Gregmal Posted October 30, 2016 Share Posted October 30, 2016 I will always endorse a CEO who is focused on making superior products over financial transactions as vastly better. Hence Barra >>> Marchionne. Under Barra, GM has compounded at a staggering negative 8% for 3 years. Today (and throughout her tenure) she shows her clear owner orientation and conviction in her abilities and GM's future prospects by owning a whopping $4 million of common equity, 10 months of cash compensation. Under Marchionne, three different public companies (combining his tenure at each) have compounded at 20%+ for 18 years. He has ~$100 million invested in the company. It's one thing to like GM stock, it's another to be so biased in your analysis that you can definitively say Barra >>> Marchionne. If Marchionne was in Barras shoes, do you think GM would have inferior product? That's essentially what you are saying. Buick, a few years back was a dead brand. Now its a bright spot. Cadillac is currently undergoing a massive turn around and is already showing signs of great improvement. The newly designed Corvettes have also been a major hit, and the trucks are selling at record pace. SUV's too. Literally everything at GM is firing on all cylinders so as a patient long term investor, I'm quite alright with that. Even Europe, which has never made money, is beginning to show signs of life. Then you look at FCAU, and its basically Jeep and thats it. Dodge Rams are doing alright but everything else Dodge is junk. You literally can't give away a Chrysler. Maserati has never demonstrated the ability to make money and the Ghibli was an unmitigated disaster. So to respond to your last remark, yes, given what's gone down with GM under Barra, a noticeable turnaround with left for dead brands, and what hasn't occurred at FCAU, it would be foolish to assume Machionne would have been able to do what Barra has done given he's shown no ability to do it with his current company. No offense, but using short term share performance(especially given the government bailout+recall fiasco situations) to formulate your opinion about the CEO's work is incredibly naive and short sighted. Kind of branching off of what Dalal mentioned, given this is a value investors board, missing the forest for the trees because you're pissed off that the stock hasn't performed as hoped is utterly preposterous. I mean under this logic Elon Musk must be one of the greatest CEO's of all time when you look at the short term performance of TSLA and SCTY(yes he's not the CEO here but still calls the shots) from their IPO's. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 30, 2016 Share Posted October 30, 2016 I will always endorse a CEO who is focused on making superior products over financial transactions as vastly better. Hence Barra >>> Marchionne. Under Barra, GM has compounded at a staggering negative 8% for 3 years. Today (and throughout her tenure) she shows her clear owner orientation and conviction in her abilities and GM's future prospects by owning a whopping $4 million of common equity, 10 months of cash compensation. Under Marchionne, three different public companies (combining his tenure at each) have compounded at 20%+ for 18 years. He has ~$100 million invested in the company. It's one thing to like GM stock, it's another to be so biased in your analysis that you can definitively say Barra >>> Marchionne. If Marchionne was in Barras shoes, do you think GM would have inferior product? That's essentially what you are saying. It's very easy to get wildly different "compounded returns" based on your starting and ending points. If you pick the moment Barra was named CEO vs +/- a few weeks later, you would get wildly different results on "compounded returns under Barra". Any serious investor understands this. You also of course ignore GM's dividend from your return calculation. Oh, and you also ignore the massive recall that was announced literally within weeks of Barra taking helm which cost billions (somehow you might find a way to blame Barra for it anyway). It's also plain silly to use a few year's performance of GM's stock to get a verdict on Barra's performance. Why don't you look at GM's profitability over her term and get back to me. You might see that though the stock hasn't done much, the business sure has. Barra was not a financier before taking the helm, she started lower down. Yet somehow it's easy to distort her ownership of GM by saying she only has "$4M" invested in GM while Marchionne has "$100M" in FCAU because Marchionne 1) was already many many times more wealthy than Barra (due to his history as playing financier) when each took the helm of their respective auto companies and 2) Marchionne has received astronomical compensation in stock/options/cash such as a whopping $72M in "Special Bonus" from FCAU in 2014 (http://www.wsj.com/articles/fiat-chrysler-ceo-marchionne-earned-34-6-million-in-2014-1425661936). Talk about robbing shareholders (too bad FCAU holders are