GM - General Motors

[fareastwarriors]

Looking at G.M., China Widens Crackdown on Multinationals

 

 

http://www.nytimes.com/2014/08/13/business/international/looking-at-gm-china-widens-crackdown-on-multinationals.html?ref=business&_r=0

[CorpRaider]

I apologize if this has been previously discussed in the thread, but is this generally considered to be a WEB position?  Seems like it is right around the area where it would be big enough for him to maybe be personally calling the shots on it.  I noted that BRK upped the position by a bit on the latest 13F.  Thanks.

[Picasso]

I apologize if this has been previously discussed in the thread, but is this generally considered to be a WEB position?  Seems like it is right around the area where it would be big enough for him to maybe be personally calling the shots on it.  I noted that BRK upped the position by a bit on the latest 13F.  Thanks.

 

Nope this is Weschler.

[jeffmori7]

I apologize if this has been previously discussed in the thread, but is this generally considered to be a WEB position?  Seems like it is right around the area where it would be big enough for him to maybe be personally calling the shots on it.  I noted that BRK upped the position by a bit on the latest 13F.  Thanks.

 

Nope this is Weschler.

 

Could it be Combs and Weschler? Because the position was cut by 25% last quarter, but now is up by 10% again one quarter later?

[CorpRaider]

Thanks.  With him cracking jokes about Charlie's hearing and purchasing GM at $36, I started to wonder.

[fareastwarriors]

Credit Holds the Key to Auto Sales

 

Booming Auto Sales Could Be Dented if the Tonic of Cheap Credit Were Removed

 

http://online.wsj.com/articles/credit-holds-the-key-to-auto-sales-ahead-of-the-tape-1409686892

[Mephistopheles]

Can anyone recommend some good books/sites where I can learn about the auto business and how to value auto stocks? Thanks

[DCG]

I work in the auto business, but on the software side. I might be able to answer some questions though.

[compounding]

Can anyone recommend some good books/sites where I can learn about the auto business and how to value auto stocks? Thanks

 

Overhaul and Once Upon A Car are probably good books to start off with. For more company-specific material Mondo Agnelli, Shift (by Ghosn) or American Turnaround were good reads as well.

 

I didn't really enjoy My Years With General Motors or Iacocca that much, but I've seen other people recommend them highly.

 

There's also a chapter in Beating The Street that can be useful, with Lynch's take on how to think about auto investments and the pent-up demand cycle.

[Mephistopheles]

Can anyone recommend some good books/sites where I can learn about the auto business and how to value auto stocks? Thanks

 

Overhaul and Once Upon A Car are probably good books to start off with. For more company-specific material Mondo Agnelli, Shift (by Ghosn) or American Turnaround were good reads as well.

 

I didn't really enjoy My Years With General Motors or Iacocca that much, but I've seen other people recommend them highly.

 

There's also a chapter in Beating The Street that can be useful, with Lynch's take on how to think about auto investments and the pent-up demand cycle.

 

Thanks compounding, I'll check these out.

 

I work in the auto business, but on the software side. I might be able to answer some questions though.

 

Thanks DCG, will do. :)

[fareastwarriors]

GM Raised to Investment Grade By S&P

 

Ratings Firm Says Recall Remains Negative Factor

 

http://online.wsj.com/articles/gm-raised-to-investment-grade-by-s-p-1411679235?mod=WSJ_hp_LEFTWhatsNewsCollection

[Picasso]

Has anyone thought about the likelihood of an activist investor in GM?

 

Cash makes up 60% of the current market cap, you have a pension liability with a below market discount rate (seems very manageable), and now a return to investment grade in the corporate bond market.

 

Seems like there is a lot to do in terms of optimizing the capital structure and more efficiency in operations given low margins compared to other peers.

 

This seems like a stock where share repurchases near the current share price would add a ton of value to the long-term value.

 

They repurchased 20% of the shares from the government at $27.50 (if I remember correctly) but reissued shares at $40 or so when the convertible preferred stock matured.  Now the share price is back down to $33 and is depressed from a combination of recalls and from what seems like a lot of hedge fund liquidations of what was once a hedge fund hotel.

 

There are no catalysts but cheap enough to provide a wide margin of safety.  The right kind of activism and the stock can provide some very healthy returns.  Thoughts?

[wisdom]

Buffett said in a recent interview that Ted has 15% of the money he manages in GM. Kyle Bass called this his best idea.

 

Pabrai has a huge investment GM warrant B and according to poster above Ted said for his personal portfolio he would have bought the C warrants a he can take on more risk.

 

analyst expect close to $5 EPS in 2016 + you have $17 cash per share. US car fleet is old and the replacement cycle is on.

 

Current share price is at $33. At 10x you are looking at $50 share plus cash gives you options.

 

The catalyst could be the recalls ending and the cases being settled.

[Picasso]

Buffett said in a recent interview that Ted has 15% of the money he manages in GM. Kyle Bass called this his best idea.

 

Pabrai has a huge investment GM warrant B and according to poster above Ted said for his personal portfolio he would have bought the C warrants a he can take on more risk.

 

analyst expect close to $5 EPS in 2016 + you have $17 cash per share. US car fleet is old and the replacement cycle is on.

 

Current share price is at $33. At 10x you are looking at $50 share plus cash gives you options.

 

The catalyst could be the recalls ending and the cases being settled.

 

The C warrants trade for a dollar, while the 42 strike 2016 options also trade for a dollar.  Any advantage to the warrants aside from liquidity on large purchases?

