Tag Archives: GE

Ackman Has a Point About United Technologies Corporation Stock

Here we go again. Activist investor Bill Ackman is calling for another company breakup as a means of “unlocking value.” The target this time? Government contractor United Technologies Corporation (NYSE:UTX). Owners of UTX stock have a right to be worried, not so much because Ackman is wrong (he may well be right), but because the activist investor and hedge fund manager can cause more than a little chaos when he gets involved.

The 2010 split-up of Fortune Brands is one example. Though it eventually paid off, creating Fortune Brands Home & Security Inc (NYSE:FBHS) among other stand-alone companies, like Jim Beam and Titleist, it was a rough road to traverse. In the meantime, his involvement with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) took a disastrous turn in 2015. The company is still digging itself out of a hole Ackman helped dig.

Point being, current and prospective owners of UTX stock have no idea what they’re going to get with Ackman’s involvement.

If you can look past the Bill Ackman reputation, though, and judge the idea solely on its merits, you may find an idea that wouldn’t have mattered just a few years ago is spot-on today.

United Technologies Does That?

If the premise rings a bell, it may be because Daniel Loeb, chief of hedge fund Third Point, has been singing a similar song for several days now. Loeb’s fund took on a sizeable stake in UTX stock several weeks ago and, earlier this month, in a letter (mostly) to Third Point investors, he explained United Technologies would be better served by splitting up.

Loeb’s call echoed something Ackman has intimated for weeks, but explicitly said during a conference call on Tuesday: “The management here has put together three outstanding businesses and built them to significant scale. We think each business would trade at a very attractive valuation and, more importantly, operate more effectively as independent companies.”

United Technologies currently operates three distinct and oddly disparate divisions. Most investors are familiar with its government contracting work. Most investors may not realize, however, that the company is also the name behind Otis elevators and the maker of climate control equipment. The impending deal to purchase Rockwell Collins, Inc. (NYSE:COL) will fold in nicely with United Technologies’ aerospace and defense division, but it’s a complicated melding nonetheless.

More important, it’s now clear what Ackman’s got in mind for the 1.9 million shares of UTX stock his fund, Pershing Square, acquired during the first quarter.

He’s Got a Point

It was a self-serving comment to be sure, but Ackman’s observation that “other than Berkshire Hathaway, conglomerates have not had a great track record” wasn’t an incorrect one. It only takes a quick glance at General Electric Company (NYSE:GE) to see how this is true, and only a slightly longer thought to realize why this is true.

There was a point in time when size and scale meant different kinds of business under the same umbrella could share expenses and cross-market products to one division’s customers. The old PepsiCo, Inc. (NASDAQ:PEP), when it still owned the three restaurant chains that became Yum! Brands, Inc. (NYSE:YUM), comes to mind. They were largely aiming at the same set of consumers in the same way.

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There’s a reason PepsiCo and Yum! Brands decided to split, though, just like there’s a reason General Electric is at least mulling the sale of some of its divisions.

That reason? Those different divisions can now use the speed of the internet and the power of real-time information to achieve maximum efficiency. The presence of unrelated business within and outside of the boardroom really is a distraction.

Bottom Line on UTX Stock

So, is an impending split-up a reason to buy into UTX stock? No, and the growing interest of Bill Ackman isn’t a reason to sell it either. A break-up is inevitable sooner or later — and likely sooner rather than later. If not pressed by Ackman and Loeb, someone else would have. There’s just not a good enough reason to be under the same umbrella anymore — in a world without information or time constraints and in a world without any significant geographical constraints.

Rather, the time to make any buy/sell decisions on United Technologies is if-and-when it splits into three parts. It’ll be much easier to judge the merits of each arm then when we can at least see their books. Until then, it’s all just speculation.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter

Ballentine Partners LLC Lowers Holdings in General Electric (GE)

Ballentine Partners LLC lessened its position in shares of General Electric (NYSE:GE) by 52.2% in the fourth quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The institutional investor owned 39,945 shares of the conglomerate’s stock after selling 43,663 shares during the period. Ballentine Partners LLC’s holdings in General Electric were worth $697,000 at the end of the most recent reporting period.

