After being pummeled in the 2008 financial crisis and sharply rebounding last year, General Electric
Nonetheless, I was surprised to find out that last year, GE was the No. 1 stock owned by investment clubs, as measured by the folks at Better Investing. If retail investors were so keen on the stock, it got me to thinking: What's the consensus sentiment view on GE?
Turns out, almost everyone is bullish. Let's have a look at a few key sentiment drivers.
1. Analyst opinion
Analysts are unanimous in their belief in GE. Data from Yahoo! Finance captures the love-fest:
| Strong Buy | 2 |
|---|---|
| Buy | 9 |
| Hold | 6 |
| Sell | 0 |
| Strong Sell | 0 |
2. Insider buying
Over the past year, GE insiders have sold $93,150 worth of their company stock. During the same time period, insiders bought $837,820 worth of GE stock. The net effect, then, is insider buying to the tune of $744,670. (Data from Form4Oracle.) While that's not exactly a meaningful amount of the $220-billion-plus company, the trend is positive: Insider buying far outweighs insider selling.
3. Guru buying
Next, we'll look at "guru" ownership of the stock. Gurus are split on GE. On one hand, Fairholme's Bruce Berkowitz disclosed a new stake in GE in the fund's most recent 13-F filing.
On the other hand, Fairfax Financial, headed up by the legendary Prem Watsa, sold its GE stake during the summer.
Two investors for whom I have deep admiration with opposite takes on the same stock? Let's call this a split.
4. Retail investor community sentiment
For community sentiment, I turn to Motley Fool CAPS, our proprietary stock rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. General Electric has a respectable four-star rating in CAPS.
5. Short-sellers
Next we'll look at whether short-sellers are circling the stock.
There are 61.6 million GE shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 0.6%. That's not very high -- a struggling operator like Barnes & Noble has a short interest of 13.5% right now -- and so for determining sentiment, we'll take it as a good sign.
6. Does Buffett own it?
This is the "cherry on top" test, and in GE's case, it passes: Berkshire Hathaway owns shares of GE.
Adding it up
GE is liked by analysts, insiders, the CAPS community, and Buffett. Short-sellers aren't targeting the stock, and gurus are split. Add it all up and GE comes out a stock with a general aura of bullishness.
Of course, you can't base an investment philosophy on who likes the stock you like, and a consensus opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." There's hardly a "greedy" sense surrounding GE right now, though.
The purpose of this exercise wasn't to make a definitive buy-or-sell call on GE. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on GE's movements, and for more analysis on GE, make sure you add it to your Watchlist.
