Activist investing firm Trian sold another huge block of General Electric stock this week, according to its latest Securities and Exchange Commission filing.
Nelson Peltz’s fund sold 11.6 million GE shares on Wednesday, following separate sales of about 15.6 million shares July 31 through August 4, which were disclosed earlier this week.
The second sale might alarm investors, who brushed off Wednesday’s news and bid up General Electric (ticker: GE) shares 3.7%. But shares are down 1% in early trading Thursday.
Investors, often times, pay attention to what the “smart money’ is doing. Peltz’s net worth approaches $2 billion, and he has been investing successfully for decades. The GE bet, however, soured long ago. Many on Wall Street missed the decline of company fortunes, which ushered in the “Culp era.” Larry Culp, GE’s CEO since late 2018, is the first outside CEO hired in the company’s history.
Trian took its initial stake in GE in 2015—when Jeff Immelt was in charge—believing that the company’s efforts to pay down debt and cut costs would lead to share price outperformance.
GE—under Culp—has, indeed, paid down debt and cut costs, but that hasn’t boosted the stock price compared with 2015. GE shares have fallen, very roughly, to $7 from $27 over Trian’s holding period.
After the latest stock sale, Trian owns about 32 million shares, roughly one-third of its initial 2015 position. On Wednesday, a Trian spokesperson told Barron’s the fund still believed in GE’s turnaround now being led by Culp, and that the sales were related to “portfolio management purposes.” The spokesperson also pointed out that Trian founding partner and CIO, Ed Garden, continues to serve on the GE board of directors.
“Trian believes that GE will weather its current challenges due to the Covid-19 crisis and emerge a stronger company as global aviation begins to recover,” the statement said.
Trian reiterated their statement on Thursday. It’s unclear if Trian will continue to reduce its holdings or if the sales are driven by a change in GE’s fundamental outlook. GE’s largest division—aviation—has been hammered by Covid-19, which is keeping people off planes.
GE stock is down about 43% year to date, worse than comparable returns of the Dow Jones Industrial Average and S&P 500. But the decline is very similar to the other aerospace supplier stocks Barron’s tracks. Boeing (BA) and Airbus (AIR.France) shares are both down 47% year to date.
Write to Al Root at allen.root@dowjones.com
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Trian Sold a Whole Lot of GE Stock — Again - Barron's
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