Insiders Buying at General Electric (GE)

GEEarlier today it was reported that there had been some significant insider buying at General Electric (GE). The buying comes on the heels of the blue chip company slashing its dividend on Friday in order to cushion further losses on its balance sheet. CEO Jeffery Immelt as well as Vice Chairman Michael Neal both bought 50,000 share lots. Mr. Neal is in charge of the GE Capital division that has been the major drag on earnings and still has a lot of uncertainty surrounding it. Michael Neal and Jeff Immelt should have more knowledge about what is going on at GE than anyone else. I am sure that it is hoped by Immelt and crew that this large purchase by Mr. Neal would be a signal to the marketplace that all is well. The other buyer was Director Ralph Larsen, who purchased 30,000 shares. CNBC (owned by GE) announced what was going on with GE today on its Closing Bell program:

“About midday we had headlines crossing that chairman Jeff Immelt along with Vice Chairman, who runs GE Capital, came out and bought a combined 100,000 that hasn’t done much for the stock. And in another piece of bad news, the credit default swaps on five-year notes for GE Capital, the finance arm, actually are now trading on an up-front basis meaning if you’re going to insure $10 million worth of these notes you’re going to have to first of all pay the insurer $850,000 up front in addition to a $500,000 annual fee. Basically reflecting the concerns about the risk of GE.”

However, this insider buying was not regarded as a vote of confidence in GE that Immelt and company had hoped, or perhaps it was simply overshadowed by the credit issues also announced today. Shares were down more than 10% today and are trading around a 15 year low. Immelt must be feeling powerless in this situation as he has not only cut the dividend, but also put more of his own money on the line. As his former boss, Jack Welch said, he has a credibility issue, as he has been behind the curve on so many issues recently. At this point, he is the captain of a rudderless ship.

Insiders Buying at GE

About Ockham Research 645 Articles

Ockham Research is an independent equity research provider based in Atlanta, Georgia. Security analysis at Ockham Research is based upon the principle known as Ockham's Razor, named for the 14th- century Franciscan friar, William of Ockham. The principle states that a useful theory should utilize as few elements as possible, because efficiency is valuable. In this spirit, our goal is to make the investing environment as simple and understandable as possible, yet no simpler than is necessary.

We utilize this straightforward approach to value over 5500 securities, with key emphasis given to the study of individual securities' price-to-sales, price-to-cash earnings and other historical valuation ranges. Our long term value investing methodology is powered by the teachings of Ben Graham and it has proven to be very adept at identifying stock prices that are out of line with fundamental factors.

Ockham Research provides its research in a variety of forms and products including our company specific reports, portfolio analytics tools, newsletters, and blog posts. We also offer a white labeling research solution that can give any financial services firm their own research presence without the time and cost associated with building such a robust coverage universe of their own.

Be the first to comment

Leave a Reply

Your email address will not be published.