GM - General Motors

[CorpRaider]

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.

 

Agree on Einhorn.  He's legit in my opinion.  Was going to buy some GLRE but the short book; I just can't get comfortable on shorting as a routine practice, when you have usually a positive expected return asset, costs are high, your losses are infinite...

 

I also worry about the poker interests and the fact that he's getting divorced.

[Jurgis]

https://www.bloomberg.com/news/articles/2017-09-26/cadillac-finally-has-an-answer-to-tesla-s-autopilot

 

Headline is clickbaity, article more level headed.

[sleepydragon]

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.

 

Agree on Einhorn.  He's legit in my opinion.  Was going to buy some GLRE but the short book; I just can't get comfortable on shorting as a routine practice, when you have usually a positive expected return asset, costs are high, your losses are infinite...

 

I also worry about the poker interests and the fact that he's getting divorced.

 

He is getting divorced? Per my professional experience, hedge fund manager getting divorced usually happen the year when they are expecting a large jump of year end bonus :)

[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.

 

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/

 

You just said in your "my post wasn't a victory lap" response that the analysts are "late to the party"... 

 

What party?  The stock is up inline with the S&P over the last 2 years and much lower over the last 5 when the analysts have been bearish. 

 

Also, Einhorn trimming GM from a $3 billion position to a $2 billion position after 5 years hardly seems like having no patience...

 

Those links just prove a) they can make a car drive itself in one city (wow Mary!, you can now do what Google has been doing for years) and b) they're very good at making press releases that make you think they're making amazing progress.  Saying you have the first mass-produceable self-driving car (it just won't be able to drive itself for a while) is like saying you're the first to be able to mass-produce hover-boards because you can mass produce skateboards without wheels, but they just can't hover yet. 

[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/

 

You just said in your "my post wasn't a victory lap" response that the analysts are "late to the party"... 

 

What party?  The stock is up inline with the S&P over the last 2 years and much lower over the last 5 when the analysts have been bearish. 

 

Also, Einhorn trimming GM from a $3 billion position to a $2 billion position after 5 years hardly seems like having no patience...

 

Those links just prove a) they can make a car drive itself in one city (wow Mary!, you can now do what Google has been doing for years) and b) they're very good at making press releases that make you think they're making amazing progress.  Saying you have the first mass-produceable self-driving car (it just won't be able to drive itself for a while) is like saying you're the first to be able to mass-produce hover-boards because you can mass produce skateboards without wheels, but they just can't hover yet.

 

Haha I never said that the driverless thing was a huge deal. In fact, I criticized analysts for valuing GM based on this in my original post. I merely said that the Cruise acquisition was amazing which I still believe to be true as it puts GM ahead of all other automakers with the exception of Tesla in this area. Which I think is without a doubt true as no automaker will get the software/tech talent to do the job that Silicon Valley has.

 

Funny that you think driving in a city like SF is no big deal and not an accomplishment. I mean, it’s only a major city with many many obstacles (certainly far more than highway driving or suburban or rural driving), but ok sure buddy.

 

And ya, we all know that when we trim a position by 30%, it means we have full conviction.

[cmlber]

Funny that you think driving in a city like SF is no big deal and not an accomplishment. I mean, it’s only a major city with many many obstacles (certainly far more than highway driving or suburban or rural driving), but ok sure buddy.

 

Sure, it takes incredibly talented people to accomplish that.  But to tout it as "amazing" and evidence of how amazing Mary is as a CEO is ludicrous.  Google has been doing this for 5 years! 

 

If you or I ran GM and had access to $20 billion, I'm nearly certain we could get the same result. 

 

And ya, we all know that when we trim a position by 30%, it means we have full conviction.

 

He still has 20% of his portfolio in it lol  And his position size is actually larger than it was in Q4, he just bought some more in Q1 and sold some of it in Q2.  Hardly the behavior of someone impatient and late to the party.

[Dalal.Holdings]

Funny that you think driving in a city like SF is no big deal and not an accomplishment. I mean, it’s only a major city with many many obstacles (certainly far more than highway driving or suburban or rural driving), but ok sure buddy.

 

Sure, it takes incredibly talented people to accomplish that.  But to tout it as "amazing" and evidence of how amazing Mary is as a CEO is ludicrous.  Google has been doing this for 5 years! 

 

If you or I ran GM and had access to $20 billion, I'm nearly certain we could get the same result. 

 

 

Except that GM bought this talent for just $1B, not 20. I would call that amazing. Also, GM has only owned cruise for little over a year and they already have a chevy bolt outfitted for autonomy.