willing to hand their cash to him)! I will gladly own companies where management receives more humble compensation and does not focus on financial transactions to make money/bonuses. You can't make some of this stuff up! I'm sure Marchionne was dreaming about the "Special Bonus" he could've pocketed if he had pulled off a GM-FCAU deal. From the article: http://www.wsj.com/articles/fiat-chrysler-ceo-marchionne-earned-34-6-million-in-2014-1425661936 ________________________________________________________________________________ "Fiat Chrysler to Pay CEO $72 Million Sergio Marchionne awarded special bonus, shares for successful merger last year" Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne is on track to get $72 million in total pay for 2014—mostly from bonuses and a stock award tied to Fiat’s takeover of Chrysler that led to a 61% jump in its share price. His pay exceeds that of automotive chiefs in Europe and the U.S., including the $29.5 million pay package that former Ford Motor Co. CEO Alan Mulally took home in 2011 for leading the second-largest U.S. car maker through a turnaround. The Canadian-Italian executive has led the auto maker for a decade. Last year, he earned €6.6 million ($7 million) in salary and incentives. On top of that, Mr. Marchionne received a €24.7 million bonus “as a recognition he was instrumental in major strategic and financial accomplishments for the Group,” according to its annual report to shareholders filed on Thursday. ______________________________________________________________________________ $72M is more than 10% of the profit made by FCAU in 2014!! In 2013, he got $24.7M for "recognition he was instrumental in major strategic and financial accomplishments for the Group"? Isn't that called just doing your job as CEO?? If Barra was paid like Marchionne, she'd be worth hundreds of millions for sitting in front of congress and successfully navigating the ignition switch recall. If Barra was paid like Marchionne, maybe she too would want to engage in deal making so she can pocket a "Special Bonus" as well. Such is the power of perverse incentives. Glad Barra is of more humble origins. Again, Barra >>> Marchionne. Link to comment Share on other sites More sharing options...
cmlber Posted October 30, 2016 Share Posted October 30, 2016 Buick, a few years back was a dead brand. Now its a bright spot. Buick USA sales since Barra became CEO have exploded from 205k units/year to 226k units/year, a 3.2% CAGR. Woah! Ya, it's growing rapidly (+40% since Barra became CEO) in China, so is every other brand... that's pretty much what China SAAR is up in that same time period. It was selling 800k cars/year in China when she took over, hardly a "dead" brand. Cadillac is currently undergoing a massive turn around and is already showing signs of great improvement. Can you quantify this? Because Cadillac sales in the US since Barra took over are actually down. Again, ya it's growing in China, so is everything. The newly designed Corvettes have also been a major hit, and the trucks are selling at record pace. SUV's too. Corvette sales since Barra's first year as CEO have been flat. They doubled in her first year, but if you think this was because she was CEO and not because of years of effort designing the new Corvettes you are mistaken. And everyones trucks/SUVs are selling. GM isn't taking market share, they are growing with the market. Then you look at FCAU, and its basically Jeep and thats it. Dodge Rams are doing alright but everything else Dodge is junk. You literally can't give away a Chrysler. Maserati has never demonstrated the ability to make money and the Ghibli was an unmitigated disaster. So to respond to your last remark, yes, given what's gone down with GM under Barra, a noticeable turnaround with left for dead brands, and what hasn't occurred at FCAU, it would be foolish to assume Machionne would have been able to do what Barra has done given he's shown no ability to do it with his current company. Jeep, from 277k units sold in NAFTA the year Sergio took over Chrysler, is on pace to sell 1 million units in NAFTA this year. Growth of almost 400% in 7 years. International sales were 60k units in the year he took over. They'll sell more than 10x that in a couple years. Ram has doubled market share since Sergio took over. Volume didn't grow because the market grew like Buick. He has grown EBIT in the components business from 139m euro the year he took over Fiat to 448m run rate this year (a 10% CAGR over 12 years) on its way to 600m. The year he took over Fiat, Maserati and Ferrari combined generated EBIT of 4m euro. Last quarter Maserati produced EBIT of 103m euro and Ferrari now has a 10 billion euro market cap. And yes, he has intentionally deemphasized Chrysler. He has said that 100 times. It's like saying Buffett isn't a good CEO because he had to shut down the textile mills. Chrysler is Sergio's textile mill and Jeep is his See's Candy. (Before you go saying I'm naive and short sighted, I'm