A number of other hedge funds have also recently added to or reduced their stakes in GE. KCS Wealth Advisory acquired a new position in shares of General Electric during the 4th quarter worth about $183,000. Broadleaf Partners LLC acquired a new position in shares of General Electric during the 4th quarter worth about $195,000. Chicago Equity Partners LLC acquired a new position in shares of General Electric during the 4th quarter worth about $195,000. First United Bank Trust boosted its stake in shares of General Electric by 31.2% during the 4th quarter. First United Bank Trust now owns 11,596 shares of the conglomerate’s stock worth $202,000 after buying an additional 2,760 shares during the last quarter. Finally, Moisand Fitzgerald Tamayo LLC acquired a new position in shares of General Electric during the 3rd quarter worth about $204,000. Hedge funds and other institutional investors own 56.18% of the company’s stock.

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In other General Electric news, major shareholder Electric Co General sold 3,883,000 shares of the firm’s stock in a transaction that occurred on Tuesday, April 24th. The shares were sold at an average price of $15.00, for a total transaction of $58,245,000.00. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Company insiders own 1.12% of the company’s stock.

A number of equities analysts have recently commented on the stock. Vetr downgraded shares of General Electric from a “strong-buy” rating to a “buy” rating and set a $21.08 price objective for the company. in a research note on Wednesday, January 10th. JPMorgan Chase reiterated a “sell” rating and issued a target price on shares of General Electric in a research note on Monday, January 15th. Deutsche Bank reiterated a “sell” rating and issued a $15.00 target price on shares of General Electric in a research note on Wednesday, January 17th. Vertical Research set a $18.00 target price on shares of General Electric and gave the company a “hold” rating in a research note on Tuesday, January 16th. Finally, Goldman Sachs set a $18.00 target price on shares of General Electric and gave the company a “neutral” rating in a research note on Wednesday, January 24th. Seven research analysts have rated the stock with a sell rating, thirteen have assigned a hold rating, four have given a buy rating and one has assigned a strong buy rating to the company’s stock. General Electric currently has an average rating of “Hold” and a consensus price target of $17.65.

Shares of GE stock opened at $14.62 on Thursday. The company has a current ratio of 1.76, a quick ratio of 1.48 and a debt-to-equity ratio of 1.44. The stock has a market cap of $122.16 billion, a P/E ratio of 13.92, a price-to-earnings-growth ratio of 2.71 and a beta of 1.02.

General Electric (NYSE:GE) last issued its quarterly earnings data on Friday, April 20th. The conglomerate reported $0.16 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $0.11 by $0.05. The firm had revenue of $28.66 billion during the quarter, compared to the consensus estimate of $27.26 billion. General Electric had a negative net margin of 6.16% and a positive return on equity of 11.22%. The business’s revenue for the quarter was up 6.6% compared to the same quarter last year. During the same period last year, the business posted $0.14 earnings per share. sell-side analysts anticipate that General Electric will post 0.98 EPS for the current fiscal year.

The business also recently disclosed a quarterly dividend, which was paid on Wednesday, April 25th. Shareholders of record on Monday, February 26th were given a dividend of $0.12 per share. The ex-dividend date of this dividend was Friday, February 23rd. This represents a $0.48 annualized dividend and a yield of 3.28%. General Electric’s dividend payout ratio (DPR) is presently 45.71%.

General Electric Profile

General Electric Company operates as a digital industrial company worldwide. It operates through Power, Renewable Energy, Oil & Gas, Aviation, Healthcare, Transportation, Lighting, and Capital segments. The Power segment offers technologies, solutions, and services related to energy production, including gas and steam turbines, engines, generators, and high voltage equipment; and power generation services and digital solutions.

Institutional Ownership by Quarter for General Electric (NYSE:GE)

Dow's Worst Performing Stock Still Procter & Gamble

Procter & Gamble Co. (NYSE: PG) posted a share price loss of just 0.5%, enough to maintain its rank as the worst-performing Dow Jones industrial stock of the year to date. So far in 2018, the shares have lost 21.2%.

