“We are in this period of peak uncertainty,” Babkes said.
Pzena bought GE shares last year, the first time in the value investment firm’s more than 20-year history that it has made a significant investment in the company’s stock. They hope GE, which booked billions of dollars in charges last year, can avoid negative surprises.ĭaniel Babkes, senior research analyst at Pzena Investment Management, said GE’s stock price already accounts for some potential negative news, including prolonged struggles for the power business and dour assumptions for liabilities. Investors will also watch GE’s moves to shore up the balance sheet and reduce debt, including updates on planned asset sales. “Usually a turnaround of that magnitude takes a year or two to be complete and you can then start seeing the fruit of it.” “The actions that need to be taken in the power business – it’s not a quick fix, it’s not something that you can achieve in six months,” said Michael Kon, portfolio manager with Golub Group in San Mateo, California. The unit is expected to realize virtually no earnings this year, according to analyst estimates compiled by Refinitiv. GE is trying to restore profitability at the power division, which manufactures and services turbines. “Based on what we believed the business is worth, it is one of the best investment returns, even on a risk-adjusted basis, that we can find in the large-cap space,” said Gary Lenhoff, chief investment officer at Great Lakes Advisors in Chicago, which Lenhoff said was buying GE shares in the second half of last year and said his timeline was three years.Įven those with long-term investment horizons will keenly watch fourth-quarter results on Thursday.