Warren Buffet recently pulled out of his $315 million position in General Electric. In essence, Warren Buffet signals an end of an era for the slowing $217 billion conglomerate. GE has been underperforming in recent years, only returning 9% in 3 years compared to the S&P 500's 35%.
On one hand, the investment in GE was comparatively small, given the breadth and scope of both Berkshire Hathaway, a $432 billion company, and GE, a $217 billion company with massive business units focused on power, energy, oil and gas, healthcare, and aviation.
But losing the imprimatur of the world's greatest investor is no small deal, and it highlights the uncertainty facing one of America's oldest and most storied blue-chip businesses. Coupled with the management overhaul, which came earlier than anticipated, this appears to be the end of an era for GE.
GE's newly appointed CEO is expected to steer the ship in the right direction and increase profitability for the 125- year old giant.
Another failing of the Immelt regime was the company's inability to react quickly to market bubbles and industry shifts. Among the market inflections the company whiffed on, according to's research, were the gas-turbine bubble in the early 2000s, buying "fad of the day" water and security assets in the early to mid-2000s, the auto-derivative bubble, the locomotive boom, and the oil and gas boom.
"For various reasons, GE senior management is almost never ahead of the curve when calling market inflections," Tusa wrote in the research note. "To be sure, there is an art to this, and there are few management teams that have this skill, but GE seems to be particularly vulnerable to being late in their market calls."
With Immelt and Buffet out, GE is facing a new era. I'm curious as to what you monkeys think of this. What is the future of GE? Did Warren Buffet's exit change anything? Please discuss.