Possibly, but I think he’d go straight common equity. The credit risk is not so bad to require the layer of protection and BRK is sitting on a record cash heap. They could literally buy the entirety of GE out of YE cash on hand and still have $214B of untouched marketable securities left over. So I think what they’re most interested in is a large marquee asset they can put a ton of cash into at a great valuation…
Aviation comes to mind…
I’m not sure GE would part with aviation yet unless they pursue a full break up.
i dont think he will buy the entire company. he likes well run businesses that he doesnt need to worry about. the current management is still a big questions mark and i dont think he trusts these guys yet.
buffett likes his margin of safety and who knows what risks he sees in GE so preferreds are not a bad idea.
maybe he feels like gambling at his old age LOL
Or he’s senile, which is what you would have to be to invest in GE at this point.
Lol, nah.
Todd Combs (who’s running BRK’s book) made his name running a hedge fund that specializes in financials and is known for preferring to go after complex firms and “tearing apart the accounting”. If anyone felt comfortable stepping in it would be that Combs. The current management team has been stellar and has a track record. Buffett has a track record of being willing to step into financials that are experiencing moments of crisis specifically for this reason. Beyond that you have an energy and turbine business that fits in well with the massive BRK energy entity, GE aerospace that fits in fantastically with PCP and a blue chip healthcare brand. The financial arm has huge synergies for them because they are uniquely positioned to manage it, can fire the existing financial staff if they wish for cost and the aircraft leasing portfolio could be a real asset within BRK. People are also ignoring the fact that BRK owned GE as recently as 2017, sold at $30 (demonstrating a handle on the business, see Combs fingerprints on that one) and as recently as a few months ago Buffett said he’d be interested again at the right price.
People saying you need to be crazy to touch names honestly shouldn’t be confused with professional investors. A great investor once said, “Be greedy when others’ are fearful.” This is vintage Buffett for anyone who’s analyzed his past moves beyond an undergrad case study.
He wouldn’t buy the preferred over the common here because in this case I honestly think if he wasn’t confident enough to buy the common he wouldn’t bother going in.
He’s got a lot of money to put to work and this is honestly a very attractive company.
he did buy teva but ppl are saying it wasnt him decision lol
Haha I was just kidding. I know next to nothing about GE and have no opinion on if this is a good entry point.
Fair enough my bad.
mortgage insurers getting crushed
i saw that interview you referenced. i think he said something alogn the lines that during the great recession, he bought ge because the credit crunch was a temporary issue holding it back.
the issue now is that ge hasnt been growing despite the fact that everyone else is growing. this is no longer a temp issue.
also i recall that he emphasized that he would only buy certain parts of GE. so i do not think he would buy ge stock.
here it is an article about iot:
How do you figure? The reason they haven’t been growing is because their two biggest segments are power turbines and O&G, both of which are in secular decline. Siemens (the other larger player) is seeing the same results in their power generation unit, although that unit is a smaller part of the company’s portfolio. BHGE is also recovering with the steadying deepwater and LNG markets. Every big name in those spaces has seen the same issues BHGE has. So to say they haven’t been growing while everyone else is is false when you go on a sector by sector basis. The healthcare has performed well and they’re killing it in aerospace. Within insurance LTCA were an issue they’ve now addressed, but that was an industry wide issue in the insurance space (which Buffett acknowledged). I would not count out any action by Buffett at this stage. Yes, credit was an issue for GE finance during the crisis and now energy exposure is an issue during a cyclical low in power turbines and a recovering O&G cycle. All the more reason to invest.
i think floor might be in. thoughts?
(Reuters) - General Electric Co (GE.N) posted quarterly results that topped expectations on Friday, as earnings from aviation, healthcare and transportation offset weak power and oil-and-gas profits, sending shares sharply higher in premarket trading.
GE also affirmed its forecast for 2018 earnings and cash flow, and said it expects to book as much as $10 billion in proceeds from divesting industrial assets this year. Those comments eased concern that GE would post poor results.
“This news alone should fuel a relief rally,” Deane Dray, analyst at RBC Capital Markets, wrote in a research note.
