The September short interest in General Electric (NYSE: GE) fell 7.6 million shares to 59.7 million. The move is unusual because GE now trades near a multi-year high. It should not take more than a bit of bad news to push it down.
But, after over five years of under-performing the market after Jack Welch retired, GE shares are up 20% in the last year.
What happened? GE has been slowly dumping the dogs in its portfolio of companies. It has parted company with its plastics unit. There is also a feeling that the company has disclosed any mortgage problems in its loan portfolio, and that they are modest.
More important, though, the company has been on a multi-month investor relations drive to try to convince Wall St. that the company is worthy of a better valuation. It would appear, at the very least, that the company is considered a good place to invest when the financial markets are troubled.
GE is unlikely to convince skeptics that it is not in too many businesses. Almost no one can divine why the conglomerate owns NBC Universal. But, the performance of its infrastructure and industrial businesses appear to make up for that concern.
The firm's shares still lag the S&P by a bit on a five year measurement, and perhaps not as many investors are willing to gamble that the disparity will continue.
Douglas A. McIntyre is a partner at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-21-2007 @ 10:27AM
Bruce E Warnock said...
We are retired folks and we have watched our GE stock decline from $60 in the year 2000 when Jack Welch retired. It is hard to imagine how their Board of Directors has stuck with Jeff Immelt through all these years of underperformance. GE still has a long way to go just to return to where it once was when Welch was in charge.
A good start would be to separate the positions of CEO and Chairman of the Board and that would make management much more accountable to the shareholders. GE has refused to do this so far but many public companies are now moving that way.
GE is an outstanding company but its shareholders deserve better results. You refer to "dumping the dogs" and perhaps that might include the current CEO?
9-21-2007 @ 2:09PM
Tattletale said...
I agree with Bruce Warnock. He has it nailed. When your CEO is dragging his ass or if a cfo is spending too much of the shareholder monies.....dump him. Don't wait until you head south.
9-23-2007 @ 8:50PM
Mike Dunn said...
According to the financial times . com on tuesday sep 18 2007 12:56 The accounting treatment of the losses in japan and wmc the subprime business,forced GE to trim its full year earnings forcast to a range of $2.16-$2.21 per share from previous estiments. Now whats up with that may I ask? Could that change the shorts position?
Mike Dunn
Schenectady NY
9-24-2007 @ 3:52PM
Mike Dunn said...
I forgot to mention previously estimates were $2.18-$2.23
Mike Dunn
Schenectady NY