GM - General Motors

[Dalal.Holdings]

Long Einhorn interview on Bloomberg:

 

https://www.bloomberg.com/news/videos/2017-06-02/david-einhorn-on-gm-value-tesla-profit-apple-video

[Guest notorious546]

Has anyone seen a graph/image which highlights how the auto-industry has consolidated over time? It would be interesting to see how this compares over time.

[york]

Has anyone seen a graph/image which highlights how the auto-industry has consolidated over time? It would be interesting to see how this compares over time.

 

 

Not entirely sure if this is what you wanted. Only super user friendly if you buy the poster.

https://www.historyshots.com/collections/pop-culture/products/genealogy-of-automobile-companies

 

This is current snapshot of where things stand today.

http://static2.businessinsider.com/image/590a018c2ceae91f008b4aa5-960/bi-graphicscar%20brands%20web%20v03.png

 

Additionally, this fella has a pretty well done visualization of the automaker haystack.

http://www.automotivefamilytree.com/#

 

 

 

 

[gokou3]

GM Reports Net Revenue of $37 Billion and Income of $2.4 Billion from Continuing Operations

http://www.gm.com/mol/m-emergency_news-2017-0725-gm-2017-q2-release.html

 

Capital Return

 

In  the  second  quarter  of  2017,  GM  paid

$0.6  billion  in  common  stock  dividends

and  repurchased  $1.5  billion  of  common

stock.

  For  the  full  year  GM  expects  to

return  up  to  $7  billion  to  shareholders

through  common  stock  dividends  and

share buybacks.

 

 

[Liberty]

https://arstechnica.com/cars/2017/09/turns-out-the-chevy-bolt-is-a-lot-of-fun-to-autocross/

[boilermaker75]

https://arstechnica.com/cars/2017/09/turns-out-the-chevy-bolt-is-a-lot-of-fun-to-autocross/

 

I plan to test drive the Bolt, although I am not interested in purchasing.  They know I am not interested in purchasing. The Chevy dealer is also the BMW dealer and I recently bought a BMW; so they are going to give me a call to test drive as soon as they get their first Bolt.

[chesko182]

GM is issuing preferred equity this week (amount not known yet) price talk is around 6.5%, will be issued under GM financial, use of proceeds for general corporate purposes.

 

Very interesting to see that even though they were completely opposed to greenlight's proposal, in some ways they are following it by doing this. Einhorn's dual share class structure was essentially creating a preferred stock, is it possible this new security drives the income investors to it and growth investors into the common equity? There's definitely some capital structure optimization reasoning behind this.

[DTVI]

I apologize if I'm being dense, but In Greenlight's Q2 letter, Einhorn notes "GM is capitalized to survive any foreseeable downturn. It has $20 billion of cash and a $14.5 billion undrawn revolver".  Is it in the range of normalcy for them to issue preferred equity in such a scenario? 

 

Wishcasting a bit, could it be a possible prelude to an offer for FCAU?

[Philip Morris IV]

Unless the common dividend is cut I don't see how they can decidedly split the income- from the growth-investors in the shareholder base.

 

If GM wanted to execute a less wacky version of The Einhorn Plan, they could cut the common dividend and watch their stock tank, then tender/exchange a large portion of common shares for new preferred shares (or issue preferreds and use the proceeds to buyback common).  That would effectively transfer the current dividend to preferred shareholders while the common would be rewarded with a huge EPS spike.  But GM is probably (and rightfully) skeptical that the institutions would react how they/Einhorn expect.

[Gregmal]

I apologize if I'm being dense, but In Greenlight's Q2 letter, Einhorn notes "GM is capitalized to survive any foreseeable downturn. It has $20 billion of cash and a $14.5 billion undrawn revolver".  Is it in the range of normalcy for them to issue preferred equity in such a scenario? 

 

Wishcasting a bit, could it be a possible prelude to an offer for FCAU?

 

I don't mind them hoarding as much cash and liquidity as they can here. If they can retire shares with those proceeds then the net cost is barely 2%. Although admittedly, I'd be a smidge ticked if they did a massive buyback here at $38 after seeing them dick around for the past 5 years between $25-$35. But I'd still probably all in all be ok with it.

[Dalal.Holdings]

GM is issuing preferred equity this week (amount not known yet) price talk is around 6.5%, will be issued under GM financial, use of proceeds for general corporate purposes.

 

Do you have a source for this information?

[dutchman]

Deutche bank upgraded gm today!  Can anyone share the report?! :)

[Dalal.Holdings]

A continued investment in GM over the past few years required something that many people find difficult: patience and confidence in their analysis and ideas. David Einhorn certainly didn't have it (was busy making obscene proposals and later winding down his shares over the past few months).

