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It's been a challenging year for
General Electric(GE - Get Report). Not only has this $173 billion conglomerate seen a 10.2% decline year-to-date (it's one of the
5 Worst-Performing Dow Stocks of the Year), from a
technical standpoint , GE is also showing weak
relative strength more recently.
It shouldn't come as a surprise, then, that GE is among the most-hated names for the past quarter, shedding $20.7 billion from institutional portfolios as managers took capital losses and sold another 54 million shares. (This in spite of buying from the likes of
Seven Cohen's SAC Capital, which added 4.3 million shares of the stock in the third quarter.)
General Electric has its hands in many disparate businesses, from jet engines to home appliances. That diversified manufacturing focus provides GE with some degree of independence from the business cycle, and ample cross-selling opportunities. A focus on new technologies (like next-generation green energy) should help the firm maintain its leadership position in most of the markets that it operates in.
Still, there's a big black cloud hanging over GE's business: GE Capital. The firm's financial services arm makes up a full 25% of the consolidated firm's bottom line -- exposure that could become a concern again. While GE's loan book has been improving for the last few quarters, more economic rockiness could make its financing business a drag on earnings rather than a driver.
At the very least, it doesn't make sense to be a buyer of GE until it shows more technical strength.
GE shows up on recent lists of
5 Auto Stocks in Top Gear and
10 High-Quality Stocks for 2012, and I featured it last week in "
5 Big Stocks to Trade for Gains."