 

I guess I have two hesitancies on GM.  The first is the likes of competition from TSLA.  The second is the generally low valuations for all automakers.  Even the Japanese automakers trade for a small premium to book value and near 10x earnings. 

 

So would it be better to buy the best (Toyota Motors) at 1.3x book and 10x earnings or GM at 1x book and 7x earnings?  Or is it better to buy a highly levered one (Fiat) which trades at a very low multiple or normalized earnings?

 

Perhaps the thing I like best about GM is the optionality of cash, close to a 4% dividend to reduce some opportunity cost risk, and generally distaste among investors.

 

I'm under the impression that the valuation more than offsets any potential negatives but if those negatives present themselves as further hurdles in the years ahead it would be prudent to change the thesis (looking at you SHLD investors).

[karthikpm]

Any thoughts on GM common vs Warrants at today's prices?

 

[fareastwarriors]

U.S. Car Sales Hitting the Speed Limit

 

http://online.wsj.com/articles/u-s-car-sales-hitting-the-speed-limit-heard-on-the-street-1411573081?mod=Markets_newsreel_10

[peter1234]

Buffett said in a recent interview that Ted has 15% of the money he manages in GM.

 

Ted Weschler, Buffett and Mary Barra GM CEO went out for lunch together in Buffetts 2006 Cadillac.

 

Buffett asks her if the new Cadilllacs are any better?

 

Answer is ... yes!

 

Buffett sends Susie Buffett to get him the newest Cadillac the next day.

 

;D

[peter1234]

Mary Barra is a total car 'guy' that is passionate about what she does.

 

Buffetts 1 line employment interview:

 

Are you passionate?

 

;D

[Mephistopheles]

Has anyone thought about the likelihood of an activist investor in GM?

 

Cash makes up 60% of the current market cap, you have a pension liability with a below market discount rate (seems very manageable), and now a return to investment grade in the corporate bond market.

 

Do they disclose the discount rate? I'm having trouble finding it in the 10-k. Unless you're talking about the rate of return assumption, which is 6.5%.

[Picasso]

Has anyone thought about the likelihood of an activist investor in GM?

 

Cash makes up 60% of the current market cap, you have a pension liability with a below market discount rate (seems very manageable), and now a return to investment grade in the corporate bond market.

Do they disclose the discount rate? I'm having trouble finding it in the 10-k. Unless you're talking about the rate of return assumption, which is 6.5%.

 

Page 100 of the last 10-K.  The discount rate is just under 4%.

 

From a 2013 Bloomberg article http://www.bloomberg.com/news/2013-07-26/gm-to-ford-pension-gains-frees-cash-for-fusion-like-hits.html

 

For GM, each increase of 1 percentage point in the discount rate cuts $8.76 billion from the present value of its U.S. pension obligation, according to its 2012 annual report. A similar increase would reduce Ford’s U.S. total obligation by $5.2 billion, its regulatory filing shows.

[Mephistopheles]

Has anyone thought about the likelihood of an activist investor in GM?

 

Cash makes up 60% of the current market cap, you have a pension liability with a below market discount rate (seems very manageable), and now a return to investment grade in the corporate bond market.

Do they disclose the discount rate? I'm having trouble finding it in the 10-k. Unless you're talking about the rate of return assumption, which is 6.5%.

 

Page 100 of the last 10-K.  The discount rate is just under 4%.

 

From a 2013 Bloomberg article http://www.bloomberg.com/news/2013-07-26/gm-to-ford-pension-gains-frees-cash-for-fusion-like-hits.html

 

For GM, each increase of 1 percentage point in the discount rate cuts $8.76 billion from the present value of its U.S. pension obligation, according to its 2012 annual report. A similar increase would reduce Ford’s U.S. total obligation by $5.2 billion, its regulatory filing shows.

 

Great, thx!

[muscleman]

Has anyone thought about the likelihood of an activist investor in GM?

 

Cash makes up 60% of the current market cap, you have a pension liability with a below market discount rate (seems very manageable), and now a return to investment grade in the corporate bond market.

 

Seems like there is a lot to do in terms of optimizing the capital structure and more efficiency in operations given low margins compared to other peers.

 

This seems like a stock where share repurchases near the current share price would add a ton of value to the long-term value.

 

They repurchased 20% of the shares from the government at $27.50 (if I remember correctly) but reissued shares at $40 or so when the convertible preferred stock matured.  Now the share price is back down to $33 and is depressed from a combination of recalls and from what seems like a lot of hedge fund liquidations of what was once a hedge fund hotel.

 

There are no catalysts but cheap enough to provide a wide margin of safety.  The right kind of activism and the stock can provide some very healthy returns.  Thoughts?

 

Are you sure about that? 60% of market cap should be $31.8bn. I only see $19.8 bn in their 10-Q.

 

[Picasso]

I included marketable securities which are mostly Treasury notes.

[Picasso]

Ford Sees Pretax Profit $6 Billion, Missing 2014 Profit Goals

 

http://www.bloomberg.com/news/2014-09-29/ford-sees-pretax-profit-6-billion-missing-2014-profit-goals.html

 

GM seems to have tracked this move down in Ford.  GM has about 17% market share in Brazil versus Ford at 9.2%.  I wonder how these losses in South America will compare to GM.

[fareastwarriors]

GM Hopes to Shift Gears After Recalls

 

CEO Will Outline Strategy to Deliver Profit, Quality and Satisfaction Goals

 

 

 

http://online.wsj.com/articles/gm-to-shift-gears-set-new-goals-1412036113?mod=WSJ_hp_RightTopStories