INSTANT VIEW: Buffett to invest $3 billion in GE shares
NEW YORK (Reuters) - General Electric Co said on Wednesday that it would sell $3 billion of preferred shares to Warren Buffett's Berkshire Hathaway Inc, with another $12 billion in common shares going to the public.
The news erased an earlier fall in GE shares. The following are market comments on the move:
COMMENTS:
PAT BECKER, JR., CHIEF INVESTMENT OFFICER AT BECKER CAPITAL MANAGEMENT:
"This is a win-win situation for Warren and GE. We own GE shares and we like the company's diversified business model. Long term, we feel this is a great place to put your capital.
"And since we don't know how long this credit crisis will last, if you have the ability to raise capital you better do it today than six months down the road."
TOM SOWANICK, CHIEF INVESTMENT OFFICER AT CLEARBROOK FINANCIAL
"He is the only major financial institution that has ready cash to buy cheap assets. You could actually call Buffett a mid-western vulture fund who is eating off the debris of the financial chaos."
JOE SALUZZI, CO-MANAGER OF TRADING AT THEMIS TRADING IN CHATHAM, NEW JERSEY:
"He bought (Goldman Sachs) GS, now it's GE. Is he going to go for GM next? These are one of those signs when you are looking for a market bottom. You want smart money to come in and say 'I'm coming in there and putting my money down'.
"The thing with Buffett he always get a better deal than everybody else. GE was getting hammered on some fears of them not getting access to money.
"There were rumors they were having trouble overnight. I guess this squashes those rumors. Even if they were true, they're getting money."
CAMPBELL HARVEY, PROFESSOR OF FINANCE AT DUKE UNIVERSITY, DURHAM, NORTH CAROLINA
"This means that we are near the trough. Some people will take it as a negative sign that GE is in trouble. I take it as a time when a very smart investor decides 'I am going to buy low, and this is it.'
"It is not a time to issue common stock. But in their particular case they are at least able to do it, given this deal they have swung with Buffett. Without this deal it would have been questionable."
JAMES SWANSON, CHIEF INVESTMENT STRATEGIST, MFS INVESTMENT MANAGEMENT, BOSTON
"This has to be a signal to hedge funds that have cashed, to long-only shops that have cashed that the time has come in the eyes of some very wise people that pricing of companies in the financial markets has gotten too cheap. And there are ways to invest in long-term franchises.
"I think it takes us back to fundamental investing. It looks to me like the beginning of people finding real value in a market that's in full of disarray."
BILL FITZPATRICK, ANALYST OF OPTIQUE CAPITAL MANAGEMENT IN MILWAUKEE, WISCONSIN:
"It's a vote of confidence in an excellent franchise. These are times to lean on General Electric for its stability, its diversity, its businesses.
"(Buffett) is a value investor, the stock is now extremely attractive ... It would make a lot of sense for Warren Buffett."
DAN GENTER, PRESIDENT AND CHIEF INVESTMENT OFFICER, RNC GENTER CAPITAL MANAGEMENT, WHICH MANAGES $3 BILLION
"It is great news. It basically confirms our confidence in GE and GE's management. Certainly like everybody else, they were swept into these issues. Where they were having difficulties, it was in their financial units.
"People would have been naive to think (those units) would have been immune."
NEIL HENNESSY, CIO AND PORTFOLIO MANAGER, HENNESSY FUNDS, NOVATO, CA
"Buffett's making some moves. He's been hoarding cash, and hoarding cash, and hoarding cash because he wasn't able to buy anything with a lot of value in it. Now he's finding some.
"He's a great investor, a patient investor.
"If you just step back -- and this is the value of being in Omaha instead of Wall Street, you get to think -- ... the Dow Jones, 27 of the 30 companies that are members are extremely profitable."
(Reporting by Svea Herbst-Bayliss, Jim Finkle and Muralikumar Anantharaman in Boston; Paritosh Bansal, Jennifer Ablan, Juan Lagorio and Ellis Mnyandu in New York; and James Kelleher in Chicago)
