General Electric Company (GE): Billionaires are Betting Big

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BERKSHIRE HATHAWAYGeneral Electric Company (NYSE:GE) has attracted the interest of various big-name investors in the hedge fund industry. Part of the appeal of GE is its diverse product operations and international presence. GE’s key segments include aviation, healthcare, financing and energy. Aviation and healthcare account for around 15% of revenue each. The capital and energy segments are GE’s largest revenue contributors, each accounting for around 30% of company revenues. At the end of the third quarter General Electric had a plethora of billionaires owning the stock, including Warren Buffett, Ken Fisher and Steven Cohen (see Warren Buffett’s new picks here).

Generally speaking, GE is showing positive traction and could regain much of the market value it has lost over the last five years. The diversified products company is down 40% over this stretch, while the S&P 500 Index is relatively flat. Recent quarterly results met estimates but also managed to show order growth of 15% year over year for GE’s energy division. The rising global energy demand, including the initiative toward fossil fuel alternatives is mostly what’s behind this order growth.

Aviation is another key segment for GE that has been weak since 2009, but it is showing signs of recovery due to an increase in commercial air traffic. Last quarter total orders for the aviation segment were up 14%, with commercial engines up 14% and military engines up 15%.

On the whole, revenues are expected to be up 2% in 2012 and then 4% in 2013, on the back of long-cycle energy and technology business growth. We are also encouraged by GE’s international presence, with more than 50% of total revenue coming from emerging markets. These major markets include China and India, which have been buying up locomotive and power turbines, among many other key transitional products. With nearly $85 billion in cash on hand, GE should be able to continue making key acquisitions and have no problem paying its current 3.5% dividend yield, which is an annual payout of only $8 billion.

Other major diversified tech companies include Siemens AG (NYSE:SI), United Technologies Corporation (NYSE:UTX), 3M Co (NYSE:MMM) and The Boeing Company (NYSE:BA). Siemens is an integrated tech company that also pays one of the highest dividend yields in the industry at 3.6%. The payout is only 50% and Siemens also boasts the highest 5-year earnings expected growth rate of our five major diversified tech companies at 60%. This, coupled with its industry-low 11.5x forward P/E, and a 0.9x P/S makes Siemens one of the best opportunities in the space at the moment. Siemens also called billionaire investor Ken Fisher its top fund owner in 3Q (check out Ken Fisher’s newest picks).

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