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Wednesday, 07/23/08
Posted 07/23/08, 11:03
pm ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Wednesday, 07/23/08 |
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Dow Jones: |
11,632 |
+ 29 |
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NASDAQ: |
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2,325 |
+ 21 |
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S&P 500: |
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1,282 |
+ 5 |
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Opening Segment 1
Title: |
'Imagination at
Work' |
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. . . .
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Featured Stock(s): |
General Electric (GE)
See GE's official
website
here.
See the Yahoo!
Finance profile for
GE
here.
See Opening Segment 2,
below...
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After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC: So
I'm sitting around over
the weekend, reading this
weeks' BusinessWeek, and I
come across this hugely
bearish article about my
boss' boss' boss, Jeff
Immelt, I may have been
missing a boss there...
The CEO of
General Electric (GE),
which owns this network,
and I came to this
paragraph... I'm going to
read it verbatum, because
it got me thinking real
hard... Quote: "Even with
the disposal of insurance,
the reality is that GE
remains a company that's
far more exposed to
financial services than
many investors would
like."
Back in 2001, when GE
Capital made up to 40% of
the company's net income,
the argument continues,
Sherin said he wouldn't
want that ratio to go
above 45%, at least for a
few years. Now those
businesses are roughly
half the net, financial
services, scary... I put
the magazine down... I
said, there you go, that's
it... Ah, hah, that's why
GE is being punished...
It's a hidden financial...
Sure enough, in the time
that it took to write the
article, presumably early
last week, through today,
we have seen almost all of
the financials going from
this to this... From sell,
sell, sell, to buy, buy,
buy... 50%, 60%, 70% up...
And in some cases,
Wachovia 100% up... Far
worse companies than GE
when it comes to balance
sheet or lending... And at
the same time, GE, it's
done next to nothing...
Despite it being,
according to BusinessWeek,
far more exposed to
financial services than
many investors would
like...
Now, wait a minute... It's
illogical Mr. Spock... You
can't be darned if you do
and darned if you don't...
If you die by the
financial sword, you
should live by the
financial sword... I say
live long and prosper, buy
some GE... Bussiness
people want to point out
that GE lost a billion
dollars, whoa, a billion
dollars, in subprime from
WMC mortgage before
selling it last year...
Horrors, a billion... Hey,
come on... The vast
majority of banks would
have killed to lose that
little, killed... And it
got rid of it almost a
year ago... And do you
think you could sell WMC
mortgage now or any other
subprime unit?... You'd
have to pay another
company to take it off
your hands...
As one analyst covering
GE's actually and truly
better than expected
second quarter wrote last
week, here's one...
Talking about darting with
faint praise, there is a
pervasive "lack" of bad
news... GE beat the
estimates for heavens
sake... Can you name me
one financial that didn't
have a gigantic shortfall
relative to expectations
set just three months
ago... All of the others
were drastically reduced,
and the only other answer
is GE... For all of the
others, we're thrilled,
absolutely thrilled if
they only lost $6 billion,
instead of $8 billion...
GE, again, made money...
$5.4 billion for the
quarter, to be precise...
It's planning to sell its
weakest business to
consumer and industrial
segment, we spun off the
share holders next year...
So the worst area will be
gone...
That leaves GE with some
really strong
businesses... Like
infrastructure, other
infra plays during this
whole period are up
huge... How about the year
over year FLR, up 36%...
JEC up 24%... ABB, really
comperable, up 17%... GE
is down 28%... Not
logical... GE is also the
biggest wind player... We
don't talk about it
because it's such a small
part of the business, but
it's the biggest and would
otherwise be in our
"WindEx"...
How about healthcare?...
We love healthcare stocks
on Mad Money... We're
supposed to hate GE
because it has a
healthcare business?...
While everyone else is
stuck in poorly performing
consumer finance
businesses, GE is dumping
theirs at what I think is
going to be a great
price... I think the
remaining GE will dominate
all the rest of lease
finance... It's
competitors like CIT are
being left in the dust...
And it has what it appears
to be a fortress of a
balance sheet... Yeah, I
should have included it in
the fortress four banks,
making them the fortress
five, as GE's balance
sheet looks better than
WFC's, JPM's, BAC's and
USB's... Those guys look
like the Ford and DMV in
food compared to GE... The
only other financial name
that hasn't moved is
Washington Mutual... And
that's run by General
Custer... I mean, that's
run by General Kerry
Killinger, a true Mad
Money
Wall of Shamer, if
there ever were one... GE
is the center rower, you
know we like these with
50% of sales from
international, merging
markets, rose 20% for the
second quarter, but it
seems like nobody cares...
Actually this is one of
those chances that for
each of the positives I
mention, you're supposed
to go "nobody cares"...
With a 4.5% yield among
the highest in the Dow
Jones average and repeat
after me, nobody cares...
After taxes, even after
Obama's taxes, I think you
have a winner...
Here's the most important
part...
People better start caring
because if the market
won't take GE up, the
Shaichs will do it... At
the exact bottom in the
1990 bank stock
cataclysim, a Saudi Prince
nobody had ever heard of,
bought a huge chunk of the
then lowed and despised
CitiGroup... That marked
the beginning of one of
the greatest runs I've
ever seen in my life...
Now GE is making a huge
deal with the Avudabi
state owned, Mubadala
development company... My
prediction... Just like we
all know now who Prince
Alaweed is, we'll remember
the name Mubadala after GE
recovers... This company
wants to be one of the top
ten share holders in GE...
You know how you get
that?... You gotta buy a
minimum of 125 million
shares... That's $3.4
billino dollars worth...
At these prices, well, I
don't know how it stays
here... Mubadala will be
there every day buying...
It's like there's a second
buy back to GE... For all
wee know, Mubadal
development could become
the biggest shareholder...
Who knows what kind of
firepower this sovereign
company has?... Back in
1990 when Prince Alaweed
bough his big stake in
Citigruop, nobody knew who
the heck he was...
Yesterday most people
said, who the heck is
Mubadala?... I don't want
to be as glib as I was in
1990, when I shouted to
Karen Cramer, then my
trading partner, who is
this clown prince, when it
hit hthe tape?... Well,
the answer was, the crown
prince, was the man who
called the bottom,
something I didn't realize
until the stock rallied
25%... We got this news
yesterday and everyone
yawned, who is this
Mubadala?... I'm saying
Yabba Dabba to Mubadala,
as in Yabba Dabba Doo...
. . . .
.
The Bottom Line!:
General Electric (GE)
got taken down along with the financials
because it's largely one of them... But
it hasn't rallied with the rest of the
group, even though it's the real fort
Knox to those zinderknuffs, which, as
much as I love the movie Bow Jest, was
in the end, over run... I think this
investment by Abu Dabi's Mubadala
development will be what puts in the
bottom, and starts sending these shares,
back, back up where they belong... And
until then, GE is paying 4.5% dividend
yield to wait... Hmm, I can't believe I
said all this about the company I work
for... But now I'm darn glad I did.
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
|

|
GE |
29.33 |
na |
General Electric (GE)
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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Most popular
investing books ordered:
(click any book to see at
Amazon.com) |
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Mutual-Fund-Holdings.com
NEW RESOURCE!
See Ken Heebner's CGM
Focus Fund
Top 25 holdings - The No.
3 Top-Performing Mutual
Fund in 2007
|
|
Opening Segment 2
Title: |
'CEO Interview'
Ronald M. Shaich, CEO |
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. . . .
. |
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