New York (HedgeCo.net) – One of the largest activist hedge funds in the world has taken a $2.5 billion stake in General Electric. The Trian Fund, which is run by Nelson Peltz, announced the deal on Monday and that sent GE’s stock up over five percent.

While activist investors are known for establishing stakes in companies and then going in and trying to upset the status quo in order to boost the stock price, this one is a friendly deal. In an article from CNBC about the deal, Nelson Peltz was quoted as saying, “We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns. Our recent discussions with Jeff and his team have solidified our belief that they are highly motivated to fully deliver on GE’s transformation and share much common ground with Trian on ways to improve long-term shareowner value.”

The Jeff referred to in the quote is GE’s CEO, Jeffrey Immelt. According to reports, Trian supports the current executive team and they have not asked for a seat on the board as a condition of the deal. The article from CNBC also featured a statement from Mr. Immelt:

“We welcome Trian’s significant investment in the Company. GE maintains an open dialogue with our shareholders and enjoys productive, collaborative relationships with them. I have known Trian Principals Nelson Peltz and Ed Garden for many years. Trian has a strong track record of working with companies to build long-term shareholder value, and has been an engaged shareholder. We appreciate their perspectives and look forward to a constructive ongoing dialogue with Trian as we execute our strategy to reshape the Company.”

Rick Pendergraft
Research Analyst
HedgeCoVest