Nelson Peltz’s Trian Fund Management apparently likes what it sees with GE. Hedge fund Trian disclosed on Monday that it is now a top ten shareholder of GE, with a position of 98.5 million GE shares currently valued at close to $2.5 billion. Moreover, GE has now become the Trian Fund’s largest investment.
Trian’s Nelson Peltz and Ed Garden have had a working relationship with GE’s CEO Jeff Immelt for many years. According to knowledgeable sources, Trian has undertaken informal discussions with GE’s management team for close to two years. Trian has recently conducted a more thorough due diligence, including on-site visits and meetings with senior execs of GE business units. The results of the due diligence are that GE is in the midst of a major transformation that is likely to generate strong returns in the future as the company reshapes itself from a broad conglomerate with a large financial services business to a more focused industrial company.
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Of note, Trian is not requesting board representation at this time.
Trian has also produced a white paper on GE that explains its investment thesis and current and future recommendations for the company. The detailed report includes a great deal of information on the firm such as margin targets, capital structure, capital allocation and more, and is a phenomenal resource for other investors interested in GE. The white paper suggests that GE could be worth $40 to $45 per share by the end of 2017.
Statement from Nelson Peltz of Trian
In explaining the increased investment in the iconic industrial giant, Nelson Peltz, CEO and co-founder of Trian, noted, “We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns. Our recent discussions with Jeff and his team have solidified our belief that they are highly motivated to fully deliver on GE’s transformation and share much common ground with Trian on ways to improve long-term shareowner value.”