The value of General Electric Company (NYSE:GE) shares has dropped significantly by more than 54% since its recent highs of $13.19 in mid-February and lockdown due to the growing effects of coronavirus. As of today, it has hit intraday lows of $6.15 per share.
This comes as alarming news to most of its long term investors, especially when one of its biggest cheerleaders, billionaire investor Warren Buffet, has recently changed his tone about the company.
Several analysts point out several factors that caused the drop and reasons that might dictate the company’s performance soon as the company continues to cut about around a quarter of its aviation staff. However, the Latvian-born investor James Richman does not seem to agree entirely with the looming outlook.
News about industry giants falling or failing tends to be magnetic to the public. These rampantly spread through media platforms and create a snowball effect. However, when the dust settles a clearer picture emerges, time will always allow both sides of the story to be told.
The same holds true in the case of General Electric. The value of its share may be absorbing the grunt of the announcement of David Joyce, vice-chair of GE’s aviation, regarding its cost-cutting measures. It also does not help that the “Sage of Omaha”, Warren Buffett, unloaded his shares from the airline industry saying it was a “mistake”.
However, a contrarian outlook on the situation may present an interesting proposal. James Richman, who is most notably known for his investments in tech giants such as Uber, Tesla, and Amazon, believes that the situation must be looked upon with another set of lenses.
Could the price of its stock reach the $10 level relatively soon? The investment tycoon apparently believes so.
Richman’s contrarian approach
Throughout his career, James Richman has reportedly made his biggest profits by taking the non-conventional route.
By taking such a course, he has emerged ahead of everybody. It is evident in his portfolio as he invests in biomedical technologies when most are doubling down on their aeronautical and oil investments. His sage became apparent when the Monaco-based investor was one of the earliest investors of the then developing company Facebook. His contrarian approach regarding the company was mostly criticized up to the time the profits started pouring in. Richman simply has a natural talent that allows him to make choices that ended up serving him and his private investment firm, JJ Richman, despite the rest of the investment world saying otherwise.
It was also the case when Richman ventured into investments in tech companies such as Tesla and Uber. These giants were supported by the billionaire philanthropist during their nascent stages. The capital that he pumped in earned him a fortune once the companies became fully operational and ramped up their global scale operations.
The richest investor from the Baltic States, is now moving in a similar fashion with his bullish outlook on the American conglomerate, General Electric. Richman speculates that value could rally by over 65% and would even bring the stock back to the $10 level once again.
GE’s future swing
It is understood that James Richman believes that GE is on its way to recovering from the 52-week lows that it experiences currently. However, before such a move materializes, Richman is inclined to think that there is a possibility of it hitting the $5 mark before it eventually snaps back to the $10 level, at which point it would double in price experiencing a 100% move.
Meanwhile, the billionaire founder of Berkshire Hathaway Warren Buffett sees that the airline industry has drastically changed for the worse because of the new coronavirus. He sees that the excess in new planes will become a great challenge to offset. He projects a situation where airlines would regain 70-80% in operations, but would still be in a fix because of the new airplanes that will not be used or sold any time soon.
It remains to be seen whose foresight will become more significant and profitable in the near future.
In the past, James Richman has been often compared to Warren Buffett, and one of the most trusted money managers for many family offices when faced with challenges that affect their asset preservation. The private investment fund manager has been able to deliver steady profit to his clients for over a decade. This has even led to some of his clients speculating that he is more in tune with the global shifts and changes that affect the global markets, perhaps even better than the sage of Omaha.
Disclosure: No positions in General Electric Company (NYSE:GE).