GE

[earthtodan]

I was starting to get bored with my 3.5% position in GE, with its weak dividend raise and too-big-to-manage, too-big-to-analyze business model, but today was not a boring day. I can't place a valuation on the news, but they basically pulled the curtain off of a 3-year plan to do what everyone has been talking about and waiting for patiently (or impatiently) by freeing up $26B of financial assets and aggressively buying back shares. I did not sell any shares and I don't plan on adding at this level, but I will add if it falls back to the previous trading range. With a 3%+ yield and a 5%+ buyback, it now offers at least an 8% shareholder yield, before growth. As for dividend growth, the dividend will naturally increase by the amount of the share count reduction without the company having to pay out more money; i.e., if the share count reduces 5%, the dividend per share increases 5% on the same amount of money paid out. The rest is upside.

I noticed a while ago that SYF (the traded symbol for GE Capital) has increased 30% from its IPO, but GE did not get pulled up along with it, even though they still own 80%. That should have been a signal to add shares, but I passed on the opportunity.

Jeff is also talking about using capital for industrial acquisitions, so it will be interesting to see what he buys for us.