GE earned an adjusted 16 cents per share, up from a restated 14 cents a share a year earlier. Analysts on average had expected 11 cents a share, according to Thomson Reuters I/B/E/S. GE recently restated 2017 results to reflect changes in accounting standards.
“It’s an apples-to-apples, 5-cent beat,” said Scott Davis, analyst and chief executive at Melius Research in New York, noting that the figure excludes restructuring costs of about 5 cents a share.
https://finance.yahoo.com/news/ges-profit-continuing-operations-surges-104321862.html
Supervalu (SVU)
Their wholesale segment outperformed. This segment is 80% of sales. The 2 acquisitions for the wholesale division are going better than expected and the synergies from one of the the acquisitions has been raised to $80MM from $60MM.
Their retail segment has been holding down their profitability but is finally beginning to show improvement. In the earnings call yesterday, management announced they will be selling off it’s unprofitable Shop 'n Save retail businesses. They have entered in to a definitive leaseback agreement which will be bring in $450MM that will be used to deleverage. There is a strong push to turn around the retail segment.
Management is putting more focus on improving online business, and has been ramping up its delivery service. SVU recently got a contract with Instacart to provide store coupons and loyalty rewards on it’s e-commerce sites.
Reason’s the price target may not be achieved:
- Retail has caused SVU’s shares to plunge due to stiff competition. This led to retail stores being sold
- Declining gross margin
- Strong competition
Adding First Quantum (FM CN) from Toronto Exchange.
^ can’t name individual stocks but am adding base metals at this point. chinese fiscal stimulus coming if tariffs are a go. china is going to run hot before it fizzles. still somewhat bearish on commodities but can pick up certain junior miners for less than cash and huge optionality if china ramps up infrastructure capex to battle short-term decline in services exports.
Here’s my game plan in my personal account. I try to focus on value. Keeping an eye on Southwest Airlines. BRK already has a position (and given Buffet’s recent talks, they could add more). It’s taken a beating from reduced RASM forecasts, and recent accidents. I added GE at $14 last month. Holding.
I made some ballsy (in highsight, felt stupid at the time) picks on Macy’s at $20 in 2017 and RDS-A at $52 in 2016. Both rallied hard and have good yield. Holding both. The Iran news helped RDS-A. I’m also holding around 20% in cash, and 10% for volatility speculation (pre-earnings straddles). 401-K is 100% in a TRP mutual fund. Not touching that with a 10 foot pole for the next 30 years.
luv looks promising. but again this shit is cyclical. when oil prices rise, i feel they will get creamed! but who knows really. the airline industry has consistently increased their profitability this cycle and it looks like perhaps the next airline downturn wont be so bad as the 07 08. plus this company isnt really levered.
no luv for ge for me. i dont like turnarounds with a ton of debt. the old adage, fool me once, shame on you, fool me twice, cant get fooled again. verbatim:
“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”
not a fan of rds.a or energy cos in particular. i think from a cyclical standpoint they will kill it just cuz oil price will rise. but imo, their profits will have a long term secular decline, its also too capex intensive! the lowest cost producer will ipo soon. so depending on whether they want to focus on profitability , or draining their swamp that may have less value in the future will be key! rising oil prices is a terrific indicator when shit will BURNNNNN!!!
about 15% of my net worth is in liquid cash. but this cash is actually borrowed money. so im levered with cash on hand. im paying prolly 2% net for the privilege. should markets tank. im good for a year maybe 3 if i cut my expenses a lot. if i lose my job, it gets real interesting cuz i have maxed out a loan from my 401k. ill have to take money out from my roth unless i can call in some loans or borrow money from my uber rich aunt.
After today’s earnings, I’m a bit puzzled with Macy’s. What started with an oversold value play is turning into one of my best picks. Same store sales have done fine. They’re improving their online presence. Good dividend. Still cheap by current overall market valuation. It’s a cash cow with excellent real estate assets in prime locations. Still holding. I live pretty close to a Macy’s mall and it’s always packed (what kind of got me interested in researching the company in the first place). Even with Amazon and online shopping, I think people still like the tangible nature of shopping at a store.