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I am sure there are some, but I think that the knife needs to fall to single digits before I think about trying to catch it. Need to see some downwards resistance build.
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I am sure there are some, but I think that the knife needs to fall to single digits before I think about trying to catch it. Need to see some downwards resistance build.

I haven’t pulled the trigger yet. I saw a story today that GE could potentially be removed from Dow Jones Industrial Average. Such a removal would really have a negative impact on share pricing methinks. Waiting to see how that shakes out.
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Remember all the pumping a couple weeks ago about how GE could spin off divisions to "increase shareholder value"?

Steve
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Remember all the pumping a couple weeks ago about how GE could spin off divisions to "increase shareholder value"?

Steve


That was a distraction to lessen the attention of a $6 billion charge attributed the LTC insurance they are running off the books.

Flannery is a bean counter. He’ll sell off low profit divisions-locomotives, light bulbs, appliance. Then squeeze spending. He’s grounded the corporate jets. Hee, i bet that has cheesed off the execs. I wonder if he go so far as to sell the jet fleet?
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You'd have to be mentally ill to buy it at this price. If they kick it out of the Dow the next thing you hear will be the swirls as it goes down the toilet.
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You'd have to be mentally ill to buy it at this price. If they kick it out of the Dow the next thing you hear will be the swirls as it goes down the toilet.

Then it becomes a “cigar butt” stock. Money to be made.

http://www.valuewalk.com/walter-schloss/
Schloss bought many companies that Buffett would have described as “cigar-butt” companies. Similar to Graham, Schloss sought to acquire as many companies trading at a 1/3 net working capital as possible.

From 1955 to 2002, by Schloss’ estimate, his investments returned 16% per annum on average after fees, compared with 10% for the S&P 500 over the period.
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Remember all the pumping a couple weeks ago about how GE could spin off divisions to "increase shareholder value"?

Yep. I bought some shares on speculation that very day at something like $18 per share.

Within a couple of days, I realized my mistake and closed out the position at $17 and change.

Of course, I also bought BABA on the same day. So far, that seems to have been a good decision. However, Alibaba is still a bit scary to me because of periodic stories about people selling counterfeit designer goods on Alibaba.

I bought BABA shortly after its IPO at around $101 per share. Then, it promptly fell to around $70 per share and stayed there a long time. I put in a standing order to close that position if it ever got back to breakeven, which it eventually did.

If I had held onto those BABA shares, I could have realized some serious gains. Last time I checked, BABA was trading in the $180 range.

Mr. CheeryO and a few other folks were much smarter and held onto their BABA long after it rose back above whatever they paid for it.

I don't do as well with individual stocks as I do with ETFs. That's why 90% of my investments are in ETFs, rather than in indivual stocks.

Live and learn... very slowly learn for some of us.
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Live and learn... very slowly learn for some of us.

GE https://invest.kleinnet.com/bmw1/stats40/GE.html

Wait for a single digit cigar butt, six to eight dollars? GE was over-financial-engineered and is now still (again?) paying the price.

The Captain
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Wait for a single digit cigar butt, six to eight dollars? GE was over-financial-engineered and is now still (again?) paying the price.

Don't dismiss the possibility of a bankruptcy of convenience to dump their $30B unfunded pension liability, and render the common holders collateral damage.

Steve
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dump their $30B unfunded pension liability

That's the shoe I've been waiting to hear thump to the floor.


david fb
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Don't dismiss the possibility of a bankruptcy of convenience to dump their $30B unfunded pension liability, and render the common holders collateral damage.

Steve


GE isn’t over leveraged. And 50% of Flannery’s paid is GE stock. A turn around will make him even richer. GE is super tanker size. Changing course will take awhile. Short term the momentum is downward though. A 20% general market decline could create a huge down draft. If that happens, i’d Keep an eye on whether Buffett would come to the rescue again.

Uncle Warren talks a little bit about GE:https://www.cnbc.com/video/2018/01/10/warren-buffett-wed-buy...
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Uncle Warren


My guess is that Buffett would have GE create him some sort of sweetheart deal where he gets warrants or other convertible securities so that he is not a common stock holder. I don't see him coming in at $6 a share and buying a bunch like the rest of us small time investors would have to do.
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Don't dismiss the possibility of a bankruptcy of convenience to dump their $30B unfunded pension liability, and render the common holders collateral damage.

My brain isn't wired to think that negatively but it is a possibility. Don't buy on the way down, wait for a bottom to form and an uptrend breakout. Six to eight is what the chart says looks likely.

The Captain
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I don't see him coming in at $6 a share and buying a bunch like the rest of us small time investors would have to do.

This is not an area or company I know well, but couldn't we pick up some preferred shares when it drops like a rock? Aren't those paid out if it folds? The upside wouldn't be as much but you wouldn't lose everything. It looks like GE has a few preferred options.

http://www.quantumonline.com/ParentCoSearch.cfm?tickersymbol...

That said I can't seem to find them on Google finance, but I'm probably looking in the wrong spot.

Simon (please excuse my ignorance)
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My brain isn't wired to think that negatively

Remember Frank Lorenzo? iirc he took Texas Air BK twice, so he could tear up union contracts and dump the pension obligations. He also took Continental and Eastern BK. iirc he had already stripped Eastern of assets so had no interest other than stiffing creditors.

There are some other well known money operators in the US to whom going bankrupt is simply a business strategy.

Taking GE BK would be a hard sell, right now. Net tangible assets are at -$32B and falling fast, but equity is still a positive $76B. The "job creator class" would have to do some fancy bookkeeping to blow through that much equity so they could make a case their $30B pension liability is "impossible".

