GE Stock Worth Just $2, Says Longtime Bear Charles Ortel

GE was recently foen another 2 1/2%. From Yahoo Finance:

If 2008 hadn’t been the year of Wall Street’s Armageddon, it might have been remembered as the year General Electric was revealed to be a financial company masquerading as an industrial conglomerate.

Like most banks and Wall Street firms, GE’s financial unit, GE Capital, was pummeled by the credit crunch, arguably threatening the venerable company’s survival.

Like other financial firms, GE weathered the storm, thanks in part to the government’s bailouts – last November GE Capital was declared eligible for TARP funds, thanks to its ownership of a small S&L in Utah. To date, GE Capital has issued about $80 billion of FDIC-insured debt through the Temporary Liquidity Guarantee Program, or TLGP, The Washington Post reports.

But GE is far from out of the woods, according to Charles Ortel, managing director of Newport Value Partners, an independent research firm. As of March 31, GE had $470 billion of debt vs. just $2.8 billion of tangible common equity, he notes.

Because of that high debt-to-equity ratio and a slowdown in its industrial businesses, “we only see downside” for the stock, says Ortel, who believes $2 represents fair value for GE common, which closed Tuesday just above $11. ...MORE