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Tiger Cub Viking Global’s Big Bet on GE

Posted on September 10th, 2018

General Electric Co.’s (GE) stocks fall from grace has been legendary. Shares have plunged by almost 50 percent over the past year. But, even worse, the stock was removed from the Dow Jones Industrial Average. It was a position the company had held since the year 1907. So, when famous investors start to buy a battered stock like GE, one should take notice.

The stock moved into the seventh position on the WhaleWisdom heat map, up from its previous rank of 94. A big reason for the stock’s rise in the ranking was due to Viking Global Investors buying a massive $930 million stake in the company. Viking Global is one of the first Tiger Cub hedge funds. A group of investors that trace their origins to famed investor Julian Robertson of Tiger Management.

(WhaleWisdom)

Building A Position

Viking’s started and grew its stake in GE to more than 68 million shares. It makes the stock a top 5 holding representing almost 5.3 percent of the hedge funds total portfolio.

(WhaleWisdom)

Hedge Funds Buying

During the quarter other hedge funds were buying shares of GE and increasing their stakes. The total number of 13F shares held by hedge funds increased by more than 10 percent to 478 million shares. A total of 70 funds added to or started new positions in the stock. Meanwhile, 98 funds closed or reduced their stakes.

Momentum Shifting

It could be a big bet that the worst is behind GE and that the business outlook only gets better from here. Analysts have already slashed their estimates on the stock. Earnings for 2018 have dropped to $0.94 from the previous forecast of $0.98 at the start of the year. Meanwhile, 2019 earnings have fallen to $1.03 from earlier estimates of $1.08. But, the surprise comes in the year 2020. That is because analysts have increased their forecast to $1.12 from $1.10.

Pessimistic Views

The one-year forward price-to-earnings ratio has fallen to its cheapest level since 2015, at 12. Hedge Funds are likely seeing the stock as offering an attractive risk/reward opportunity. Meanwhile, the stock’s low earnings multiple sends a message of investors overall pessimistic views.

If analysts are beginning to increase their forecast for the year 2020, it could be a sign that momentum will start to turn more favorable for the stock. It could be a critical reason why hedge funds are beginning to accumulate shares of GE at a time when other investors continue dumping the stock.

This entry was posted on Monday, September 10th, 2018 at 8:51 am and is filed under HeatMap, Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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