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2018 Ideas

GE, HTZ (feel good about these two), CSTM (still developing view), probably need a chem name but none jumping to mind and KTOS (intriguing low conviction gamble).  Add X, NUE and AKS for good measure.

#FreeCVM #FreeTurd #2007-2017

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Also BHP and GLEN look nice (not great, but nice) as long term positions.

#FreeCVM #FreeTurd #2007-2017

Been watching HBI, may do something on this week on it.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

BS already own two of those names. But I’m liking what you cooking here 

trian owns ge. they got uber wrecked cuz of it. performance last year was like 3% so sad. peltz must be pissed

I love my cheese. I got to have my cheddar.

Nerdyblop wrote:

trian owns ge. they got uber wrecked cuz of it. performance last year was like 3% so sad. peltz must be pissed

Uber was doomed to fail long before Trian came along, they just didn’t know it yet.  Also, this is the definition of an abysmal analysis, your consistency is admirable.

#FreeCVM #FreeTurd #2007-2017

not uber the company. uber as an adjective. as in they got super wrecked, cuz trian owned it for a long time. im a man of many habits. lol. anyways none of them my type at first glance. best of luck on it though.

I love my cheese. I got to have my cheddar.

Claim: “as in they got super wrecked, cuz trian owned it for a long time”

Verdict: FALSE

Makes no sense.

Just because we can’t tell when twilight begins and ends doesn’t mean there isn’t day and night, and that these things aren’t important.

GE is the ultimate dog of the dow stock. either GE kills it or the dogs of the dow strategy is bunk.

I love my cheese. I got to have my cheddar.

I would not be surprised to see Glen take another shot at Rio this year.

#FreeCVM #FreeTurd #2007-2017

Nerdyblop wrote:

Them bricks is way too hot, you need to cut it
Your price is way too high, you need to cut it

chop it up and do an sotp. 

jokes and jokes. 

Clearly, brought to us by the beautiful mind that can’t figure out where to get a car body repaired after confirming Asian driving stereotypes.

#FreeCVM #FreeTurd #2007-2017

I’m on board BS. Big believer in a GE turnaround 

^respect

best argument for GE

actually yea if you can post your ge thesis. im slightly curious. i’ve read a bit about them.

I love my cheese. I got to have my cheddar.

GE does look interesting.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

^ GE sure is… last CEO was such a disgrace. 

So aside from looking at chart, what’s the story on GE?

At casual glance, they bought a ton of businesses, destroyed a lot of value, have their hands tied now, and are forced to divest. On the whole, looking in the last 5 years or so, all of GE is not making crazy amounts of cash flow and undervalued, at least not imo. Those 5 years are part of a strong bull market. If someone made the case that the company is too complex but making tons of cash, growing revs, and divesting will unlock value, that’s fine but doesn’t look like that’s what’s going on here. So they bought a lot of lines, over paid, stock gets crushed, but people are hoping that the stock got crushed worse than those businesses will go for in the market now?

If anything, the results we see today will likely get worse. Will morale remain in the lines of business when workers feel they may get laid off? Will buyers and suppliers want to provide/source produce from a line that is going through this? 

I’m not short by any means, no positions. But curious what someone buying this is expecting to happen.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

Slacked on HBI, up 5.5% since post, feel really stupid. Was trying to time it.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

the downside at this point with GE is larger than the upside. so many unknowns.

-more losses

-cooked books

-divesting assets

-crapy board

who knows what else is coming out in the future. GE at $10 is more interesting

"You want a quote? Haven’t I written enough already???"

RIP

GE could be split up and sold. Those sub divisions are probably more valuable as parts of other companies, since they don’t really have much to do with each other within GE. The stock could go up 50% one day. 

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Yep I’m with hpr. But I’ve read the stuff ohai posted too. Plus I know old people love that stock because it was the it stock of the day. Everybody wanted to work for ge. Not my thing. Not a fan of turnarounds. I like people who are always winning.

I love my cheese. I got to have my cheddar.

the previous ceo and board have to go to jail for what they did to the company. its  a disgrace.

"You want a quote? Haven’t I written enough already???"

RIP

igor555 wrote:

the previous ceo and board have to go to jail for what they did to the company. its  a disgrace.

Much like what nerdy does to this forum.

I like GE for a turnaround, but I want to know what they’re going to do about the pension issues. Plus I don’t think the stock has bottomed out yet. I’m still trying to time the market instead of DCAing, because these valuations give me indigestion.

RIP bchad - the long-winded peacemaker of AF

On a very high level, they have four major industrial businesses, healthcare (which is high performance asset), aerospace (another very high performance asset) and then the laggards: power and O&G (Baker Hughes).  Power is primarily driven by natural gas turbines used to make electricity, in which they are the largest player in the global market with the best product.  The issue here is that Siemens (the second largest player) recognized the market was headed towards cyclical oversupply in 2014 and backed off, while GE kept their foot on the gas and grew capacity.  They are now rectifying that through restructuring, this is a very solvable problem.  In O&G they merged into Baker Hughes at a bad time and while this problem will be harder to solve, the market is recovering conveniently for them when you look at any metric of E&P activity and I think a spin off or sale of those assets is a very likely outcome.

In finance, the non-core problem assets are and have been in run down and have now (post update) been completely reviewed by regulators, auditors, two sets of consultants and new management.

