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General Electric (GE) Has Fallen 26% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of GDS Investments top stock picks. GDS Investments, an investment management firm, is bullish on General Electric Co (NYSE:GE) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on General Electric Co (NYSE:GE) stock. General Electric Co (NYSE:GE) is an American multinational conglomerate.

In July 2019, GDS Investments had released its Q2 2019 investor letter. General Electric Co (NYSE:GE) stock has posted a return of -26.0% in the trailing one year period, underperforming the S&P 500 Index which returned 11.4% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, General Electric Co (NYSE:GE) stock has fallen by 37.9%.

Let’s take a look at comments made by GDS Investments about General Electric Co (NYSE:GE) stock in the Q2 2019 investor letter.

“Another core holding with exciting turnaround prospects is General Electric Company (NYSE: GE). There, Larry Culp and his team continue to improve the balance sheet and position the company for growth by restructuring and stabilizing GE Power while accelerating the strengthening of GE Aviation and GE Healthcare. During the Q1 conference call and later investor presentations, corporate leadership suggested that 2019 will be a “reset year” with a return to positive free cash flow in 2020 and an acceleration of this metric in 2021. To achieve those goals, the company will focus on margin improvement, better overall execution, and the continuation of business simplification through corporate separations.

In that regard in late-February, General Electric agreed to sell GE Biopharma to Danaher Corporation (NYSE: DHR) for $20B in a net cash sale which should close in Q4 2019. In other restructuring news, General Electric’s merger of GE Transportation with Westinghouse Air Brake Technologies Corporation (NYSE: WAB) is closed. In that transaction, General Electric received $2.9B in cash and 24.9% equity ownership of Wabtec. Furthermore, and as we noted in previous letters, we would not be at all surprised if other transactions are announced over the next 12-18 months. We remain mindful of the possibility that GE Healthcare may eventually be spun-off into a separate company.

Finally, our bullish outlook on General Electric is supported by the recent recovery of the company’s publicly traded bonds, all of which are up significantly this year. That recovery is a sign that investors are becoming more comfortable with Mr. Larry Culp’s turnaround and ability to generate meaningful cash flow in future years.”

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Earlier this month, we published an article suggesting investors to avoid buying General Electric Co (NYSE:GE) stock. The stock has provided a return of about -70% in the trailing five year period.

In Q2 2020, the number of bullish hedge fund positions on General Electric Co (NYSE:GE) stock decreased by about 2% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with General Electric’s growth potential. Our calculations showed that General Electric Co (NYSE:GE) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.