14 Nov An Update on General Electric and Cameco

I regretfully elected to sell General Electric today @ $18 after listening to new CEO John Flannery discuss the current outlook for the company and the prospects going forward. I should have made the decision back in October when the company reduced its expectations for operating cash-flow for the year from $12 – $14 billion down to $7 billion. That is a ridiculous miscalculation for a company the size and quality of General Electric. I was hoping the new CEO would give us something more positive this week in his initial review of the business but there doesn’t seem to be any near-term upside surprises. It is going to be a slow process turning around GE’s large power business and the remaining businesses are not generating enough cash to offset the drag. I made a big mistake continuing to hold the shares and feel the lack of clarity and optionality going forward just doesn’t justify owning the shares any longer. I have owned GE shares since 2011 in most client accounts and had no intentions of selling. However, if management can’t predict the earnings of the business any better than this I really don’t think I have enough confidence at this point to put a fair price on the company myself.

I sold Cameco last week @ $9.46 after the company announced it was going to shut down two mines and reduce the annual dividend from .40/cents to .08/cents per share. This is absolutely the right thing for the company to do with uranium prices down to $20/lb. I have full confidence in the management team at Cameco but felt until uranium prices begin to show some signs of recovery it’s probably best to move to the sidelines and take a wait and see approach.