Trian Fund Management L.P., a firm led by activist investor Nelson Peltz, has disclosed in a press release that they have become one of the top ten shareholders of General Electric (GE) with a beneficial ownership of 98.5 million GE shares that are currently valued at approximately $2.5 billion.
Trian Partners believes in GE's long-term potential that will generate attractive stockholder returns.
Trian Partners said in the press release that they believe GE will execute a bold transformation to provide shareholders value in the years to come.
In addition, the company believes that GE will reshape its portfolio from a broad conglomerate to a leading industrial company that is focused on attractive infrastructure and markets.
Nelson Peltz, the CEO and a founding partner of Trian Partners, said in the press release that GE "is undervalued and underappreciated in the market."
"Our recent discussions with Jeff and his team have solidified our belief that they are highly motivated to fully deliver on GE's transformation and share much common ground with Trian on ways to improve long-term shareowner value," he said.
Ed Garden, CIO and a founding partner at Trian Partners, adds in the press release that the company "believes GE has significant long-term potential."
"We believe that the strategy of GE management and the board is broadly in line with our recommendations and we look forward to continuing to interact with management as GE works to expand operating margins, drive organic growth, increase capital efficiency and execute a disciplined capital allocation strategy," he said.
Reuters added that Trian Partners said in a report that GE could return over 40 percent of its current value to shareholders by the end of 2018.
GE's shares rose by 3.7 percent to $26.41 in premarket trading on Monday.
Reuters also reported that activist investors typically buy company shares that are undervalued and push for management or structural improvements.
The company is recommending that GE explore more share buybacks and consider joint ventures and initial public offerings to further reduce the size of GE Capital's balance sheet.
Reuters adds that Trian Partners said GE's reliance on its financial arm has hurt its total shareholder return.
GE Capital accounts for about 40 percent of GE's revenue in 2007, but the rising funding cost of the unit nearly sank GE during the financial crisis.
Trian Partners said in the press release that they have not asked GE for a board representation but are expecting the company to deliver on its commitments.