Steve
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Preferreds, sort of:

GEB
GEH
GEK

Not much under par at this point from my understanding, or at least not enough to interest me.

This site has a good review:

http://www.quantumonline.com/ParentCoSearch.cfm?tickersymbol...

Most of them are retired and signified by an *.
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GE isn’t over leveraged.

True, GE hasn't burned through all it's equity, like Boeing has.

And 50% of Flannery’s paid is GE stock.

As we saw in 08-09, the "job creator class" always seems to get it's stock options repriced, or replaced, or rejiggered, so they still make their 8 figure compensation.

Steve
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Not much under par at this point from my understanding, or at least not enough to interest me.

Thing about preferred: they may pay dividends when the common doesn't, or they may be "cumulative" so if the dividends are suspended, you would receive the suspended dividends if payment is resumed. But preferred has no fixed claim on assets like a bond. If a company goes BK, the preferred guys have only a slightly better chance of getting anything that the common guys.

Steve
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I know well, but couldn't we pick up some preferred shares when it drops like a rock? Aren't those paid out if it folds?

Buffett has a history of demanding special issues that are made only available to him and his company. In other words, GE would create a special security that you and I simply cannot buy.

Such is why I often poo poo comments by people suggesting that you can invest like Buffett or that we should do as he does. No one can invest like he does.

Like this one:

Buffett's Berkshire invests $5B in Goldman
http://money.cnn.com/2008/09/23/news/companies/goldman_berks...

In its first big move to raise capital, Goldman Sachs Group announced Tuesday that it will receive a $5 billion infusion from Warren Buffett's Berkshire Hathaway, an investment that could also raise confidence in the venerable Wall Street firm and the financial markets in general.

The firm also increased its common stock offering Wednesday to $5 billion at $123 a share, an increase from the original $2.5 billion offering announced Tuesday evening.

Goldman (GS, Fortune 500) will sell $5 billion of preferred stock to the insurance and investment giant, which will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, the company said. Berkshire (BRKA, Fortune 500) has five years to exercise the warrants. Buffett will be paid a 10% dividend on his shares.

Goldman shares rose 3.5% to about $129 in midday trading Wednesday.


Preferred with a 10% div and warrants with a strike price that is already $14 in the money.

Any individual investor ever get such a nice deal - and at the expense of existing common stock holders?
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Thing about preferred: they may pay dividends when the common doesn't, or they may be "cumulative" so if the dividends are suspended, you would receive the suspended dividends if payment is resumed. But preferred has no fixed claim on assets like a bond. If a company goes BK, the preferred guys have only a slightly better chance of getting anything that the common guys.

From what I can see with the GE preferreds (anyone please correct me if I am wrong), it looks like they are not convertibles. They really are just like bonds. They are just ahead off the common stock in line, but still behind any traditional bonds.

I really do not think that they are Preferred in the traditional sense. They are just all that I could find with GE.

Regardless, they are not of interest to me at the current prices. By the way, the website that I referenced previously indicates that GEK is "unsecured and unsubordinated obligations of the company and will rank equally with all existing and future unsecured and unsubordinated indebtedness of the company."
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Remember Frank Lorenzo? iirc he took Texas Air BK twice, so he could tear up union contracts and dump the pension obligations. He also took Continental and Eastern BK. iirc he had already stripped Eastern of assets so had no interest other than stiffing creditors.

Continental went bankrupt (at least) twice. My cousin used to work there and lost his job. When they emerged from bankruptcy they wanted to hire him back at half pay. By then he had set himself up in business renting apartments in LA. He has been independent and prosperous ever since.

The Captain
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He has been independent and prosperous ever since.

Good for him. iirc, Lorenzo tried to get a license to start up another airline after destroying all the line he had previously controlled. The DOT rejected his application, saying his track record shows he isn't fit to run an airline.

ah...the net is a wonderful thing.

April 6, 1994
COMPANY NEWS; Lorenzo Plan For Airline Is Rejected

In a rarely used legal proceeding, the agency passed the case to an administrative law judge, who issued his recommendation last December to deny Mr. Lorenzo's application. The Department of Transportation issued its final ruling yesterday.

The agency said both Eastern Airlines and Continental Airlines, while they were owned by Texas Air and controlled by Mr. Lorenzo, "experienced operational, maintenance and labor-related problems that were among the most serious in the history of U.S. aviation."

These problems, including repeatedly failing to prevent and correct maintenance problems that compromised safety, "resulted in an extraordinary level of Federal oversight to ensure the public's protection," it added.


http://www.nytimes.com/1994/04/06/business/company-news-lore...

Steve
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When they emerged from bankruptcy they wanted to hire him back at half pay. By then he had set himself up in business renting apartments in LA. He has been independent and prosperous ever since.

Similar thing happened to my wife.

I'd gone from running a weekend flea market stand to quitting my day job and opening a brick and mortar store store while my wife continued to work at a clothing factory.

Then the factory moved her job along with the jobs of dozens of her fellow workers down into Mexico and laid them all off.

He who hesitates is lost and I didn't dither. I set her up in my 'old' store and opened another 'new' store a few blocks away.

Later, when the Mexican Venture failed the factory came around asking her to come back.

By then she'd had a couple of months of watching a small portable TV when there were no customers in the store, a small kitchen where she made coffee and lunch and being her own boss.

She told'ed not only no, but Hell NO!
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She told'ed not only no, but Hell NO!

Dave, the path to financial happiness is:

0. Get a job
1. Get rid of your boss
2. Get rid of your partners
3. Get rid of your employees
4. Get rid of your customers!

Think of your portfolio as your mini-conglomerate.

The Captain
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