Today has been one of the best days that I have had in the market for quite some time. It kind of started on Thursday, but Friday proved to be a day that I will remember for quite a long time.
I guess anyone who is reading this and knows a little about me already knows where I am heading. So, here it goes. I have been betting that GE will be a turnaround play for quite some time.
My investment in GE goes back over a decade to about 2005. I can remember that year quite well because that was the year of Katrina. Everyone who was touched by that hurricane kind of labels everything before or after Katrina. At any rate, that is when I really started to trade GE. At first, I did not go full force into GE. I bought in and sold for a while and turned nice profits. Then around 2008, I started to decide to collect the dividend and allow it to reinvest and grow. Soon after that, the bottom fell out. It fell really fast. I held all the way down to the bottom, like I did with Cutter and Buck at the turn of the 21st Century. However, I chose not to buy more as it fell, because it could conceivably fall to naught. I really did not want more exposure. In hindsight, buying on that day the stock bottomed around $6.00 was a truly missed opportunity. However, who has a crystal ball?
As soon as the stock and the market stabilized, I decided to bet on a turnaround. So, I went headlong into GE, and over the last 7 years, it has steadily moved higher except for the last 2 year period—–Until today! Today, GE posted a 10.8% gain- added to the almost 3% gain from Thursday. All told, GE gained 13.99% in 2 days. Not only was that a fantastic gain, but it also put GE at a multi-year high. The stock also broke out of its downward trading range. That is a nice list of accomplishments. Who knows how long this uptrend will last, but today was a banner day in Dividenddreamer’s investment history.
Well, all of this is well and good, however, I want to see the money. I hear about buybacks and asset sales and dividends and all of these numbers are in the billions! They say that the deal will return 90 billion to shareholders. I seem to remember the Synchrony deal returning 30-40 some odd billion, but have yet to see any of it.
When I hear that we, as shareholders, should see 35 billion in dividends, my mind wants to think that should be in addition to the dividend we already receive. If the deal will take 2 years, we should be getting about 18 or more billion either way. I hope they are not counting our current dividend along with the new numbers because that is kind of misleading. So, it seems that the shareholders should see some real dividend growth or a special dividend on top of the quarterly dividend. At least that is how I see it. It would be nice to have it spelled out in real terms and not just a bunch of billion dollar numbers that are more vague than a closeup of any Monet.
I would like to be told that shareholders are currently receiving $.92 per share and if everything goes well, we should see $3.00-$4.00 per share in the next 2-3 years in addition to the current dividend. I hope it is in addition to the current dividend, but it probably will just be our payout as usual except larger over the next few years. I have received a special dividend before, and it just lowered the stock price by that same amount. So, I hope that is how it will go.
At the same time, GE will have tons of cash, and if they buy the shares back after giving us the special dividend, the company can purchase a massive amount of shares back at a discount of the dividend- I think? That buying pressure should push the price higher, so it is a potential win-win for shareholders. I normally hate buybacks! I have stated that before. However, if GE reduces the share price by a special dividend, then repurchases a massive $50 billion worth of shares, the stock price could be pressured to the upside. They could conceivably quell any selling pressure and stabilize any downward movement with such a massive amount cash. Also, any shorts should see pressure to close out their position and push the price even higher.
I feel that the tide has turned. The investors are getting what they want. GE is going back to its roots. The banking and financing pieces of the puzzle are going to be eliminated. Once all of these things are accomplished and Alstom is settled, GE should see a P/E deserving of a true industrial company. GE is positioning itself to be the number one industrial company in the world- bar none.
All of this is well and good, but as the title of this post states…..Show me the money!! I like hearing about billions and all that, but that is just talk…..Talk is cheap! I want to see cash in my account. I want to see the stock price appreciate (like today) over time. This is what every shareholder wants from his or her investment, and the time to pay up has come.
GE is a huge beast. It will continue to be a huge beast. Once GE Capital is cleaved, GE
will be a lean mean industrial machine. That is pretty much a given. If Jeff Immelt can execute his plan, we may see one of the greatest turnaround stories ever written. I hope he can accomplish the goals of the company and reward not only the employees but the long term shareholders and current investors as well. I am going to enjoy the events of the past few days and bask in the sunlight they have brought forth. We, as shareholders, should embrace change and know that the events of the past should not hinder GE from reaping rewards in the future. It is not about getting knocked down, it is about getting back up. Today, GE is standing tall!! It sure feels great.
Robert the DividendDreamer