Warren Buffett Hates Hedge Fund Activism More Than He Loves GE

He won’t have anything to do with a company that listens to the likes of Nelson Peltz.
Getty Images

Getty Images

Take deep breaths, Greg Abel, Todd Combs, Ajit Jain, Matt Rose and Ted Wechsler: You’re not going anywhere. And that’s because Warren Buffett’s not going anywhere. At least, that’s one message you can take from one of America’s oldest investors abandoning one of America’s oldest companies after it decided to part ways with one of America’s longest-standing CEOs.

Berkshire’s decision to cash out its GE stake came in the same quarter that the conglomerate announced it was changing leaders, with Jeff Immelt stepping aside as chief executive after 16 years and handing over the job to one of his lieutenants, John Flannery.

Of course, Buffett could be cashing out of an investment that’s made him $1 billion over the last decade for reasons other than sending a message to his underlings. Like the fact that he really hates hedge-fund activists and, by extension, the companies that bend the knee to them.

Mr. Immelt had been under pressure from activist investor Trian Fund Management to cut costs and analysts have expressed concerns the company will need to lower its profit targets.

Selling out of GE may be the middle finger Buffett is sending Nelson Peltz’s way, but it also leaves him with $300 million in cash he really, really doesn’t need. So he did a little modest shopping, including with former parts of GE no longer beholden to the short-term vultures.

Also in the second quarter, Berkshire bought shares of Synchrony Financial, GE’s former consumer finance unit, and added to positions in Bank of New York Mellon Corp and Apple Inc.

Warren Buffett Cashes Out on GE, Cashing In on Crisis Loan [WSJ]