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General Electric: It Ain't Goin' Be Easy

December 14, 2018

Summary:

- General Electric needs to show some serious progress in its restructuring efforts, but a real turnaround is not going to be easy.

- However, I believe that General Electric's management team has levers to pull that should allow them to focus on the top risk factor (i.e., financial leverage).

- I am long General Electric and I plan to stay long.

 

2018 will be a year that General Electric ($GE) and its shareholders will want to forget about. The company's stock started the year in the $17 per share range but GE shares are now sitting below $7, which are prices not seen since the Financial Crisis.

 

This storied company's stock is down big over the last 11 plus months and this is after it finished down by approximately 45% in 2017. I have been asked a lot lately about what I plan to do with my GE shares and my answer has been consistent - i.e., I plan to stay long (and wrong, at least for now). My thoughts on this company/stock have not changed to this day, but it's important to remember, it is not going to be easy for Mr. Larry Culp, CEO, to orchestrate a true turnaround of this hodgepodge of a company. Therefore, investors should obviously still view this once great company as a high risk/high reward investment.

 

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