 

The cheapest stock in the S&P 500 with a great dividend yield (relative to US Treasuries), with a large (relative to market cap) stock buyback plan in place.

 

After the Opel sale cleared in late July, GM immediately had an extra $2B in cash to repurchase its shares. After the sale of loss making divisions, more and more future free cash has been unlocked for that purpose.

 

These analysts come out of the woodwork now that GM is near an all-time high (where were they just less than a year ago in the low 30s?) like the weatherman who calls the storm when it's already here. Even more amusingly, many of them were deeply bearish on GM not too long ago. Today, they attribute a bulk of their "valuation" of GM to driverless/electrification, ignoring the large cash generating business that exists and the large buyback potential (relative to market cap)--the real answer is right in front of them. Occam's razor. Albeit Mary has done an amazing job at driverless prospects (Cruise Automation acquisition) and electrification (Bolt/Volt), but these are not driving the "value" of the stock currently.

 

Still the cheapest stock in the entire S&P 500 on a P/E basis...

[cmlber]

A continued investment in GM over the past few years required something that many people find difficult: patience and confidence in their analysis and ideas. David Einhorn certainly didn't have it (was busy making obscene proposals and later winding down his shares over the past few months).

 

The cheapest stock in the S&P 500 with a great dividend yield (relative to US Treasuries), with a large (relative to market cap) stock buyback plan in place.

 

After the Opel sale cleared in late July, GM immediately had an extra $2B in cash to repurchase its shares. After the sale of loss making divisions, more and more future free cash has been unlocked for that purpose.

 

These analysts come out of the woodwork now that GM is near an all-time high (where were they just less than a year ago in the low 30s?) like the weatherman who calls the storm when it's already here. Even more amusingly, many of them were deeply bearish on GM not too long ago. Today, they attribute a bulk of their "valuation" of GM to driverless/electrification, ignoring the large cash generating business that exists and the large buyback potential (relative to market cap)--the real answer is right in front of them. Occam's razor. Albeit Mary has done an amazing job at driverless prospects (Cruise Automation acquisition) and electrification (Bolt/Volt), but these are not driving the "value" of the stock currently.

 

Still the cheapest stock in the entire S&P 500 on a P/E basis...

 

You first posted your thesis on GM almost two years ago.  It was $33.31/share.  The stock is up 22% since then (let's say 30% with dividends).  The S&P 500 is also up 29% in that time period.  Why are you taking a victory lap and shit-talking David Einhorn for not having patience and the analysts who were so stupid that they just didn't get it and missed out on this huge ride?  Also, what evidence do you have that Mary has done an "amazing" job at driverless prospects?  I agree with you on the stock, but I think you have some commitment bias here. 

[RadMan24]

This discussion won't end well. Daniel Ammann has also been selling shares lately, President of GM.

 

On another topic, I suggest folks listen to the Maven webcast - you get a sense of how GM is opening a funnel to new customers, laying the groundwork for efficient electric fleet usage, automation, and inner-company synergies. After that presentation, a lot of these analysts appear to be waking up - GM has electric cars, and are able to build up electric infrastructure in major cities (which house millions of customers that would never own a GM car) all because of Maven operations (started in Jan. 2016 by the way). Stealing its own slogan, Maven is operating like Berkshire's NetJets asset model.

 

If Maven is successful, the opportunities are huge. I'd compare it to Welsch's $1 billion bet on China way back in the day. Same with Cruze automation, although I think Maven may offer superior returns if autonomous technology becomes commoditized.

 

 

 

 

 

[Tompety03]

Dalal - Where did you see that Greenlight has been winding down their position?  Q2-16 Whale Wisdom 13F shows 30% of the portfolio in GM, although I may be misreading that.

 

Thanks,

Chris

[gokou3]

Seems like Greenlight quadrupled their position in 2017Q1?

 

http://www.rocketfinancial.com/OwnHist.aspx?sID=39458&fID=374

 

 

[Tompety03]

yes, sorry meant to say Q2-17. I have not seen anything that it has changed since then.

[sleepydragon]

https://www.bloomberg.com/news/articles/2017-09-28/when-warren-buffett-runs-your-pension-plan

 

"Take Burlington Northern Santa Fe. Before Berkshire took control, in 2010, the railroad’s pension fund held hundreds of securities and was 73 percent funded, meaning it had only 73¢ for every dollar owed to plan participants. By the end of last year the situation had changed: The plan was 9 percent overfunded. Four stocks—DaVita, VeriSign, General Motors, and Verizon Communications—accounted for more than half its assets as of Sept. 30, 2016, a Labor Department filing shows.

