These investors got the GE trade right. Here's what they say to do with the stock now

Published Tue, Nov 9 202110:06 AM EST

General Electric 's move to split into three public companies is music to investors' ears as the troubled conglomerate finally has the chance to fully realize the potential of its different businesses, they say. The century-old giant announced Monday that it will divide into three separate publicly traded units focused on aviation, health care and energy. The action followed consistent underperformance of its share price over the last two decades. Top value investor Bill Nygren, who has owned GE since at least 2015, said each of the three segments looks like a worthy investment and he expects the stock price to catch up with its business value soon. "Oakmark's argument for owning GE has always been that the sum of the parts is worth more than is implied by its stock price," the Oakmark portfolio manager told CNBC. "By giving investors the opportunity to select and invest in the businesses they are most excited about, we believe this is an important step toward closing the gap between stock price and business value." Nygren said aviation and healthcare are already very solid businesses, while its power unit could see a rebound from the pandemic as well as strong demand for renewables. GE represents a more than 3% weighting in Nygren's Oakmark Select Investor fund (OAKLX), which has returned over 37% this year. "Aviation, though temporarily depressed due to Covid travel restrictions, and healthcare are both great businesses and we would expect their stock prices to reflect that," Nygren said. "Energy has potential for a turnaround and has a leading position in renewables which should also appeal to investors.' GE shares, which were already up 55% over the last 12 months, jumped more than 6% in early trading on Tuesday. Brenda Vingiello, chief investment officer of Sand Hill Global Advisors, also cheered the news from the conglomerate. She has previously recommended holding GE within the industrial space. "I think this is great news as investors will be able to better understanding the fundamentals of each part of GE's business and the businesses will each be valued accordingly," Vingiello told CNBC.

Larry Culp, CEO, General Electric

Scott Mlyn | CNBC