Trian Fund Management disclosed that it has sold about 9.4% of its General Electric stock investment.
Trian subsidiaries sold 6.66 million GE shares from May 22 through 24 for a total of $64.2 million.
They know sumpin' we don't?
Originally posted by @ZgebMFI-rbd.
Old men arguing like teenagers
When it was clear Immelt had far overpromised to shareholders, Trian was an important player in expediting his ouster and both reconfiguring and simplifying GE’s board of directors. When GE was trading in the $20s last fall, Trian’s partners faced the decision to exit the boldfaced investment in disarray, or tie their hands and join the board to help in turnaround efforts. The fund chose the latter.
So they discounted getting s---ered by Immelt, decided to go all in and now feel things are fixed and are getting out. That is a good story for us.
An investment firm, usually, looks for a company with an excellent management structure, or "culture", as some like to call it. One major sign is capital allocation. Or how they spend their money.
Mergers and acquisitions
Invest in organic growth
Repurchase shares
Pay down debt
Pay dividends
Is GE showing good management skills? It is seriously downsizing by ridding itself of certain segments. Yes, this pays down debt, but at what cost? The only organic growth I see is in Aviation. Dividends? Let's not even go there. And last, but not not least, the stock repurchase fiasco of a few years back that spent tens of billions of dollars to only prop up the stock price and stall the inevitable freefall.
NP's handicap was that he thought about GE play with both, his mind and heart. He likely felt betrayed in the end.
https://www.forbes.com/sites/antoinegara/2018/11/16/how-jeff-immelts-courtship-of-an-activist-investor-backfired-for-ge-shareholders/
"Ed Garden has been Chief Investment Officer and a Founding Partner of Trian since November 2005. Mr. Garden is currently a director of General Electric, where he is a member of the Finance & Capital Allocation Committee and Management Development & Compensation Committee" - quote from Trian Partners website.
Just sayin'
I think if you asked Trian if they should have bought in at $26/share, they would say "Hell yes". They would say, "That's the way an activist investor makes money. We buy in on the way down, fix it and sell on the way up. There's no way to beat the market by imagining a way to time the market except to actively change the market."
Trian selling is GOOD news. It means GE is on the way up.
"No feeling. You win a few, you lose a few. But you keep on fighting." $ is just a scorecard.
Trian has lost around $1B investing in GE so I suspect this is just about raising some cash for other investments or expenses. Also suggests they don't expect to see their money made whole any time soon-they bought around $26/share. Here is an interesting article from Forbes:
http://fortune.com/2018/11/26/nelson-peltz-ge-pg-stock/
This place is just a bunch of old men talking about nothing.
Of course Trian knows something we don't. They know how to make money. They sold 10% of their holdings making 10 to $20 million. They will put that into other high reward, high risk investments. They are keeping 90% in GE stock hoping for a lesser return with less risk. Eventually they will sell 100%. That will be just before our complete recovery. Them selling is a great thing.