well aware that this is very far from a perfect analogy but it's directionally right). He had the foresight to see Jeep/Ram/Maserati/Ferrari were where he should spend his limited capital and you're faulting him for not investing the money he didn't have in a secularly declining business? The guy did all of this with hands tied behind his back, taking over a company about to die in 2004, keeping it alive through the crisis, with one of the worst balance sheets in the industry. No offense, but using short term share performance(especially given the government bailout+recall fiasco situations) to formulate your opinion about the CEO's work is incredibly naive and short sighted. Kind of branching off of what Dalal mentioned, given this is a value investors board, missing the forest for the trees because you're pissed off that the stock hasn't performed as hoped is utterly preposterous. I mean under this logic Elon Musk must be one of the greatest CEO's of all time when you look at the short term performance of TSLA and SCTY(yes he's not the CEO here but still calls the shots) from their IPO's. First of all, Fiat has had plenty of it's own recall fiasco's and went through the same crisis that GM did. Second, is Sergio's 18 year track record "short term share performance"? I agree Barra's 3 years could be considered short term, but we're not talking about quarters, 3 years is a decent amount of time. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 30, 2016 Share Posted October 30, 2016 [Citation Needed] on your 18 year 20+% compounded returns for Sergio. This guy is no Buffett--he did not take a small amount of pay from his company and compound his own wealth through gains in the size of his business, instead he extracted astronomical sums from his business as bonuses/salary. Your focus on sales (Buick sales, Jeep sales, etc) and stock price returns is funny. GM has #1 market share in the U.S. and #2 in China. They sell tons more vehicles than FCAU and boosting sales after a certain point will hurt returns as they are forced to increased incentives while also dumping cars in the low margin fleet/rental market (all are what FCAU is doing to boost sales). Sales don't necessarily help you win profits and low quality sales leave you vulnerable during a downturn. Go see GM's history from 2000-2008. Go look at the free cash flow and earnings generated by GM under Barra and you might see that though the stock hasn't done much, the business sure has. Looking at FCF of FCAU (and not manipulated figures like adjusted EBITDA/etc) reveals a disaster -- this company can't generate ample cash even during a booming auto market. Meanwhile, Marchionne has made himself some sort of cult following where shareholders are ok that he is extracting massive sums of compensation from this cash poor business. "Only when the tide goes out do you discover who's been swimming naked." They are desperately looking for a partner before the tide goes out. From the article: http://www.wsj.com/articles/fiat-chrysler-ceo-marchionne-earned-34-6-million-in-2014-1425661936 ________________________________________________________________________________ "Fiat Chrysler to Pay CEO $72 Million Sergio Marchionne awarded special bonus, shares for successful merger last year" Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne is on track to get $72 million in total pay for 2014—mostly from bonuses and a stock award tied to Fiat’s takeover of Chrysler that led to a 61% jump in its share price. His pay exceeds that of automotive chiefs in Europe and the U.S., including the $29.5 million pay package that former Ford Motor Co. CEO Alan Mulally took home in 2011 for leading the second-largest U.S. car maker through a turnaround. The Canadian-Italian executive has led the auto maker for a decade. Last year, he earned €6.6 million ($7 million) in salary and incentives. On top of that, Mr. Marchionne received a €24.7 million bonus “as a recognition he was instrumental in major strategic and financial accomplishments for the Group,” according to its annual report to shareholders filed on Thursday. ______________________________________________________________________________ $72M is more than 10% of the profit made by all of FCAU in 2014!! In 2013, he got $24.7M for "recognition he was instrumental in major strategic and financial accomplishments for the Group"? Isn't that called just doing your job as CEO?? If Barra was paid like Marchionne, she'd be worth hundreds of millions for sitting in front of congress and successfully navigating the ignition switch recall. If Barra was paid like Marchionne, maybe she too would want to engage in deal making so she can pocket a "Special Bonus" as well. I'm sure Marchionne was dreaming about the "Special Bonus" he could've pocketed if he had pulled off a GM-FCAU deal. Such is the power of perverse incentives. Glad Barra is of more humble origins. Again, Barra >>> Marchionne. Link to comment Share on other sites More sharing options...
