General Electric Cuts Dividends; Trian Partners Moves In

General Electric Cuts Dividends; Trian Partners Moves In
By General Electric Company (w:File:General_Electric_logo.svg) [Public domain], via Wikimedia Commons

General Electric shares fell yesterday on the news that the company was halving its dividend to align the payout to cash flow generation. The “will they, won’t they” that preceded the announcement may not have helped new CEO John Flannery, who has otherwise been seeking to project an air of decisiveness. A dividend cut, like that which opened toy maker Mattel up to a takeover bid from a rival just last week, might be a spur for an activist investor were it not for Trian Partners already claiming a significant portion of the stock and a seat on the board of directors. Activists are not known for advocating payout reductions, so the move by GE’s board must sting almost as much as the stock price, which has declined 24% in the two years since Trian released its white paper. Trian is evidently just getting started, but has so far been wrong in its view that the company could increase earnings and return more capital to shareholders. It may even have been wrong that the company had the right mix of businesses, given the number of asset disposals Flannery appears to be planning. Unless the plan for its board seat is merely damage control, it may be time for a new white paper.

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What we’ll be watching for this week

  • Will TheStreet’s move yesterday to retire its preferred shares embolden an activist to push for a takeover, or will the two private equity investors on its share register steady the ship?
  • Has one-time ValueAct Capital target Smiths Group done enough to address shareholder dissatisfaction? The U.K. industrial company has its annual meeting Tuesday.
  • Will The Advisory Board’s special meeting on Wednesday approve the sale of its healthcare consulting business?
  • Will Twenty-First Century Fox shareholders deliver a significant protest at the annual meeting Wednesday, knowing that the board is weighing a sale of its most valuable assets?
  • Will Hain Celestial, which settled with Engaged Capital earlier this year, get shareholders to approve an advance notice bylaw on Thursday?

Short update

DG Value: Targeting Overlooked Opportunities In The Middle Market

Yarra Square Investing Greenhaven Road CapitalFounded in 2007 by Dov Gertzulin, DG Value is a value-focused investment firm. The firm runs two primary investment strategies, the diversified DG Value Funds and the concentrated DG Concentrated strategy. Q3 2021 hedge fund letters, conferences and more The flagship DG Value Fund was launched in 2007, specializing in middle-market distressed situations and event-driven Read More

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Chart of the week

So far this year, 27% of U.S.-headquartered companies publicly subjected to activist demands had a market cap of over $10bn, up from 21% in the same period last year.

General Electric

*All figures are as of November 10 in the respective year.

Article by Activist Insight

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Financial news and data providers Activist Insight and Proxy Insight announced in October 2020 that they had merged to form Insightia, a leader in the field of public company information. Activist Insight was formed in 2012 and offers an extensive range of products including Activist Insight Online, Activist Insight Governance, Activist Insight Vulnerability, Activist Insight Shorts, Activist Insight Monthly magazine, and The Activist Insight Podcast. Proxy Insight has quickly become the world’s leading source of information on global shareholder voting, covering such hot topics as director and auditor elections, “say on pay” resolutions and environmental, social, and governance (ESG) proposals.
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