Investors Bullish on GE Vernova Energy Spinoff

📆 03/04/2024 05.29.00
📰 globeandmail

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GE,Vernova,Spinoff

Bullish investors are betting it will defy the lackluster share price performance that has followed many corporate spinoffs over the last few decades. On Tuesday, the company’s energy spinoff – whose businesses include wind turbine production and powering data centres – began trading under the name of GE Vernova. GE Aerospace, which makes engines for commercial and military aircraft, kept the GE ticker symbol. Investors who held GE as of March 19 received one share of GE Vernova for every four shares of GE they owned. While spinoffs are typically designed to unlock value, many have been followed by unremarkable share price performance. A Bain & Co study of more than 350 spinoffs between 2000 and 2020 showed that spinoffs generated an average total investor return – defined as equity appreciation plus dividend yields – of 5.1 per cent a year over the three years after the split. That compares to an average annual 8.7 per cent total return for the S&P 500 during the same time frame

Bullish investors are betting on the success of GE Vernova, the energy spinoff of General Electric. Despite the lackluster performance of many corporate spinoffs, investors believe GE Vernova's focus on wind turbine production and powering data centers will lead to strong returns.

A study by Bain & Co showed that spinoffs have historically generated an average total investor return of 5.1% per year over three years, compared to the S&P 500's average annual return of 8.7%.

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