cmlber Posted October 30, 2016 Share Posted October 30, 2016 Geez, you guys are in love with this investment, it's dangerous. I also own GM, but it's so intellectually dishonest to have "World Class CEO" as one of your thesis points, that's all I'm saying. There is absolutely nothing to support that statement, unless your bar for "World Class" is ridiculously low. Maybe she will turn out to be a world class CEO, but there is no support for that statement. Do you not recall that it took two years and activist pressure for Barra to realize she should be using excess cash to buy back stock? [Citation Needed] on your 18 year 20+% compounded returns for Sergio. Take 5 minutes and look at the stock charts of the three companies he has been CEO of during his tenures. Multiply the returns together and take it to the power of 1/18. It's not rocket science. If you didn't read my last post, you miss that this guy is no Buffett--he did not take a small amount of pay from his company and compound his own wealth through gains in the size of his business, instead he extracted astronomical sums from his business as bonuses/salary. How do you think Buffett got his initial wealth? By taking 30% of the profits above a 6% hurdle rate... You seem to think Sergio raped the shareholders, but 18 year performance isn't "short term" and you seem to forget that the company is controlled by the Agnelli family, and I'm 100% certain John Elkann is a lot smarter than you are and deemed that bonus appropriate. Your focus on sales (Buick sales, Jeep sales, etc) and stock price returns is funny. GM has #1 market share in the U.S. and #2 in China. They sell tons more vehicles than FCAU. Who said I'm focused on sales? You're fellow Barra fan said one of her major accomplishments was a reviving a dead brand in Buick, I was pointing out that this is investor relations propaganda. It wasn't dead when she took over, and it has grown with the market since. Big deal. You keep pointing to GMs earnings and FCF under Barra. I agree that GMs financial results have been very strong and it's cheap (that's why I own it), but it has absolutely nothing to do with Barra. It's because we are in a boom period for auto sales and she happens to be the CEO of the largest auto company on the planet with all of it's legacy liabilities discarded through bankruptcy. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted October 31, 2016 Share Posted October 31, 2016 I never used world class. I just believe that Barra is highly underrated and Marchionne highly overrated (and overpaid). Fiat is inferior to GM and not a viable merger partner and Barra is significantly better at running an auto company than Marchionne. It will take a downturn to show many that FCAU is swimming naked. P.S. I love your "we should use GM's stock price to judge Barra, but the financial performance of GM has nothing to do with Barra" logic. Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted November 3, 2016 Share Posted November 3, 2016 http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2016/nov/1101-gmsales.html GM's retail sales continue to grow and fleet sales continue to shrink. Another strategic move under Barra that few give her credit for. ATP's higher than any other full line auto company. Buick and Chevy post best October in > 12 yrs. Link to comment Share on other sites More sharing options...
tylerdurden Posted November 3, 2016 Share Posted November 3, 2016 I can not disagree more. How come the CEO would have nothing to do with a company, which is over-performing against its peers??? I agree that GMs financial results have been very strong and it's cheap (that's why I own it), but it has absolutely nothing to do with Barra. Link to comment Share on other sites More sharing options...
skanjete Posted November 3, 2016 Share Posted November 3, 2016 I never used world class. I just believe that Barra is highly underrated and Marchionne highly overrated (and overpaid). Fiat is inferior to GM and not a viable merger partner and Barra is significantly better at running an auto company than Marchionne. It will take a downturn to show many that FCAU is swimming naked. P.S. I love your "we should use GM's stock price to judge Barra, but the financial performance of GM has nothing to do with Barra" logic. "It will take a downturn to show many that FCAU is swimming naked". Don't you think this remark is rather ridiculous? What about 2008-2009? Fiat was one of the only ones left standing. While some of their competitors went bankrupt, they had the guts to play offense and invest in Chrysler when it made sense. Link to comment Share on other sites More sharing options...
