Buffett and GE: Is It the Right Number and Right Time?

Considering General Electric

As we noted previously, Berkshire Hathaway (BRK-B) invested in General Electric (GE) in October 2008. Berkshire Hathaway exited the stock in 2017. In 2018, there were rumors that Warren Buffett was looking at General Electric. While Buffett denied the claims, he said in January 2018 that he might consider General Electric at the “right number.”

Buffett and GE: Is It the Right Number and Right Time?

General Electric has been on a selling spree. The company has been taking several restructuring initiatives to address its debt levels. So far, the restructuring hasn’t really impressed investors—visible in the dismal price action. After the crash, could General Electric be at the right number for Buffett? We don’t know since Buffett doesn’t exactly value companies (AAPL) like other pundits. However, seeing how markets (SPY) view General Electric stock could be beneficial.

Valuation

Wall Street analysts see big upside in General Electric stock. General Electric received a mean consensus target price of $12.3 from the analysts polled by Thomson Reuters. The target price represents a potential upside of almost 50% over General Electric’s closing price on January 4. Buffett isn’t a big fan of Wall Street analysts. While analysts see companies as stocks and generally have a time horizon of a year or so, Buffett sees them as companies and not mere tickers. Buffett doesn’t exit stocks. According to CNBC, Buffett said that “our favorite holding period is forever.”

IBM (IBM) was another stock that Buffett exited in 2018, which we’ll discuss in the next part.