GE Capital, had its hands in a lot of stuff, from credit cards, to insurance, mortgages to airplane leasing. At its peak GE Capital accounted for almost 66% of GE's profits. But then the Great Recession came and GE Capital nearly crashed GE because it couldn’t get any financing and didn’t differentiate itself from other financial service companies.
Nowadays, GE’s free cashflow come primarily from the Aviation Division, but three months ago GE announced a 25% reduction in its international Aviation workforce. Boeing recorded zero orders for the second time this year in April and customers canceled another 108 orders for the 737 MAX plane. Boeing CEO Dave Calhoun recently said he doesn’t see demand for passenger airline travel to return to normal this year. Dave later stated that he expects a major airline to go out of business this year as a result of COVID-19.
NOTE: Given the continued COVID-19 pandemic, it might take 3-to-5 years for the industry to recover to post-COVID-19 levels. It probably the single reason Buffett sold his entire stake in the American airline companies earlier this year.
Recently, a U.K. fund manager made changes in its U.S.-listed securities investments in the second quarter. Royal London Asset Management sold Berkshire Hathaway, Verizon Communications and General Electric stock in the second quarter.
Also recently, Nelson Peltz's Trian Fund, a multibillion=dollar investment firm sold roughly 15.6 million shares July 31-Aug. 4. If you know anything about Nelson, he’s the strategic advisor at Aurora Cannabis, which is one of the largest producer of cannabis.
It has been a forgettable year for most businesses. Industrial giant General Electric (NYSE:GE) is one of the hardest-hit companies due to the novel coronavirus, as GE stock shed more than 40% of its value since the beginning of the year.
The slowdown impacted virtually every part of the segment. Commercial engine activity and CSA billings were down 50% and 60% year-over-year, respectively. Additionally, GE’s GECAS business was marred by a sizeable number of customer deferral requests.
Some positives remain for GE stock, but it’s tough to buy the stock at this time. Its recovery in the aviation industry is sluggish, and a substantial recovery seems way off. Its long-term
The CIO at the Trian Fund, Ed Garden said the fund sold part of its GE stock for portfolio management purposes and still believes in GE’s CEO, Larry Culp and their turnaround story. However, GE is dead to me until we get above the monthly supply at $14.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