Gregmal Posted November 3, 2016 Share Posted November 3, 2016 I never used world class. I just believe that Barra is highly underrated and Marchionne highly overrated (and overpaid). Fiat is inferior to GM and not a viable merger partner and Barra is significantly better at running an auto company than Marchionne. It will take a downturn to show many that FCAU is swimming naked. P.S. I love your "we should use GM's stock price to judge Barra, but the financial performance of GM has nothing to do with Barra" logic. "It will take a downturn to show many that FCAU is swimming naked". Don't you think this remark is rather ridiculous? What about 2008-2009? Fiat was one of the only ones left standing. While some of their competitors went bankrupt, they had the guts to play offense and invest in Chrysler when it made sense. And BofA was playing offense investing in Countrywide... Chrysler was and always has been a disaster but fear not, humble leader Marchionne thought he could turn it around which hasnt at all panned out. FCAU is a gamblers spec play, GM is a conservative and well managed company. Would be like pitching a FFH takeover to Berkshire Hathaway. Thanks but no thanks. Link to comment Share on other sites More sharing options...
Philip Morris IV Posted December 1, 2016 Share Posted December 1, 2016 Huge boost in GM today (well, huge for GM at least). Nov sales report is great but not earth shattering by any means. Anyone have details on an analyst upgrade or anything else going on here? http://www.gm.com/mol/m-2016-dec-1201-gmsales.html Link to comment Share on other sites More sharing options...
CorpRaider Posted December 1, 2016 Share Posted December 1, 2016 I haven't seen any snide posts about all the "crappy ideas" on this board lately... Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted December 2, 2016 Share Posted December 2, 2016 A sentiment shift seems to be occurring regarding traditional autos amongst analysts and investors in general. Even Adam Jonas is tempering his TSLA bullishness and rerating traditional auto (once with a laughable TSLA 450 PT not too long ago). It seems the fears of peak auto and a coming down cycle are abating and people are embracing plateau auto. Firms with a strong U.S. presence and emphasis on margins (not sales), retail (not fleet), and true luxury brands like Cadillac (not Lincoln or Chrysler) will do well. GM is far superior to its domestic rivals F and FCAU in this regard. GM management is committed to profitability and Barra is starting to be viewed in more of a favorable light by investors--she certainly seems more balanced in her approach than Fields or Marchionne--a commitment to electric (Volt/Bolt), luxury (Cadillac), and sedans (even while SUVs boom) will keep GM balanced and ready for an auto downturn or a surge in fuel prices. Selling Bolt/Volt in states with high ZEV mandates like California will keep GM more competitive than Fiat and Ford in selling the large, profitable trucks/SUVs in those places. Companies like Tesla have been making money off traditional autos selling ZEV credits to them: Fiat was the largest purchaser of these credits, GM the smallest (should get even smaller after the Bolt and GM may achieve a surplus of credits and be able to sell them to competitors). Source: http://bloom.bg/2fKA9Ic One can see now why Marchionne is desperate to merge with another automaker...soon his strategy of focusing on trucks (Ram) and SUVs (Jeep) will meet financial disaster in states like California without any hint of a real electric vehicle strategy... Link to comment Share on other sites More sharing options...
Picasso Posted December 2, 2016 Share Posted December 2, 2016 I haven't seen any snide posts about all the "crappy ideas" on this board lately... Trump made CoBF great again. Link to comment Share on other sites More sharing options...
CorpRaider Posted December 2, 2016 Share Posted December 2, 2016 Value premia bull market geniuses? Maybe I should calm my enthusiasm, RPV is up like 18% YTD. Link to comment Share on other sites More sharing options...
jeffmori7 Posted December 3, 2016 Share Posted December 3, 2016 Huge boost in GM today (well, huge for GM at least). Nov sales report is great but not earth shattering by any means. Anyone have details on an analyst upgrade or anything else going on here? http://www.gm.com/mol/m-2016-dec-1201-gmsales.html Some explanation on their big November: http://www.thetruthaboutcars.com/2016/12/general-motors-incentives-skyrocket-november-gm-inventory-still-ballooning/ Link to comment Share on other sites More sharing options...
