorly despite having a free lunch in many locations. If you had dumped Macys 4 months ago and switched you would be up 30% on Target, Walmart or Lowes. Those are the real turnarounds. The department store model is defunct.
21 Jan 2018, 12:53 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Namron Damron
Comments (2466) |+ Follow |Send Message |
Vandooman, you have chosen wisely but Target, Walmart and Lowes are retail department stores. Please clarify.
21 Jan 2018, 12:55 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Michael Clark, Marketplace Contributor
Comments (12986) |+ Follow |Send Message |
HAS GE BOTTOMED? NO.
https://seekingalpha.c...
21 Jan 2018, 04:39 AM Report Abuse Reply2Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Michael, thank you for the link to your blog. You've provided some interesting charts.
21 Jan 2018, 06:53 AM Report Abuse Reply1Like
---------------------------------------------------------------------
Michael Clark, Marketplace Contributor
Comments (12986) |+ Follow |Send Message |
Thanks for your response, DS.
21 Jan 2018, 03:50 PM Report Abuse Reply0Like
---------------------------------------------------------------------
natb
Comments (143) |+ Follow |Send Message |
GE may be a good short to about $7
21 Jan 2018, 02:45 PM Report Abuse Reply0Like
---------------------------------------------------------------------
BorderBandit
Comments (81) |+ Follow |Send Message |
Someone needs to go to jail for this. Think of all the people who relied on this company as they were just relying on lies
21 Jan 2018, 06:39 PM Report Abuse Reply1Like
---------------------------------------------------------------------
TNMountaineer
Comments (33) |+ Follow |Send Message |
If, as it appears to be true, that things are far worse than anyone (except some on the inside) believed, then GE could break below its March 2009 closing low of $5.32 when all thought the world was coming to an end. The buying/selling volume peaked between $12-$14 and this could possibly provide support if GE does not further cut or eliminate the dividend. In my opinion, should the latter happen, then the bottom could be put in around $5.
21 Jan 2018, 07:13 PM Report Abuse Reply1Like
---------------------------------------------------------------------
gigaomhere
Comments (358) |+ Follow |Send Message |
that seems like a real possibility. so much on the Q4 earnings.
21 Jan 2018, 08:02 PM Report Abuse Reply0Like
---------------------------------------------------------------------
natb
Comments (143) |+ Follow |Send Message |
If the debacle is true, GE will go under just like Enron.
21 Jan 2018, 08:00 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Namron Damron
Comments (2466) |+ Follow |Send Message |
For all to consider: this is a perfect example of piling on a bad situation that will have a decent outcome. When there is blood in the streets..... you know the rest. Not calling a bottom at 16 or 12 but we are approaching the bottom looking for better news. Without better news, more blood will be drawn and will be flowing leading to a lower level for a bottom.
natb: 'just like Enron'????..... not even close. GE is not a 'house of cards'.... just a good business very poorly managed and has not been transparent with shareholders/stakehold... Not good but not a house of cards built on an inflated asset bubble derived from inflated/failed energy deregulation and a lot of debt.
21 Jan 2018, 10:59 PM Report Abuse Reply0Like
---------------------------------------------------------------------
ARG1
Comments (2544) |+ Follow |Send Message |
Namron,
There are a lot of unhappy campers. I am not sure it is piling on but unhappy shareholders and ex-shareholders venting. This isn't Enron but you have to admit the accounting, debt revelations, complicity of the BOD, it isn't to far off. I will say a word to the wise from dividend sleuth is nobody is sure what is inside the box.
21 Jan 2018, 11:10 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Namron Damron
Comments (2466) |+ Follow |Send Message |
I admit and agree.... I hate that it has happened to me but now my job is to navigate the immediate and longer term future vis-a-vis GE. The short-term remedy is to clear up the mystery, transform the company into transparency, and fix the big issues faster than fast. Lots of options available... let's see if the new leadership chooses wisely.
21 Jan 2018, 11:27 PM Report Abuse Reply1Like
---------------------------------------------------------------------
ARG1
Comments (2544) |+ Follow |Send Message |
It will not be fast. Watch the video of Immelt talking to Jim Cramer a couple months ago about Predix and the Billions it would generate. The program flopped and was turned over to MSFT. The fix will take time.
22 Jan 2018, 12:00 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » ND, I agree GE isn't 'just like' Enron, and that 'a good business ... poorly managed ... not been transparent' is a good place to begin the story.
22 Jan 2018, 06:26 AM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » ND, 'faster than fast' is a good timetable for taking action. I agree with ARG1 that it will take time, but Flannery seems to be moving quickly. Whatever one thinks of Flannery's choices thus far, procrastination doesn't seem to be one of them.
Everyone likely already has read Brian Gilmartin's recent article, which I think is an excellent summary of the situation. For anyone who hasn't seen it: https://seekingalpha.c....
22 Jan 2018, 06:31 AM Report Abuse Reply0Like
---------------------------------------------------------------------
JDoe20
Comments (3383) |+ Follow |Send Message |
Dividend Sleuth, as I think of your analogy I can't help but wonder if you used the wrong box analogy.
Might Schrödinger's cat box be better? GE has a big black box where investors can't seem to get a look inside. The question . . . . . . is the GE cat alive or dead?
Thanks for sharing your thoughts - enjoy your articles!
