sikiliza (< 20)

GE is Really a Mutual Fund

January 18, 2012 – Comments (5) | RELATED TICKERS: GE

My friend Derek reckons that there is no way one could analyze and value GE if they had all the numbers they needed to do so. This company is in so many industries and sectors, it's really a mutual fund from an investment perspective. The company gathers all this capital and then proceeds to invest it in a set of unrelated businesses in for purposes of diversification while earning a return. 

A lot of sites categorize GE as being in Industrial Machinery, Diversified Machinery or Industrial Goods and I am tempted to ask how they arrived at such a conclusion given the myriad sectors that the company has its fingers in. It really should be categorized as financial vehicle for all intents and purposes especially due to GE capital, by far it's largest revenue contributor (it had access to the FDIC's Temporary Liquidity Guarantee Program like the banks did). 

This $150B company pretty much competes on every conceivable business front out there:

Energy Infrastructure – 25% of revenues and includes: Oil, gas water, aircraft engine derivatives, generators, steam turbines, water treatment. Competing companies would include RPC (oil services), Veolia for water…..

Technology infrastructure – 25% of revenues – aviation and aircraft engines, Healthcare and Transportation – The list of competitors here is endless

NBC Universal – 12% of revenues – This competes with every other cable television and film studio out there including Lionsgate, CBS, Paramount, Viacom etc

GE Capital – 31% of revenues – competing with all major investment and commercial banks, Real Estate companies,

Home and Business Solutions – 7% of revenues – From dishwashers to lighting, these guys are pretty much head to head with every other company operating on the home front. 

Someone tell me, how would you go about analyzing all of all aspects of the business in order to gauge risk and potential for investment purposes? You might as well analyze the entire S&P 500 while you are at it.

That's probably why people call this a bell-weather stock and given its performance in the last year or so (+2.5%), I would say the economy is still rolling around in the dust.