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General Electric: This Is What You Are Investing In

May 17, 2018

Summary Points: 

- I will describe the type of company that are currently investing in if you put money to work in General Electric.

- Several analysts have released bullish notes on General Electric over the last few weeks, so the tide may finally be turning.

- I plan to stay long General Electric's stock.

 

The great debate continues – that is, is General Electric ($GE) finally worthy of your investment dollars? My bullish thesis for this industrial conglomerate has already been well-documented here on Seeking Alpha but, to put it lightly, I have been proven dead wrong over the last 3 years.

 

Where did I get it wrong? Plenty of areas but, to start, I underestimated the impact of the headwinds that the Power division would have to contend with. In addition, the company’s stretched balance sheet turned out to be more than just a question mark, as GE’s credit rating has been downgraded several notches due to the company's worrisome financial position. Lastly, and most importantly, the company's aggressive accounting turned out to be a significant issue (the fraud word has slowly been creeping into the story), which resulted in a SEC investigation and a multi-billion dollar insurance charge.

 

Enough of the “what had happened was…” talk, in this article, I plan to describe the company, or should I say collection of assets and liabilities, that you are investing in if you put your hard earned dollars to work in GE.

 

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