John Flannery, the new CEO for General Executive Co. purchased shares from GE stock that were worth over $1 million. On Monday, John Flannery revealed his plan for a turnaround in GE and the stock began to plunge. Analysts and investors had hoped that Flannery’s plan for a turnaround for GE signified that an end to the downward spiral was near, however, after his plan was revealed and seen to be more protracted than expected, the shares began to dip. This is the biggest selloff GE has seen in approximately eight and a half years. The dip in share prices may be a reflection of the disappointment in the unveiled turnaround plan. The plunge lasted for two days and saw GE stock going down by 12.6% and closing at $17.90 on Tuesday. This is the lowest price recorded for GE stock since December 2011.
John Flannery responded to this by purchasing 60,000 shares on Wednesday, Nov 15 priced at $18.27 per share giving a total cost of $1,096,200. This purchase has increased John Flannery’s stake in General Electric Co. to 683,026 shares which is representative of approximately 0.01% of the total shares in GE which is placed at 8.67 billion shares as at the month ended September 30.
General Electric Co. revealed John Flannery’s stock purchase when it was filed at the Securities and Exchange Commission on Friday, two days after the stock was purchased. GE also revealed its power business was weighed down by poor planning and execution and this could continue to affect its pricing negatively especially with the fact that they are in a more competitive market now more than ever before. The two-day plunge continued till Wednesday when a new low of $17.50 was recorded but then the stock experienced a sharp bounce to a high of $18.38 and after pairing gains of 2%. It eventually closed at $18.26.
John Flannery became CEO of GE Co. from 1st of August,2017 where he took over from Jeffrey Immelt who had been GE Co.’s CEO for 17 years, a period in which GE Co.’s stock continuously underperformed by a wide margin when compared to its peers and to the broader market. John Flannery had been working on his turnaround plan for five months leaving investors and analysts in a state of hope that he would come up with a plan that will be the equivalent of a sweeping reset. The reaction to the unveiling of his plan, however, shows that it fell short of expectations. During Jeffrey Immelt’s tenure, GE’s stock price dropped by 3% from 2002 to 2013, although their income experienced an increase from $15.1 billion to $16.9 billion in the same period. During the same ten-year period, GE paid out $87 billion in share dividends. The S&P 500 index also showed an increase to almost double its value in the ten-year period that Immelt took over.
Based on information in the latest filings, GE Co.’s previous CEO, Jeffrey Immelt owned 2.6 million shares in GE representing approximately 0.03% of the total shares outstanding.
On Friday, GE shares fell by another 2% to $18.21 pairing gains of 1.2%. It has suffered a weekly loss of 11%. The past three months have shown a loss of 25.8% and the total loss year to date stands at 42.4%. When compared to the Dow Jones Industrial Average (^DJI) in the past three months, the ^DJI reports a gain of 7.8% giving a year to date total of 18.2%. This makes GE the worst performer in the Dow Jones Industrial Average.