Selling the subsidiary

On Wednesday, we elected to exit General Electric Vernova (GEV), the recently spun off subsidiary of General Electric (GE), and Stagwell (STGW) on behalf of clients in our Opportunities strategy.

The proceeds have been allocated towards our strategic cash position with the intent of reinvesting when opportunity presents.

Let’s dive in.

Selling the subsidiary

A key component of our thesis when we originally initiated a 5% position in General Electric (GE) was focused on the spin-off of the company’s energy vertical, General Electric Vernova (GEV). At the time, we believed that the company’s valuation was unfairly weighed down by its conglomerate discount – said differently, the standalone parts were more valuable than the whole.

As expected, General Electric officially spun off its energy business into a standalone entity on Tuesday, and the proceeds provided clients with shares of the new business: General Electric Vernova (NYSE: GEV). Because our go-forward thesis centers around GE’s aerospace business and its revenue and margin expansion story, we elected to exit the newly owned shares of GEV on behalf of clients in Opportunities.

To be clear: shares of General Electric (GE) were not impacted by the trades, and our thesis following the spin off continues to track nicely.

Exiting Stagwell

Our thesis for Stagwell (STGW) was originally centered around the idea that market participants weren’t fully appreciating the company’s ability to acquire the growing budgets of technology companies over the medium term. However, after an underwhelming quarter, Stagwell has quickly turned into a show-me story – the company is growing only slightly faster than its industry (not meaningfully faster as we’d expected), and we believe that management doesn't have a good handle on its guidance and business visibility. Moreover, they haven't executed as we hoped they would in tough times, and we elected to exit the position as a result.

The proceeds of the trades have been allocated to strategic cash and have decreased our net exposure to ~83%. As always, let us know if you have any questions about the recent trades; we’re happy to assist.

– Your Titan Team

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