Buy when no one wants

There are few major companies that are in such an abysmal situation as General Electronics (GE). You see, it is a global leader in a wide ranges of sectors including appliances, aviation, healthcare, transportation, energy, water technologies, cable, film, consumer electronics, lighting, electrical distribution and finance. It is one of the American icons that used to make Americans proud of but its stock is touching 6 years low as of now. It was especially painful for GE investors in the past 2 weeks or so as it has been basically in a free fall, after very poor earnings report. It’s situation is so bad that GE has to cut its dividends in half. This is how a capitulation looks like. But this is when a value investor may consider to buy when almost no one else from the herd is interested.  Let’s face it, GE is still the global leader in man of the sectors and is still a profitable company. The recovery of the economy around the world will be a positive force for GE to get on its foot again to revive. It is just a matter of time. I believe GE is very close to its bottom, if not yet in as the current price of around $18. One important sign for a stock to reach its important bottom is the insider buys. You see, no one else knows the real situation better than those who are intimately involved the business of the company, especially those at the senior levels who are actively managing or managing the business activities. We have got that for GE. Just in the past two weeks during the free fall of GE, its CEO and other directors have bought millions of GE shares around $17-18. Interestingly, Director James Tisch, the CEO of Loews and a famous value investor even bought more aggressively of 3 million shares worth over $50 million. What kind of a vote for confidence from those insiders in GE! There is no better sign than this to get a reasonable assurance that GE is a very good value stock at this price, even if not exactly at its bottom! Even after a 50% dividend cut, its dividend is still yielding 3%. Consider this as an early Santa Claus gift if you are a long term value investor.