There has been a lot going on at and around General Electric (GE) lately. The firm announced it was selling off its asset management business (to State Street STT) and a day later, submitted a request to the Department of Treasury to have its designation as a Structurally Important Financial Institution removed. A few days ago, an influential Sell-Side analyst at the broker Sanford Bernstein, Steven Winoker, downgraded GE from Buy to Hold (or whatever politically correct terminology Bernstein is using now) citing 1) it’s recent stock price rise and 2) its PE multiple.

For those of you who have taken an IOI training session, Winoker’s reasoning should strike you as amusing.

GE had published its 2015 annual report a few weeks ago, and since there was so much news flow around the company, we sat down to take a look at it. Our detailed comments may be found in our research report entitled This 124-Year Old Looks Better Without Make-Up.

A few surprising things we found in the report were:

  • How much cleaner the results look when adjusted for recent GECC divestitures
  • How large a proportion of profits generated by Aviation, Power & Water, and Healthcare now
  • That our valuation is similar to Schrödinger’s cat in that it is at once bullish and neutral depending on a factor that is not directly observable at present.

So take a look at our report and contact us if you have questions about it!