The books are not “cooked”, they had a small portion of LTCA written in I think the early 90’s that have been an industry wide issue.  40% of the portfolio began making payments in the last two years causing them to be reevaluated.  In 2 or 3Q they announced the review and gave a target number which was not excessively far off.  So this week’s number was telegraphed although somewhat higher and investor fatigue is definitely playing a role.  Which is exactly the time to move in.  Expect more clarity at earnings but we are very near a trough and end to downside catalysts at this point.

There are a lot of things to like on this one.  1)  The current CEO engineered a turnaround in healthcare at GE, taking it from their worst asset to a high performer, so he’s done this before within the organization and has great internal knowledge, as does the new CFO.  2)  You also have a beaten down valuation at a time when most portfolios are carrying too much valuation risk.  3) New management teams will invariably front load all of the pain to ease their benchmark.  Given that this has been a fresh team installed in 2017 and this latest write down was telegraphed from the onset, you have good peace of mind.  Personally, I’m waiting post YE17 earnings to jump in, but that’s me being conservative.  4)  This is a turn around of an A2 rated company so you have peace of mind around longevity and runway.  5)  Lastly, to the point of cash flows.  Looking at past 5 year FCF when this was building is cute but laughable.  You have one of the leading aerospace engine businesses heading into the biggest industry production ramp in history, a great healthcare unit with strong demographic support, a globally leading power asset which has already taken the worst of its restructuring charges (and China is developing natural gas capacity which may renew demand) and a finance unit that once shored up should resume upstreaming dividends although that is years out.  

Also, the board has been cleaned up.  I like a company like this in set and forget mode.  Buy GE now and let it sit for 20 years.

#FreeCVM #FreeTurd #2007-2017

A few other observations… over the last 5 years, revenues have slipped, operating income, EBITDA margin, Net income margin… cash balance.

We’re in times when buyback are at their highest and companies have good cash positions. Companies have had money to spend. They can be leading in this and that but why are margins slipping? Is this the case for their healthcare and aero competitors?

It’s not a one time thing, it’s across time. Those great businesses, cumulatively post up these numbers. If they can’t boost margins (or even hold them flat) in this environment, what’s it going to take?

I wonder who will be the buyer for Baker Hughes… Halliburton / Baker Hughes (a deal that probably would have resulted in synergies) was a **** show, with antitrust issues in both the U.S. and Europe. Don’t think Schlumberger or another OFS trying to get into that… Would some other conglomerate buy them or a PE and what type of price would they get for it? But yeah, maybe spin off… there’s been a few OFS ipo’s recently.

Unless they have some great stuff in the pipeline that I’m ignoring, I don’t get it.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

Well, with aerospace they were sinking the costs associated with R&D and ramp on engines and systems that will then go into 20 years of accretive production ramping now.  Looking through the broader A&D supply chain yes margins and cash have slumped leading into the next gen production ramp for these reasons.  Healthcare was turned around over that period.  As I pointed out, power was experiencing cyclical effects as was O&G.  So the “in this environment” doesn’t really apply to them because what you need to appreciate is that within a broader cycle and positive atmosphere, the last 5 years offered very different experiences within industrials where many struggled amidst the 2015 China slowdown, WTI collapse and broader commodities slump.  That said, there was a lot of buildup of fat under Immelt that also influenced the margins negatively.  Which is why GE’s got a new CEO that has direct internal turn around experience at healthcare.  Power is definitely the biggest offender here (and largest unit) and the story was laid out above, this was not unique to them but the whole turbine sector fell into overcapacity around 2014 and GE failed to adjust quickly enough.  

I honestly look at this as a relatively straight forward investment case surrounded by a lot of TV pundits and fatigued investors fueling commentary that’s not reflective of having taken time the time to understand the business.  They have great underlying assets and I haven’t hyped them before now but as an entry point following earnings we’ll be at a point where you have a pretty clear line of sight on the turn around and I’m calling it (post earnings).

#FreeCVM #FreeTurd #2007-2017

why wait post earnings then, everything looks good. limited downside

"You want a quote? Haven’t I written enough already???"

RIP

igor555 wrote:

why wait post earnings then, everything looks good. limited downside

Entry point, any last kitchen sink charges will be rolled out by mgmt this quarter.  Keep in mind Flannery’s only been in since August so this is only his second results period, I’d expect any last conservative moves will be taken this quarter to set the stage for better comps.  Fundamentals are there though.

#FreeCVM #FreeTurd #2007-2017

Who is still betting on Netflix? 

SportBiker wrote:

igor555 wrote:

the previous ceo and board have to go to jail for what they did to the company. its  a disgrace.

Much like what nerdy does to this forum.

I like GE for a turnaround, but I want to know what they’re going to do about the pension issues. Plus I don’t think the stock has bottomed out yet. I’m still trying to time the market instead of DCAing, because these valuations give me indigestion.

motorsport!

how i feel about GE.

https://www.youtube.com/watch?v=Cc-BSxo_fmA

(Turn around, bright eyes!)
Every now and then I fall apart

with an sotp in the heart!

I love my cheese. I got to have my cheddar.

the case for GE is simple. just try and justify BA’s valuation and GE’s valuation at the same time. GE comes out the winner no matter how you look at it. BA’s valuation makes me wanna retch.