Institutional Investors Indicate Better Days Are Ahead for General Electric

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After General Electric’s (NYSE:GE) wretched performance from 2016 through 2018, those who chose to invest in GE stock in 2019 probably made out pretty well. GE delivered a solid performance, gaining over 53% in value for the year. And it hasn’t run out of steam yet — so far in 2020, GE stock is up almost 15%. The apparent turnaround in the company’s fortune has caught the attention of analysts, many of whom are feeling quite bullish.

BCI snaps up GE stock

Source: testing /

And what’s more, one of Canada’s largest investment agencies significantly increased its holdings in GE during the last quarter of 2019.

Given what General Electric has been doing for the past year, is now the time to consider GE stock for your own portfolio?

Three Brutal Years for GE Investors

General Electric has been around for nearly 130 years and it has grown to have many lines of business. So it’s not surprising that the company has had its ups and downs — as has GE stock. Since 2000, GE has had a particularly tumultuous run, and the period between 2016 and 2018 was especially tough on investors.

The headlines from that time told the story: “GE Shares Drop to 9-Year Low as Weak Power Business Stumbles,” “How GE Went From American Icon to Astonishing Mess,” “What the Hell Happened at GE?” and from InvestorPlace’s Lawrence Myers, “The Disaster That is General Electric Company Stock.”

In 2018 alone, General Electric lost $90 billion in market value. Adding insult to injury, GE — the last remaining original member of the Dow Jones Industrial Averagegot the boot. After more than a century in the index, its spot was taken by Walgreens Boots Alliance (NASDAQ:WBA).

BCI Ups Its Investment in GE

While General Electric was clearly in trouble, there was one positive sign in the fall of 2018. The company hired a new CEO. In October of that year, Larry Culp became CEO of General Electric — the first company outsider to hold that position — and he had a turnaround plan.

As Culp began to put that plan into action, GE still had further to drop (it was trading in the $7 range by December 2018), however in 2019 GE stock began to recover. Its growth of over 54% for the year got the attention of investors. As reported by Barron’s, one of those investors was British Columbia Investment Management (BCI). The agency that manages the Canadian province’s public assets had a portfolio worth 153.4 billion CAD in 2019. And BCI made the call in the fourth quarter to buy another 677,8722 shares of GE, increasing its stake in the company to 2.1 million shares.

BCI describes its investment strategy:

“We are driven by long-term considerations. As our clients have obligations that extend beyond 70 years, we invest in quality assets and stable companies with the potential to appreciate in value and provide reliable cash flows in the years to come.” 

In other words, this is not an agency that’s prone to gambling on dicey stocks. 

Bottom Line for GE Stock

General Electric is not out of the woods yet. A year of recovery is a positive sign, but the company has a long way to go to get anywhere near its glory days. Investors today are celebrating the fact that GE stock is close to breaking the $13 ceiling — and analysts have a $13.91 average 12-month price target for the stock. That’s still less than half of what GE was trading for just three years ago.

BCI and others that invest now are obviously taking on some risk. However, with General Electric showing signs that Larry Culp’s turnaround plan is working, the potential long-term payoff is significant.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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