THE SILENCE ABOUT GENERAL ELECTRIC SPEAKS VOLUMES / THE WALL STREET JOURNAL

HEARD ON THE STREET

JULY 21, 2009, 4:45 P.M. ET

The Silence About General Electric Speaks Volumes

By PETER EAVIS

The silence is deafening.

General Electric's stock has been a mutual fund mainstay for decades, so the steep share price decline has created much pain for retail investors. Often when a bellwether underperforms, it doesn't take long for one or two mutual fund managers to start speaking out. Some might say why they're sticking by the stock, while others might advocate new strategies for management.

Indeed, interesting insights on well-known stocks have sometimes come from vocal mutual fund managers, including Legg Mason's Bill Miller, Longleaf Partners' Mason Hawkins, and Michael Price, who was famously outspoken when he ran the Mutual Series funds.

Yet, with GE, there is barely a whimper.
One possible reason: mutual fund managers may not have ready answers for GE's problems, which stem mainly from its finance arm, GE Capital.

"There's a black hole there and we don't know how big it is," says Mr. Price, who no longer runs mutual funds. Also, GE's investor base is huge, making it hard for any individual to garner enough support to influence management.

Still, GE is the sort of situation that attracts the interest of deep-diving value investors. A case could be made that the uncertainty surrounding GE Capital is masking value in the industrial business. Typically, there'd be someone proposing ways of "unlocking" it.

That's the sort of challenge that Legg Mason's Mr. Miller might ordinarily take up. Only, he seems to have taken a different approach. At the beginning of the year, Legg Mason had 27.8 million shares. By the end of the first quarter, it had sold nearly all its holding.

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