GE Woes Spark Money-Manager Exodus After 3 Quarters of Inflows
(Bloomberg) -- It was a turnaround for General Electric Co. -- but not of the kind management was hoping to see.
Institutional investors dumped more than 126 million GE shares during the three months ended in March, reversing three straight quarters of net purchases, according to regulatory filings data compiled by Bloomberg. The exodus came as the industrial behemoth plunged 23 percent.
Tuesday was the deadline for investment managers with more than $100 million in assets to file their first-quarter 13F reports with the Securities and Exchange Commission. Some of the notable funds that reported reductions in their exposure to GE include Morgan Stanley Capital Services, Renaissance Technologies, Pimco, Scotia Capital and Harris Associates. Highbridge Capital Management and Alyeska Investment Group exited their positions.
Big investors pulled out of GE as they found Chief Executive Officer John Flannery’s strategic plan uninspiring. While the shares have bounced back about 15 percent from this year’s low after the company reaffirmed its profit forecast, they’re still trading almost 50 percent below where they were at this time last year.
And it’s become tougher to find a GE bull these days. The shares have six buy ratings, down from 13 late last year, when Flannery took over. The average analyst price target of $16.10 implies an 8 percent gain in the next 12 months.
Gabelli and Co. analyst Justin Bergner is among those taking the long view on GE. He started coverage this week with a buy recommendation, saying that with “all the shoes that have dropped under prior leadership” the company’s investment merits can be easily overlooked. Asset sales and “troughing earnings” should create a positive runway for GE shares in the coming two to three years, he wrote in a research note.
And not everyone on the buy side was bearish during the first quarter. Nelson Peltz’s Trian Fund Management slightly boosted its GE stake during the quarter. Adage Capital also increased its exposure to the company.
The reduction in GE was the third-biggest among U.S. stocks during the first quarter, the 13F filings show. Investors sold about 137 million shares of Cisco Systems Inc., and 169 million Bank of America Corp. shares.
©2018 Bloomberg L.P.