‘Smart Money’ and Rusty GE

There’s no better word to describe General Electric than beleaguered.

GE’s fall from grace from its mid-2000 zenith has been choppy, set in motion, arguably, by the terrorist attacks on 9/11 that strained the jet engine and insurance segments of the company.

The last couple of years have been especially savage.

GE’s enormous power division was hit hard when the company discovered one of its most important products natural gas-fueled power turbines had an “oxidation issue” that compromised its blades.

(We think that means they rusted.)

Softening sales in the power division along with cash flow shortfalls meant shares fell by 45% in 2017. And the freefall continues in 2018: Shares have dropped an additional 35%.

To add salt to the wound, the company was punted from the DJIA index in June this year an index GE had been continuously a part of since 1907.

Despite General Electric’s dire circumstances, we noticed something unexpected.

chart

Institutional money’s raising its stakes in the company. Since the third quarter of 2017, the smart money’s been buying slowly more GE stock while selling’s relatively stable.

And just look at the second quarter of 2018. Boom.

Do they know something we don’t?

Let us know what you think. Buy, hold or sell GE?

We appreciate your feedback.

Your Rundown for Tuesday, October 2, 2018…

GE: What a Difference a CEO Makes

One catalyst for institutional money upping the ante on GE was installing a new CEO, John Flannery, in August, 2017.

But while the company and its shareholders hoped Flannery could right the ship, you can’t argue with numbers.

Under Flannery’s direction, over the past 13 months, GE’s stock returned an abysmal -53% even as the S&P 500 gained almost 16%.

Yesterday, we learned Flannery’s out at GE and there’s a new CEO in town, Larry Culp.

Culp’s known for his leadership at Danaher Corp from 2000 – 2014; as its CEO, Culp transformed the company from outdated industrial to of-the-moment technology.

Jim Cramer says, Culp “was fantastic at Danaher.”

Just how fantastic? Take a look at DHR shares during Culp’s term.

graph

Mr. Fantastic.

Compare that with Flannery’s term:

graph

Of course, we’re comparing 14 years as CEO to 13 months with other variables at play. But it’s interesting nonetheless.

On the news yesterday, GE’s stock ended the day up 7.09% at $12.09 a share.

A new CEO at General Electric would suggest a wait-and-see approach to the stock. If Culp’s history’s any indication, a turnaround might be in order for beleaguered GE.

Market Rundown for Tues. October 2, 2018

S&P 500 futures are slightly down 3.5 points to 2,926.5.

Oil is up a nickel to $75.35.

Gold’s up almost $5 to $1,196.30.

Bitcoin’s lost $26.28 to $6,568.70.

Have a great day. We’ll talk tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the publisher of Seven Figure Publishing. He is also the editor of The Rundown and has been with Agora Financial / Seven Figure Publishing since 2005. He's been covering technology and markets for over a decade.

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