Some CEOs spend their cash bonuses on yachts, midlife crisis-level sports cars, and donating to universities so their kids can get admitted. But, General Electric CEO Jeff Immelt is bucking the trend: spent his entire 2013 cash bonus – all $2.6 million of it – buying stock in the company he runs.
[General Electric was the former parent company of CNBC, though it sold off its remaining stake to Comcast in 2013.]
That's quite a vote of confidence for a company down nearly 9% in 2014 and up only 8% in the past twelve months.
On CNBC's Street Signs' Talking Numbers segment, contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, says he's buying with Immelt and he remains bullish on the stock.
"I put my cash bonus into J. Crew and snow removal but I actually did buy a little GE in the 401k," says Ross. "I'd buy more right here."
Ross notes that the over the past two and a half years, the GE's stock has had three short dips below its 200-day moving average only to move back above it within a few days.
"As history has shown us, false breakdowns beneath the 200-day have corresponded with fast moves in the opposite direction," says Ross.
On the stock's longer-term chart, Ross points out that GE has stayed above its technically significant 50-week moving average, forming an upward sloping trend channel.
"We've held and tested it on six separate occasions over the last three years," says Ross about the 50-week moving average. "We're building a nice little base here. This stock should launch higher and retest the high-end of that range – and push out to a fresh marginal new high. You want to be a buyer of GE right here with Mr. Immelt."
Steve Cortes, founder of Veracruz TJM, thinks buying GE stock is a bad idea.
"GE says it brings good things to life but it hasn't brought good things to portfolios," says Cortes. "The S&P 500 is at all-time highs so it is more than made up for all of the losses since the '08 crisis. GE has only made up about half of its losses from the '07/'08 high. So, it's been an incredible laggard behind the market."
Cortes believes the company's structure is the reason GE hasn't matched the benchmark S&P 500 index.
"The conglomerate model simply does not work," says Cortes. "There's a lack of focus in GE in a company that tries to make everything from washing machines to warheads. For that reason, it has been and will continue to be a market laggard."
To see the full discussion on General Electric with Ross on the technicals and Cortes on the fundamentals, watch the video above.
- General Electric
- Jeff Immelt