Activist hedge fund Trian Fund Management L.P. said Monday that it has become a top ten shareholder of diversified conglomerate General Electric Co. (GE) with a $2.5 billion stake. Trian now has beneficial ownership of 98.5 million GE shares, with GE now being its largest investment.
Trian noted that its principals Nelson Peltz and Ed Garden have a longstanding relationship with GE's CEO Jeffrey Immelt. Founded in 2005 by Nelson Peltz, Peter May and Ed Garden, the hedge fund seeks to invest in high quality, but undervalued public companies to enhance shareholder value.
Trian has focused on companies such as chemicals giant El DuPont De Nemours & Co. (DD) or DuPont Co. and beverages giant PepsiCo, Inc. (PEP), seeking board seats and urging for the separation of non-core operations to increase operational execution.
Trian noted that GE is making a bold transformation to generate attractive stockholder returns in the years ahead by reshaping its portfolio from a broad conglomerate with a large regulated financial services business to a leading industrial company focused on attractive infrastructure end markets.
Trian added that it has not asked GE for board representation, but expects the company's management to deliver on its commitments.
Nelson Peltz, chief executive officer and a founding partner of Trian, said, "We invested in GE because it is undervalued and under appreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns."
Fairfield, Connecticut-based GE has embarked on a strategy to focus on its high-value industrial businesses and is selling most GE Capital assets.
In a separate statement, GE said it welcomes Trian's significant investment in the company and looked forward to a constructive ongoing dialogue with Trian while it executes a strategy to reshape the company.
GE, which plans to return more than $90 billion to investors through 2018, said it is on track to complete its goal of closing $100 billion of GE Capital asset sales in 2015. Further, the company said it is on track to achieve full-year industrial operating earnings outlook in a range of $1.13 to $1.20 per share.
GE closed Friday's trading at $25.47. In Monday's pre-market activity, the stock is adding $0.96 or 3.77 percent to $26.43.
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