Author Topic: GE - General Electric  (Read 62818 times)

berkshiremystery

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Re: GE - General Electric
« Reply #20 on: September 19, 2012, 05:21:11 AM »
Yes I have seen that..ValueLine are very bullish on GE with an expected annualized return between 15 to 25% for the next 5 years..

It could happen, but you have to believe in these optimistic growth in the sales projection.

I only look at ValueLine for the past data,... but I never take their estimates serious. If you would look at their BAC reports over the last 2 years, they have gone from euphoria to currently lower estimates. You have to make your own mind.


jay21

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Re: GE - General Electric
« Reply #21 on: May 21, 2013, 07:10:02 AM »
GE was in the news recently with Capital planning a dividend to the parent (  http://online.wsj.com/article/SB10001424127887324102604578494681679014370.html ). 

I was just thinking about GE because I thought it may be a good business in terms of selling top quality equipment and leasing it to buyers with a high credit rating.  I was pretty surprised how much GE Capital had in consumer and real estate assets and it turned me off to GE as an investment because they probably don't have a competitive advantage in that area.  I don't think they can compete with banks and their deposits. 

Hempton had a decent write-up explaining something similar to what I am explaining ( http://brontecapital.blogspot.com/2008/06/whats-nice-girl-like-you-doing-in-place.html ).  Here he explains the part of GE I was attracted to:

"Let’s describe some good equipment finance businesses:

    Suppose you have the superior product (say the most fuel efficient jet engine) and

    Suppose the product needs regular contracted maintenance or it kills people (such as a jet engine) and

    Suppose the product is able to be repossessed and resold and because you have the best distribution system you have the best ability of anyone to repossess it. Besides because of the maintenance schedule you know exactly where it is (like a jet engine).

    Finally suppose that the technological obsolescence cycle is say a decade or more so when you repossess it the product is worth something – so you can’t be stuck in the position that Lucent was when it repossessed One-Tel’s mobile phone system. Hey – like a jet engine.

Then you have the makings of a truly brilliant finance business. It can make good money almost regardless of the economic cycle of its customers.

Notice that this finance business does not even require the airlines to be solvent. It only requires that the product has a technological edge, can be repossessed and does not lose too much value when remarketed. Moreover the best sales network for new product is also probably a good sales system for repossessed product. GE has a competitive advantage in engines (which I think is beyond dispute), is good at selling them and hence has a competitive advantage in financing them.

There have been lots of airline insolvencies but the GE finance business skated through unscathed."

I can see why Warren and Charlie were attracted to the stock during the crisis because it probably fits into the "cancer" model that Charlie described.  You can cut away a lot of non-core assets because there's a very good business thats worth a lot in there too.
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Uccmal

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Re: GE - General Electric
« Reply #22 on: May 21, 2013, 07:33:03 AM »
The Finance business is a wonderful business.  I like GE better under Immelt than Welch, without the managed earnings. 

The also finance infrastructure, wind farms, power plants etc. 

Ge capital has the worlds largest fleet of Vehicle leasing.  The only retail driven business left is the appliance and lighting business.  Ge capital also operates in all kinds of strange peripheral businesses. 

I recall gong into a GE Capital unit 15 years ago where they were configuring office computers for everyone except Dell and Gateway.  They were assembling IBMs, HPs, Compaqs, and others all side by side in the same room.

I no longer hold GE shares but if there is a pullback in the markets it is on the top of the hit list. 
GARP tending toward value

wellmont

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Re: GE - General Electric
« Reply #23 on: May 21, 2013, 10:17:57 AM »
the finance business would be toast if it was not for US Government bailout, and Buffett bailout. It was insolvent. Buffett likes Immelt. Hates GE Capital, apparently.
« Last Edit: May 21, 2013, 10:25:55 AM by wellmont »

jay21

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Re: GE - General Electric
« Reply #24 on: May 21, 2013, 12:51:17 PM »
the finance business would be toast if it was not for US Government bailout, and Buffett bailout. It was insolvent. Buffett likes Immelt. Hates GE Capital, apparently.

I just came across this quote from Munger from 2005's Wesco's meeting notes:


AIG, GE Credit and the Risks of the Carry Trade

That said, it’s a lot like GE. It is a fabulously successful insurance operator, and with success it morphed into a massive carry business: borrowing a lot of money at one price and investing it at another price. AIG was a big operator that was a lot like GE Credit. We never owned either because even the best and wisest people make us nervous in great big credit operations with swollen balance sheets. It just makes me nervous, that many people borrowing so many billions.

As you can tell in our operations, we are much more conservative. We borrow less, on more favorable terms. We’re happier with less leverage. They’ve been successful, but we’re too chicken to join them. You could argue that we’ve been wrong, and that it’s cost us a fortune, but that doesn’t bother us. Missing out on some opportunity never bothers us. What’s wrong with someone getting a little richer than you? It’s crazy to
worry about this.

There’s a lot of leverage in those carry-trade games. Other people are more certain than I am that aircraft can always be leased.
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cubsfan

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Re: GE - General Electric
« Reply #25 on: May 21, 2013, 01:29:42 PM »
the finance business would be toast if it was not for US Government bailout, and Buffett bailout. It was insolvent. Buffett likes Immelt. Hates GE Capital, apparently.

I just came across this quote from Munger from 2005's Wesco's meeting notes:


AIG, GE Credit and the Risks of the Carry Trade

That said, it’s a lot like GE. It is a fabulously successful insurance operator, and with success it morphed into a massive carry business: borrowing a lot of money at one price and investing it at another price. AIG was a big operator that was a lot like GE Credit. We never owned either because even the best and wisest people make us nervous in great big credit operations with swollen balance sheets. It just makes me nervous, that many people borrowing so many billions.

As you can tell in our operations, we are much more conservative. We borrow less, on more favorable terms. We’re happier with less leverage. They’ve been successful, but we’re too chicken to join them. You could argue that we’ve been wrong, and that it’s cost us a fortune, but that doesn’t bother us. Missing out on some opportunity never bothers us. What’s wrong with someone getting a little richer than you? It’s crazy to
worry about this.

There’s a lot of leverage in those carry-trade games. Other people are more certain than I am that aircraft can always be leased.

Boy the more I read historical stuff like this from Munger, the more he looks like a genius.

fareastwarriors

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Re: GE - General Electric
« Reply #26 on: May 22, 2013, 11:26:42 AM »

fareastwarriors

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Re: GE - General Electric
« Reply #27 on: May 31, 2013, 09:09:03 AM »
http://online.wsj.com/article/SB10001424127887323728204578517072303927436.html?mod=WSJ_business_whatsNews

GE Capital Agrees to Sell $1.36 Billion in Assets .


General Electric Co.'s GE +0.30%financial business has agreed to sell an $807 million portfolio of properties to American Realty Capital Properties Inc. ARCP -2.57%just days after Chief Executive Jeff Immelt said the company is examining a range of strategic options for parts of GE Capital.

GE Capital also agreed to sell its Canadian vehicle-fleet portfolio to Element Financial Corp. EFN.T +2.23%for about $552 million. It agreed to form an alliance with Element Financial to deliver fleet financing and management services to cross-border customers in Canada and the U.S.


wellmont

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Re: GE - General Electric
« Reply #28 on: May 31, 2013, 09:21:57 AM »
immelt does not want to go into the next crisis levered like he did the last one.

fareastwarriors

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Re: GE - General Electric
« Reply #29 on: June 04, 2013, 03:31:16 PM »