The second-worst Dow stock so far this year is General Electric Co. (NYSE: GE), which is down 19.2%. That is followed by 3M Co. (NYSE: MMM), down 15.3%, Walmart Inc. (NYSE: WMT), down 11.4%, and Johnson & Johnson (NYSE: JNJ), down 11.1%.

The Dow Jones industrial average index dropped less than 50 points over the course of the past week to close at 24,262.51, down 0.2% for the week. For the year to date, the telecom sector has dropped nearly 12%, the worst among the 10 market sectors.

P&G has yet to recover from the beating the stock took when it announced first-quarter earnings a couple of weeks ago. The results beat estimates, but the company’s announced deal to pay $4.2 billion for Merck KGaA’s consumer health unit was and remains too much for investors to swallow.

Last week’s report on inflation also is not especially good for consumer products companies like P&G. Yes, wages are rising at a slightly faster pace than prices, but consumers generally do not want to spend these modest amounts on staples. Many consumers will use the small increases attributed to inflation and the Trump tax cuts to pay down debt and others to buy a milkshake instead of a soft drink at their next outing to a fast-food joint.

The second problem with raising prices is that competition is heating up, especially from online retailers offering the same or similar products for less. Consumers may be loyal to the brand, but they are less likely to be loyal to paying full price for it if they can get it cheaper somewhere else. P&G has to figure out a way to make money in this changed environment because it is the new normal.

Procter & Gamble stock closed at $72.43 on Friday, up about 1.5% for the day, in a 52-week trading range of $70.73 to $94.67. That low was posted Wednesday. The 12-month consensus price target on the stock is $81.79, unchanged from the prior week, and the forward price-to-earnings ratio is 16.20.

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Cisco Still Holds Rank as Top Performing Dow Stock

3 Simple Steps to Start Making a Fortune Trading the Markets

Ask any successful person – in any field – the secret to making it big, and you’ll get the same response. It takes desire, knowledge, and discipline.

The same applies to trading the markets, particularly in 2018…

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Money Morning’s options trading specialist, Tom Gentile, took those three traits and broke them into three simple steps for trading the markets. Best of all, they’re perfect for traders of all ages and experience levels.

According to Tom, you don’t have to be the smartest or most talented person to trade the markets with great success. But it does require commitment and the three steps below.

Not surprisingly, the three steps Tom shares all came from his extremely successful mentors…

Arthur Blank, the owner Atlanta Falcons and founder of Home Depot Inc. (NYSE: HD), shared these secrets with him more than three decades ago. Back then, Tom was stocking shelves at the store as he worked his way through college.

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But he applied the rules to trading the markets and turned himself into a millionaire…

And he’s used these rules to bring his subscribers incredible profit opportunities in just days, including:

8% in four days on Colgate-Palmolive Co. (NYSE: CL) 9% in one day on General Electric Co. (NYSE: GE) 8% in two days on Costco Wholesale Corp. (NYSE: COST)

More on those gains in just a bit…

Here are his three simple steps to making a fortune trading the markets in 2018…

Join the conversation. Click here to jump to comments…

Thursdays Vital Data: Alibaba Group Holding Ltd (BABA), Microsoft Corporation (MSFT) and General

U.S. stock futures are headed higher this morning. Wall Street bulls are extending yesterday’s late-session rally into this morning, as trade war fears begin to ease. Traders appear more focused on looming first-quarter earnings season rather than the new Chinese tariffs.

Thursday’s Vital Data: Alibaba Group Holding Ltd (BABA), Microsoft Corporation (MSFT) and General Electric Company (GE)Against this backdrop, Dow Jones Industrial Average futures are up 0.28%, S&P 500 futures have added 0.47% and Nasdaq-100 futures have risen 0.78%.

Turning to the options pits, volume rebounded on Wednesday, but still remained below average for 2018. Overall, about 17.8 million calls and 15.9 million puts changed hands on Tuesday. The CBOE single-session equity put/call volume ratio fell to 0.63. The 10-day moving average ticked lower to 0.68.

Taking a closer look at Wednesday’s options activity, Alibaba Group Holding Ltd (NYSE:BABA) breached its 200-day moving average yesterday. Traders still flooded BABA stock with call options however, despite rising Chinese trade tensions.

