GE (GE) Gains as Warren Buffett Rumors Swirl

In addition to the positive analyst comments noted earlier, today's upside in General Electric (NYSE: GE) is related to speculation Warren Buffett could again invest in the stock.

Buffett is no stranger to GE having made a preferred stock investment in 2009 during the credit crisis, William Blair analyst Nicholas Heymann told StreetInsider.com in a phone interview. Heymann said today's rumors are "plausible" as Buffett understands the cyclicality of GE's businesses given Berkshire's own investments in rail company Burlington Northern and aerospace business Precision Castparts. Heymann also highlighted that Buffett said in a recent interview that he might be interested in GE at the right price.

If Buffett was to invest in GE again, it would likely not be a "bathtub" type of deal, as witnessed in the credit crisis, when the Buffett name helped supply liquidity and confidence to several companies. While GE has its set of challenges, the company "doesn't need capital now", the analyst said. So, an investment from Buffett would likely have to be made in the open market where shares are "cheap."

With strong free cash flow, a fat 3.4% dividend yield and a number of fixes in the works, Heymann sees GE shares retracing back over $20 over time.

Shares of GE are up 5.6% intra-day to $13.61.

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