NEW | 22 Jan 2018, 01:39 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thank you for your kind comment, JDoe20. This comment thread has demonstrated that some readers have given up on GE as a company. One even suggested the best course is bankruptcy. Even though this article is about my decision to close my GE position, the idea of GE as a dead cat has never crossed my mind. Schrödinger's cat is an interesting exercise in logic, but I think Pandora's box is more well known and perhaps easier to understand. Schrödinger's cat wasn't part of my consciousness when I wrote the article and I hadn't thought about it in a very long time until James Coleman mentioned it (above). I've enjoyed the conversation around these stories, as well as Hanlon's Razor.
I think there's considerable life left in GE. My thesis as a dividend investor is is pretty simple and modest: In light of the newly identified GE Capital insurance liability, it's likely that GE's dividend will be difficult to raise--and perhaps even difficult to maintain. Pandora provided an image of Flannery discovering various kinds of troubles once he opened he box. I have concerns about the safety of the dividend and its prospects for growth, but I've never questioned GE's viability.
NEW | 22 Jan 2018, 03:13 PM Report Abuse Reply1Like
---------------------------------------------------------------------
JDoe20
Comments (3383) |+ Follow |Send Message |
I didn't mean dead as much as dead investment for the near to medium term and I didn't see the earlier reference (250+ comments - congrats) or I wouldn't have mentioned.
GE was the first stock I bought in 1991 so it's been very painful (like 1st girlfriend). But I too finally sold out - 1/3 in Oct redeployed to BA @$244 and 2/3 in Dec after earnings report redeployed to HD @ $182. Worst thing was still having to pay cap gains I had from the Jack era.
Neddless to say, it was a good move. I say this so others might recognize it's not so much what GE might do in 3-5 years, it's more about how much you leave on the table staying in GE while so many other stocks are running with the bulls right now. Cheers!
NEW | 22 Jan 2018, 04:07 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Namron Damron
Comments (2466) |+ Follow |Send Message |
JDoe20,
I respect every investor's decision vis-a-vis a particular stock but rotating out of a loser to those you are chasing is (to me) a dubious strategy. In general, I think the market is way over bought. As a holder of BA with a very low cost basis, I am selling parts of my holdings off at circa $280-$350. I never acquired HD.
GE, even though I have been in it, appears to be at the level I purchased BA ($65) and would have purchased HD ($40).
I look for value and maybe those naysayers are right about GE for the shorter term. But, I think GE has a real chance to double in the next 2-3 years (yes, I had a double earlier this year and didn't bail). I don't hesitate to buy what's 'on-sale' and I don't chase momentum stocks i.e. BA et. al. I am guessing if we had a sell off, GE would sell off less from its current level. I am always looking for a margin of safety as well. I am buying carefully these days. It's hard to find a bargain.
NEW | 22 Jan 2018, 04:30 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks, JDoe20. I hear you--dead as in dead money at least for the near to medium term rather than dead as in 'kaput.' Every analogy has its strengths and weaknesses! Actually, 'like 1st girlfriend' may be the best analogy yet! You were wise to pick up BA and HD with the proceeds. Lots of people would be happy to pay the capital gains in order to escape with those trades. You make a good point about the 'opportunity costs.' Have a great 2018!
NEW | 22 Jan 2018, 04:31 PM Report Abuse Reply1Like
---------------------------------------------------------------------
JDoe20
Comments (3383) |+ Follow |Send Message |
Namron, I'm not 'chasing' any stock as I've owned and understand HD since 6/2009 and BA since my first investment in 6/2014. I added to both which I've grown to my largest (ba in 4 1/2 years) and HD, (third largest position) compared to my wife's 12 year stock options at #2.
The point is, there is no chasing and there is a true recognition of the value these two stocks provide with their markets and the new tax laws. I wish you luck with GE but fear you will get dividend cuts or eliminations instead of the 20% increase by BA and projected 20% or better increase by HD in a few weeks.
I've hoped for many years on GE but we all know that hope is not a plan, regardless what GE mgmt tells us . . . .
NEW | 22 Jan 2018, 10:34 PM Report Abuse Reply0Like
---------------------------------------------------------------------
Bigslix
Comments (454) |+ Follow |Send Message |
DS- I sold my GE position last year for a small loss after holding it for about five years. I was motivated to sell all stocks and bonds that I was down on to help offset a large capital gain I had last year. Glad I got out when I did, as I avoided turning a small loss into a large loss. I don't hate the company or Immelt,etc. but it is a bad stock right now. I would consider it again after two dividend increases, but that is not going to be for a few years, and I expect that I will have little to no new money to put into the market in 2-3 years from now.
Big Slix
NEW | 22 Jan 2018, 03:29 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Dividend Sleuth, Contributor
Comments (9376) |Following |Send Message |
Author’s reply » Thanks for the update, Big Slix. The tax loss trade looks really good about now.
I agree with you about the anger issue. I don't have time to harbor anger toward Immelt. I also feel no envy.
It's hard to imagine that he will not be summoned for a deposition or testimony in a civil (if not criminal) trial at some point.
My favorite translation of Proverbs 16:8 comes to mind:
'Far better to be right and poor than to be wrong and rich.'
NEW | 22 Jan 2018, 05:06 PM Report Abuse Reply1Like
---------------------------------------------------------------------
Peter Burgess
Add Your Comment:
Share your comment: Publish
Top Authors|RSS Feeds|Sitemap|About Us|Feedback|Contact Us
Terms of Use|Privacy|Xignite quote data|© 2018 Seeking Alpha
|