Dalal.Holdings Posted December 3, 2016 Share Posted December 3, 2016 Some explanation on their big November: http://www.thetruthaboutcars.com/2016/12/general-motors-incentives-skyrocket-november-gm-inventory-still-ballooning/ Hardly a legitimate "explanation". From GM on November: https://www.gm.com/investors/sales/us-sales-production.html "GM’s ATPs, which reflect retail transaction prices after sales incentives, were $35,767 in November, more than $4,000 above the industry average and ahead of last November. " Link to comment Share on other sites More sharing options...
RadMan24 Posted December 10, 2016 Share Posted December 10, 2016 Strong endorsement in Barron's : http://www.barrons.com/articles/why-mohnish-pabrai-likes-gm-fiat-and-southwest-air-1481352344?mod=BOL_hp_highlight_3 "INTERVIEW Why Mohnish Pabrai Likes GM, Fiat, and Southwest Air Pabrai finally embraces auto and airline stocks. What the stock market doesn’t understand." Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 27, 2016 Share Posted December 27, 2016 The Chevy Bolt Is the Ugly Car of the (Very Near) Future With brilliant financial engineering, GM beats Tesla to the punch. https://www.bloomberg.com/news/features/2016-12-19/the-chevy-bolt-is-the-ugly-car-of-the-very-near-future Link to comment Share on other sites More sharing options...
awindenberger Posted December 27, 2016 Share Posted December 27, 2016 The Chevy Bolt Is the Ugly Car of the (Very Near) Future With brilliant financial engineering, GM beats Tesla to the punch. https://www.bloomberg.com/news/features/2016-12-19/the-chevy-bolt-is-the-ugly-car-of-the-very-near-future The Bolt could be very popular, lets just hope GM actually produces enough for demand. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 10, 2017 Share Posted January 10, 2017 I definitely sold Way too early....oh well :-\ https://www.bloomberg.com/news/articles/2017-01-10/gm-projects-higher-profit-in-17-plans-5-billion-share-buyback Link to comment Share on other sites More sharing options...
CorpRaider Posted January 10, 2017 Share Posted January 10, 2017 Rolling. Totally anecdotal, but at least two kind of yuppie/wealthy conspicuous consumers I know have recently purchase Buick suvs. It is crazy how they seem to have taken that brand to China and revamped it and now these two are trading in their lexus and Mercedes for Buicks. Link to comment Share on other sites More sharing options...
Philip Morris IV Posted January 10, 2017 Share Posted January 10, 2017 From speaking with a few board members privately, it is really starting to look like a sentiment change is afoot here. For the past ~2 years we have seen this stock react apathetically or even negatively to good news and very serious earnings beats. In the past few months, we are seeing decent monthly sales reports and now Barra's comments send the stock up 3-4-5%. Link to comment Share on other sites More sharing options...
dutchman Posted January 10, 2017 Share Posted January 10, 2017 More than just word though right? Buyback was announced along with higher earnings expectations. Im just worried about trump provoking china. China could break GM in half. XiJinping wont tolerate any bullying this year - hes breaking the rules and trying to seek another term. He has to show strength no matter what. @FlukeFinancial Link to comment Share on other sites More sharing options...
Philip Morris IV Posted January 10, 2017 Share Posted January 10, 2017 Correct, it is more than just words (I also didn't catch the S&P ratings upgrade today), but it always was. The point was that positive news is now being met with positive reaction. Contrast this with the following catalog of reactions in 2016: 1/13/2016: GM announces $9 billion buyback, 2016 EPS guidance of $5.25-$5.75, and increases dividend 6% > stock price closed -4% 2/3/2016: reported EPS $1.39 > consensus EPS forecast $1.24 (12% beat) > stock price closed -4% 4/21/2016: reported EPS $1.26 > consensus EPS forecast $1.01 (25% beat) > stock price closed -2% 7/21/2016: reported EPS $1.86 > consensus EPS forecast $1.52 (22% beat) > stock price closed -2% 10/25/2016: reported EPS $1.72 > consensus EPS forecast $1.44 (19% beat) > stock price closed -4% Link to comment Share on other sites More sharing options...
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