Elsewhere, Microsoft Corporation (NASDAQ:MSFT) attracted a bump in call activity after setting a quarterly earnings date. Finally, General Electric Company (NYSE:GE) options volume was well below average despite a price-target cut from Stifel.

Thursday’s Vital Options Data: Alibaba Group Holding Ltd (BABA), Microsoft Corporation (MSFT) and General Electric Company (GE)

Alibaba Group Holding Ltd (BABA)

Chinese trade war rumblings have not been good for Alibaba stock. BABA shares are down more than 16% since mid-March, breaching their 200-day moving average yesterday. The stock is now testing its early December 2017 lows and is on the verge of oversold territory.

BABA stock options traders picked up on this near-oversold status. Volume yesterday rose to over 295,000 contracts, with calls snapping up 64% of the day’s take.

In fact, according to Trade-Alert.com, one trader bought a block of 10,000 April $200 calls for the ask price of $1.42, or $142 per contract. Breakeven on this trade lies at $201.42, which is well within reach if BABA can put together a rebound alongside the rest of the market.

Microsoft Corporation (MSFT)

Microsoft officially set its fiscal third-quarter earnings date yesterday. The software behemoth will report after the close on April 26. Wall Street is expecting earnings to rise 21% year-over-year to 85 cents per share. Revenue is expected to rise 9.4% to $25.77 billion.

Additionally, Microsoft announced it was spending $5 billion on development of Internet of Things (IOT) devices over the next four years. Combined with Microsoft’s cloud services initiatives, this IOT push could have a significant impact on the company’s bottom line.

Options traders are growing bullish ahead of Microsoft’s quarterly earnings report. Volume yesterday rose to 174,000 contracts, with calls accounting for 63% of the day’s take — a near-term high for MSFT. Additionally, weekly April 27 implieds are pricing in a potential post-earnings move of about 8.5% for MSFT stock.

General Electric Company (GE)

The hits just keep coming for General Electric. On Tuesday, Stifel Nicolaus cut its price target from $15 to $13, citing continued challenges at its power business and overall growth concerns. Then, yesterday, GE announced it would restate two years of earnings for 2016 and 2017 due to new accounting rules.

Despite the bearish news, GE stock rallied a little more than 1% yesterday, joining in the late-session surge. Options traders picked up on the run, and chased calls as a result.

Volume was light yesterday for GE, amounting to only 142,000 contracts — about half the stock’s daily average for the past three months. Calls made up 62% of the day’s take.

Overall, short-term GE options traders have grown bullish of late. Specifically, the April put/call open interest ratio rests at 0.66, with calls nearly doubling puts for the series. Peak call OI totals 126,000 contracts at the overhead $15 strike, as traders bet big on a GE bounce.

As of this writing, Joseph Hargett held no positions on any of the aforementioned securities.

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Tuesday’s Biggest Winners and Losers in the S&P 500

Source: ThinkstockMarch 27 2018: The S&P 500 closed down 1.7% at 2,612.60. The DJIA closed down 1.4% at 23,858.19. Separately, the Nasdaq was down 2.9% at 7,008.81.

Tuesday was a down day for the broad U.S. markets, coming a day after the Dow posted one of its top 3 performances, in terms of points, in the history of the index. All three of the major indices gave back practically all of their gains from Monday, and all of this sell off came in the last couple hours of trading. The S&P 500 sectors were mostly negative. The most positive sectors were utilities and real estate up 1.5% and 0.1%, respectively. The worst performing sectors were technology and financials down 3.7% and 2.5%, respectively.

Crude oil was down 1.9% at $64.66.

Gold was down 0.7% at $1,345.00.

The S&P 500 stock posting the largest daily percentage loss ahead of the close Tuesday was NVIDIA Corp. (NASDAQ: NVDA) which traded down about 8% at $225.51. The stocks 52-week range is $95.49 to $254.50. Volume was 34.5 million compared to the daily average volume of 15.6 million.

The stock posting the largest daily percentage gain in the S&P 500 ahead of the close Tuesday was General Electric Co. (NYSE: GE) which rose about 4% to $13.43. The stocks 52-week range is $12.73 to $30.54. Volume was 148.6 million compared to the daily average volume of 92.5 million.