"

[Dalal.Holdings]

A continued investment in GM over the past few years required something that many people find difficult: patience and confidence in their analysis and ideas. David Einhorn certainly didn't have it (was busy making obscene proposals and later winding down his shares over the past few months).

 

The cheapest stock in the S&P 500 with a great dividend yield (relative to US Treasuries), with a large (relative to market cap) stock buyback plan in place.

 

After the Opel sale cleared in late July, GM immediately had an extra $2B in cash to repurchase its shares. After the sale of loss making divisions, more and more future free cash has been unlocked for that purpose.

 

These analysts come out of the woodwork now that GM is near an all-time high (where were they just less than a year ago in the low 30s?) like the weatherman who calls the storm when it's already here. Even more amusingly, many of them were deeply bearish on GM not too long ago. Today, they attribute a bulk of their "valuation" of GM to driverless/electrification, ignoring the large cash generating business that exists and the large buyback potential (relative to market cap)--the real answer is right in front of them. Occam's razor. Albeit Mary has done an amazing job at driverless prospects (Cruise Automation acquisition) and electrification (Bolt/Volt), but these are not driving the "value" of the stock currently.

 

Still the cheapest stock in the entire S&P 500 on a P/E basis...

 

You first posted your thesis on GM almost two years ago.  It was $33.31/share.  The stock is up 22% since then (let's say 30% with dividends).  The S&P 500 is also up 29% in that time period.  Why are you taking a victory lap and shit-talking David Einhorn for not having patience and the analysts who were so stupid that they just didn't get it and missed out on this huge ride?  Also, what evidence do you have that Mary has done an "amazing" job at driverless prospects?  I agree with you on the stock, but I think you have some commitment bias here.

 

I’m not sure where in my post you gathered that I was running “a victory lap” or stated that there’s been a “huge ride”.

 

Between Q1 and Q2, greenlight trimmed its GM stake when you include common stock and call options. It was in Q2 that his proposals were rejected. We have no public info on Q3.

 

Analysts like those at Morgan Stanley were negative on GM when it was in the low 30s and become bullish near 40, hence their poor predictive value and being late to the party. One reason among many on why they should be ignored.

 

As for their progress in driverless vehicles, I’ll let you be the judge:

 

https://www.youtube.com/channel/UCP1rvCYiruh4SDHyPqcxlJw

 

https://medium.com/kylevogt

 

https://techcrunch.com/2017/09/11/gm-and-cruise-announce-first-mass-production-self-driving-car/

 

[sleepydragon]

IMO, Einhorn doesnt seem to be very good in stock picking. His biggest "wins" are the stocks he shorted: moody's, green mountain coffee, etc.

He has talents in marketing and poker.

 

[AzCactus]

wasn't Apple a big win ?

[dyow]

I disagree about Einhorn.  I think he is a very good stock picker, i still consider him one of the best.

 

The problem with Einhorn, is he can't seem to stay still.  He moves in and out of positions too much.  And he has too many positions.  Following him over the past few years his highest conviction longs have been on the money (except for one).

 

And he has a short book in a bull market.

 

If he invested like buffett and focussed just on his best longs he would have destroyed the market.  But i don't think he can do this, he seems like the type of guy who thinks a a lot, and gets bored and has to do something - i think if you criticize him this is his biggest flaw. 

 

Also i think one of the posters in this thread is actually mary, the posts are very suspicious.

 

 

[nikhil25]

Also i think one of the posters in this thread is actually mary, the posts are very suspicious.

 

LMAO  ;D

[Gregmal]

I disagree about Einhorn.  I think he is a very good stock picker, i still consider him one of the best.

 

The problem with Einhorn, is he can't seem to stay still.  He moves in and out of positions too much.  And he has too many positions.  Following him over the past few years his highest conviction longs have been on the money (except for one).

 

And he has a short book in a bull market.

 

If he invested like buffett and focussed just on his best longs he would have destroyed the market.  But i don't think he can do this, he seems like the type of guy who thinks a a lot, and gets bored and has to do something - i think if you criticize him this is his biggest flaw. 

 

Also i think one of the posters in this thread is actually mary, the posts are very suspicious.

 

Totally agree on Einhorn.

 

I don't even think GMCR ended up being that big of a winner for him.

 

But all in all, he's a hell of a stock picker. How about Chemours last year? My biggest gripe if I had to find one is that the guy simply doesn't learn/isnt willing to steer clear of shorting good companies solely because of valuation being excessive. It's such a common mistake for him, over and over and over. It's easy to identify, and his performance would be much better if he'd just stick for shorting junk.