Singapore, Nov 24 | General Electric Company has recently climbed back to the $10-level. Singapore-based finance firm, JJ Richman, reportedly profited from the said move.
Corporate filings and financial reports reveal that its chief executive officer, James Richman, who is known for his contrarian investment approach, was able to ride the wave of the upsurge as he reportedly forecast the stock to hit its lowest of $5 levels in early May.
From there, the company has enjoyed 100 per cent increase in price as it recently hit $10-level as predicted by Richman. Elaine Teo, spokesperson for the company, confirmed that the company has indeed invested in the American conglomerate in early May.
The value of GE had reached a 52-week low in March and even matched a 29-year low. Several corporate filings and reports reveal that Latvia-born businessman James Richman went against the odds, including a massive investment that contradicted that of Warren Buffett, by taking an optimistic view towards the multinational conglomerate.
James Richman’s outlook opposed the “stay clear” rating that other investors placed on General Electric. Richman recognised that although the reasons for GE’s decline were valid, they just formed part of the bigger wheel that constantly turns. Hence what’s valid and urgent now could be irrelevant in a short period.
The General Electric Company was in the midst of a solid run when the market crashed in March. It had reached a value of $13.16 in February, just before Covid-19 induced a free fall in the global economy.
Being a large-scale industry, GE’s performance is directly related to how COVID-19 affects the market and how the health sector can respond to the disease. The value of GE dropped along with the other sectors in March. However, the effect of COVID-19, or the policies to contain it, emitted devastating repercussions.
Travel restrictions and cessation of operations became a default for most of the countries. The globe was forced to implement non-pharmaceutical measures to contain the spread of the virus which, after almost 6 months since it broke out in Wuhan, China, still has no treatment. Only a few investors, like James Richman, have emerged unscathed from the pandemic.
The widespread restrictions included the suspension or tightening of air travel in most countries. This hurt General Electric very badly. The aviation sector has been one of its staples for the past years. The sudden slumber of this industry iced GE’s ventures into aircraft maintenance, manufacturing, and design.
Boeing, one of its primary customers, had announced in April that they would suspend the production of the 737 MAX aircraft line. MAX is the fastest-selling aircraft in aviation history and GE supplies its engine parts. The announcement pulled down the value of GE even more.
Despite the compounding issues facing GE, a contrarian perspective, like James Richman’s, was applied by some investors. They took into account factors that may be in favor of the well-diverse company as time unfolds.
GE was on the rise before COVID-19 stepped in. It was experiencing the initial results of transformation policies by Larry Culp, its CEO. The pandemic may have suspended the company’s growth but the policies remain in place. Couple this with the effect of the huge government stimulus, GE could be destined to reach previous highs.
Several investors have desperately tracked the movements of James Richman’s firm during this recession. They know that the Singapore-based financier is on to something. Knowing the colors, lines and bars of the market and economics is totally different from interpreting it and translating it to income. This is why Richman’s contrarian approach is both envied and lauded by many investors.