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GM - General Motors


PlanMaestro

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Holy sheesh man.  I'm sorely tempted sell this thing just because any organization that would pick that guy to be the one making the presentation is doomed to failure (not to mention all the GD recalls).  The GD truck they awarded is on recall.

 

You were fine with the bankruptcy and recalls of over 30 million cars. But when a dealer guy that gets chosen to hand over a car because he's a baseball fan gets a little nervous in front of a superstar, an attractive woman and a couple of million viewers, you draw the line?  :)

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Holy sheesh man.  I'm sorely tempted sell this thing just because any organization that would pick that guy to be the one making the presentation is doomed to failure (not to mention all the GD recalls).  The GD truck they awarded is on recall.

 

You were fine with the bankruptcy and recalls of over 30 million cars. But when a dealer guy that gets chosen to hand over a car because he's a baseball fan gets a little nervous in front of a superstar, an attractive woman and a couple of million viewers, you draw the line?  :)

 

 

Haha.  The bankruptcy was a positive for post BK equity holders.  As it often is.  But I can't say I bought it then.  They should have let the commish do it.  Didn't he make his money in selling cars?

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Is there a concise GM thesis somewhere?  Is it just a stock selling for very cheap?

 

Kyle Bass had a short presentation on GM (December 2013).

 

You mean a short presentation on his long position in GM. Just clarifying for others since the statement could be construed as Kyle Bass being short GM.

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Is there a concise GM thesis somewhere?  Is it just a stock selling for very cheap?

 

- Post-restructure, the industry/GM is actually decent to good

- Low breakeven relative to SARR, which means hard to ever have negative net income

- Model rationalization means less models -> more capex per model -> better models -> stable to gaining market share

- Long run way for high SAAR (most debatable)

- Cheap from an EV/EBITDA perspective

 

GM is one of the few things that I am very close to buying.

 

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Is there a concise GM thesis somewhere?  Is it just a stock selling for very cheap?

 

Kyle Bass had a short presentation on GM (December 2013).

 

You mean a short presentation on his long position in GM. Just clarifying for others since the statement could be construed as Kyle Bass being short GM.

 

Yes, thanks for clarifying.

 

Since he was asking for a concise thesis, I thought Kyle Bass' 13 page presentation would qualify.

 

He recently said GM was still a large long position.

 

;)

 

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Is there a concise GM thesis somewhere?  Is it just a stock selling for very cheap?

 

- Post-restructure, the industry/GM is actually decent to good

- Low breakeven relative to SARR, which means hard to ever have negative net income

- Model rationalization means less models -> more capex per model -> better models -> stable to gaining market share

- Long run way for high SAAR (most debatable)

- Cheap from an EV/EBITDA perspective

 

GM is one of the few things that I am very close to buying.

 

just that their culture seems hard to change, like IBM ... that's really making me biting my nails

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It's Kyle Basses largest holding ... though I personally don't weight that very heavily. 

 

But what does interest me, I believe Ted Weschler bought a few million during Q3 in the $34 range. 

 

Is there a concise GM thesis somewhere?  Is it just a stock selling for very cheap?

 

Kyle Bass had a short presentation on GM (December 2013).

 

You mean a short presentation on his long position in GM. Just clarifying for others since the statement could be construed as Kyle Bass being short GM.

 

Yes, thanks for clarifying.

 

Since he was asking for a concise thesis, I thought Kyle Bass' 13 page presentation would qualify.

 

He recently said GM was still a large long position.

 

;)

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GM produces about as many cars as VW and Toyota - those three constantly are at the top of the world-wide sales bracket. 

But, GM is roughly half as profitable as VW and Toyota.  The upside is for GM's profit margins to double to what VW/TM enjoy today, which would also probably double or more their stock price. 

 

Almost everyone focuses on the U.S. and China, where GM makes most of its profits.  But that is not where the upside comes from - "everywhere else" (Europe, South America, Asia ex-China) is losing a lot of money. Toyota is profitable everywhere it sells cars. 

 

In order for that to happen, GM needs to think like a single global organization.  They have to remove factories from expensive areas, and they have to close factories and shut down brands in areas where they are underperforming.  Then they need to efficiently re-use R&D costs in other areas, and unleash their vast economies of scale.  Right now, GM operates like they are many separate little companies across the globe, not sharing engineering or parts, and thus never really getting economies of scale like others do.  Frankly GM seems to be the stupid kid in class because ... why they're trying to get economies of scale in 2014 instead of ... oh 2060, I don't know.  But right now is when they've seen the religion, so you should see company-wide margins improve as they standardize and use those economies of scale. 

 

 

 

 

 

 

- Post-restructure, the industry/GM is actually decent to good

- Low breakeven relative to SARR, which means hard to ever have negative net income

- Model rationalization means less models -> more capex per model -> better models -> stable to gaining market share

- Long run way for high SAAR (most debatable)

- Cheap from an EV/EBITDA perspective

 

GM is one of the few things that I am very close to buying.

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I think this is where they want to go eventually but turnarounds take time, especially if you are trying to fix business in Europe, where the regulations are more rigid. It is not easy to close factories kill brands etc. in Europe but GM seems to be on the right rack for now. Their objective is to be profitable in Europe by 16 and transition to more global production platforms through time as articulated in their latest investor meeting. I am not sure whether this time it will be any different for GM in Europe though. Last time they made any profits there was long time a go.   

 

 

In order for that to happen, GM needs to think like a single global organization.  They have to remove factories from expensive areas, and they have to close factories and shut down brands in areas where they are underperforming.  Then they need to efficiently re-use R&D costs in other areas, and unleash their vast economies of scale.  Right now, GM operates like they are many separate little companies across the globe, not sharing engineering or parts, and thus never really getting economies of scale like others do.  Frankly GM seems to be the stupid kid in class because ... why they're trying to get economies of scale in 2014 instead of ... oh 2060, I don't know.  But right now is when they've seen the religion, so you should see company-wide margins improve as they standardize and use those economies of scale. 

 

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They've been working on Europe for years, and I think they're all set up to be slightly profitable by the end of next year.

 

If you back out restructuring and f/x charges, Europe lost $100M last quarter - which is small comparable to the billions they used to lose. 

 

They're in the process of removing Chevy from Europe.  Seems to me ex-Chevy, they're already profitable. 

 

 

 

I think this is where they want to go eventually but turnarounds take time, especially if you are trying to fix business in Europe, where the regulations are more rigid. It is not easy to close factories kill brands etc. in Europe but GM seems to be on the right rack for now. Their objective is to be profitable in Europe by 16 and transition to more global production platforms through time as articulated in their latest investor meeting. I am not sure whether this time it will be any different for GM in Europe though. Last time they made any profits there was long time a go.   

 

 

In order for that to happen, GM needs to think like a single global organization.  They have to remove factories from expensive areas, and they have to close factories and shut down brands in areas where they are underperforming.  Then they need to efficiently re-use R&D costs in other areas, and unleash their vast economies of scale.  Right now, GM operates like they are many separate little companies across the globe, not sharing engineering or parts, and thus never really getting economies of scale like others do.  Frankly GM seems to be the stupid kid in class because ... why they're trying to get economies of scale in 2014 instead of ... oh 2060, I don't know.  But right now is when they've seen the religion, so you should see company-wide margins improve as they standardize and use those economies of scale. 

 

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This is good news.  Old GM would keep production flat, and discount to sell the cars.  New GM seems to be removing production, and keeping margins. 

 

If every car maker behaves this way, the industry will be a lot more profitable and create higher multiples. 

 

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