GE “Contemplating a more radical downsizing”

    FOX Business Network’s Charlie Gasparino reports that “General Electric is nearing a decision on whether to grant a board seat to Nelson’s Peltz’s Trian Fund Management” which signals “that the company is contemplating a more radical downsizing.”

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    Michael Mauboussin Tips From Great Investors [Pt.2]

    charles munger moat valuewalk Charlie Munger competitive advantage great companies great brands GARP value investing value investors Google Alphabet profit margins Berkshire HathawayThis is the second part of a short series on Michael J. Mauboussin's research document reflecting on 30 years of Wall Street analysis published in 2016. Q3 2020 hedge fund letters, conferences and more The document outlined Mauboussin's observations of successful investors throughout his three decades on the Street. This article starts at point six. Read More

    On whether Nelson Peltz’s Trian Fund Management will be granted a GE board seat:

    “The decision by GE’s board of directors could be made in the coming weeks, and possibly before the end of the month, according to people with direct knowledge of the matter. Trian holds a .82% stake in GE, which is roughly $2 billion worth of stock making the activist investing firm among the firm’s biggest single shareholders, according to the latest public filing. If the GE board agrees to give Trian a seat, it will likely be filled by Ed Garden, the fund’s chief investment officer and founding partner, rather than Peltz, these people add. It’s unclear if Trian would mount a proxy war to force its way on to the board, but people close to the deliberations between the two outfits say talks have been cordial and productive.”

    On what the decision could mean for the GE brand:

    “The move would be significant because inside Trian executives are coming to the conclusion that GE needs more intensive restructuring than has been previously announced either by its former CEO Jeffrey Immelt or the man who recently replaced him, John Flannery. GE, under Immelt, sold off most of its once highly profitable GE Capital unit, and under Flannery, the company is contemplating significant job cuts while the new CEO conducts a top-to-bottom review of the company. Still shares of GE—once a Wall Street darling under former CEO Jack Welch—have been floundering in recent years as the company missed both profitability and cost cutting targets. By granting a board seat Trian, Flannery maybe now be contemplating a far bigger restructuring – including the sale of significant businesses – in order to improve share price. Immelt announced his retirement in June amid criticism from Trian for failing to meet cost cutting targets as its stock price continued to fall.”