General Electric Company (GE)
General Electric Company (GE) is certainly a very well recognized name here in the U.S., but did you know that they’re involved in technology, media, and financial services company on a worldwide basis? How worldwide? Well, it’s probably best if you just check out the GE Worldwide web page (but you might want to refill your coffee before you start).
Their technology portfolio includes products related to aviation, energy, healthcare, transportation, and water. From their TV commercials alone we all know that they are repositioning themselves to profit from a move towards “green” and sustainable living. While the short-term situation is unsettling, I expect GE to do well in these areas eventually.
I even expect their consumer products and entertainment divisions to do well. I think it’s important to keep in mind that GE has been around since 1892 and has a history of remaking itself to suit the times. So with a current indicated dividend of 8.9%, what’s not to love?
Here’s the problem–I don’t know. Between its Aviation Financial Services and GE Capital, GE is heavily into financial services. Now I’m not screaming “the end is near!,” or stocking up heavily in canned goods, but I AM leery of financial services. My best investment in 2008 was the one I didn’t make in Allied Irish Banks (AIB). I followed it from around $50 a share down to $1.47.
My worst loss last year was Thornburg Mortgage. I had about $5,000 invested and sold it for enough to buy dinner and drinks (not too many drinks) at Don Pablo’s.
What do I make of all this? We (or at least I) don’t really know what to believe about many companies involved in financial services. How leveraged are they? What is their exposure to derivatives? Ask the same questions about every major borrower they serve. Finally, figure out when our credit markets will “unfreeze.”
And when you figure that out, please give me a call.
PS My fears aside, I do recommend their factsheet and why invest pages if you’re interested. Also, you can get another take on GE here.