Tuesday, March 31, 2009

GE is a great investment...except...

I've got a lot of great investment ideas in which I'm just dying to go long (once we've come closer to a bottom in equities) but few would be as great as GE. That's really saying something, by the way, because I normally stay as far away as I can from large-cap companies because you're just not going to find a $50-$100 billion company that's going to annualize 25% per year like a $500 million company can. GE is perfectly positioned to lobby for massive "New New Deal" dollars and has the resources to innovate and become the market leader in everything from the Smart Grid to fuel-sipping jet engines and hybrid locomotives.

The problem is that I haven't a clue what is going on at GE Financial; and that is by design. That branch of the company has been among the most secretive operations you've been reading about, yet this one flies under the radar. I've believe they have been trying to obfuscate the numbers for the last 18 months, and their problems could even be big enough to drag the whole company under. I just don't know how bad the problems are, and for that reason I cannot invest in what should otherwise be the perfect investment at the perfect moment (recovery from recession with a New Deal being implemented).

For now, I'm going to keep GE on my watchlist and hope GE Financial resolves its problems (either by stealing taxpayer dollars like the other financials or by coming out of bankruptcy). I suppose a third option is to release intelligible financial statements showing things aren't that bad, but I'm counting on option 1 or 2.

1 comment:

Konrad said...

Sometimes, I just hate the gov. Well, let's see if this is near the top of a bull run in a bear market. I'm hoping some disappointing earnings will crush the enthusiasm and send it back down.