Dow-ned but not out: Expulsion no body blow for GE shareholders - TNBC UK

Wednesday, June 20, 2018-General Electric Co’s expulsion from the elite Dow Jones Industrial Average may be a bitter pill to swallow for shareholders, but it could be little more than a publicity blow for investors in the 126-year-old struggling U.S. conglomerate.

A partner at Cherry Lane Investments, Rick Meckler, a family investment office in New Vernon, New Jersey said, “There’s only a small group of investors who actually target their investing to the Dow Jones Industrial Average”, he also added, “All in all, I don’t think it’s meaningful to investors”. Struggling with weak profits and facing calls to be broken up, GE shares have already dropped 15 percent this year. Indeed, the investors in GE may look forward on the move as the least of their worries.

GE, highlighted its share price in late August 2000, about a year before longtime Chief Executive Jack Welch turned over the reins to Jeffrey Immelt.

Since the stock has fallen more than 75 %. Not even its rich dividend has cushioned the dismal performance included reinvested dividends, GE has also delivered its total losses of around 61% till that time, while the Dow has also offered up a profit of 240 % on the same basis.

Moreover, On Wednesday, due to the elimination of the company from the Dow, it would have also lead to the height of its shares, investors predicted that GE’s removal would prompt little reaction from major investment funds. Meanwhile, Dow index of 30 top-shelf U.S. corporations is arguably more well known, professional investors, bet much more money on what happens to the S&P 500, an index in which the one-time leading U.S. company has only a tiny influence. GE’s drop from the Dow will thus likely not pose a risk of wide selling pressure by indexed investment funds.


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