 

Your comment on access to $20 B is kind of silly. Not like GM doesn’t have some capital intensive businesses that it needs to worry about right? Autonomy and car making so easy anybody could do it, that’s why Apple backed off and Google hasn’t moved beyond the prototype stage after working so long at it. Yet here comes GM and just about a year and just $1B later they have something impressive to show for it. Yeah, “amazing” is the word I’d use.

 

Einhorn started selling the same Q that shareholders rejected his proposal. Sounds like more than a coincidence as it would make no sense for him to sell before the vote in June, so those sales were in a short 2 week period at the end of 2Q. We’ll see how much he had left at the end of Q3 soon.

[Gregmal]

I think the late to the party comment more so refers to the fact that GM is doing nothing different now when every analyst loves it. Cruze is not new. Neither is the Lyft stake. The bubble sectors analysts are now giving GM credit for have been there the entire time. Meanwhile the core business continues to spit off shit loads of cash, going on 4-5 years. The stock has FINALLY started rewarding shareholders the past MONTH. Still has a long way to go and still doesn't justify the years of shitty performance. But there is a certain level of absurdity to all the analysts now loving this when nothing has changed. Adam Jonas the most egregious of them all. I've never seen an analyst have it out for a company more than Jonas did for GM during 2015-2016.

 

And Einhorn is notorious for trading around positions. One having a 10%+ position in any name is undoubtedly plenty of conviction.

[cmlber]

Funny that you think driving in a city like SF is no big deal and not an accomplishment. I mean, it’s only a major city with many many obstacles (certainly far more than highway driving or suburban or rural driving), but ok sure buddy.

 

Sure, it takes incredibly talented people to accomplish that.  But to tout it as "amazing" and evidence of how amazing Mary is as a CEO is ludicrous.  Google has been doing this for 5 years! 

 

If you or I ran GM and had access to $20 billion, I'm nearly certain we could get the same result. 

 

 

Except that GM bought this talent for just $1B, not 20. I would call that amazing. Also, GM has only owned cruise for little over a year and they already have a chevy bolt outfitted for autonomy.

 

Your comment on access to $20 B is kind of silly. Not like GM doesn’t have some capital intensive businesses that it needs to worry about right? Autonomy and car making so easy anybody could do it, that’s why Apple backed off and Google hasn’t moved beyond the prototype stage after working so long at it. Yet here comes GM and just about a year and just $1B later they have something impressive to show for it. Yeah, “amazing” is the word I’d use.

 

Einhorn started selling the same Q that shareholders rejected his proposal. Sounds like more than a coincidence as it would make no sense for him to sell before the vote in June, so those sales were in a short 2 week period at the end of 2Q. We’ll see how much he had left at the end of Q3 soon.

 

First, access to $20 B is certainly attractive to the talent necessary to build fully autonomous cars, even if the purchase price was only $1 B. 

 

Second, Cruise was already testing cars on the road in San Francisco when GM bought them for $1 B...  That ability has absolutely nothing to do with Mary Barra. 

 

And Cruise spent a grand total of $18 MM developing the technology that GM bought for $1 B two years later.  And they started right when Mary was CEO.  So if she was so amazing, why didn't she just build this internally for $18 MM?  Kyle Vogt is the amazing one.

 

With time it may turn out this was a genius acquisition, but to say right now that Mary is doing amazing things with Cruise isn't based on fact, it's based on commitment bias. 

 

[JRM]

I'll take a pre-mature victory lap.  Why not.  Several months ago I commented on an SA article that once people see SuperCruise on the new Cadillac the perception surrounding GM will change.  It's nice to be right once in a while.  It's amazing to me that somehow at this moment the perception of GM has changed based some DB analyst opinion.  Barrons said about the exact same thing at least 6-months ago, but nobody seemed to care then. 

 

Once the analysts realized that GM has investments in loss leading and soon-to-be commoditized services, the analysts went bananas.  All of the risks that "the market" was supposedly worried about the past 3-4 years are starting to come to fruition, and all of a sudden "the market" doesn't care?  Not everyone should be able to afford a pickup or SUV > 1x their salary, yet they do.  That won't go on very much longer.  At some point all of the demand that can be pulled forward will have been pulled forward.

 

With that said, GM has not reached my estimate of intrinsic value based on normalized full cycle earnings (hint: less than they're earning now). 

 

 

[Txvestor]

I'll take a pre-mature victory lap.  Why not.  Several months ago I commented on an SA article that once people see SuperCruise on the new Cadillac the perception surrounding GM will change.  It's nice to be right once in a while.  It's amazing to me that somehow at this moment the perception of GM has changed based some DB analyst opinion.  Barrons said about the exact same thing at least 6-months ago, but nobody seemed to care then. 

 

Once the analysts realized that GM has investments in loss leading and soon-to-be commoditized services, the analysts went bananas.  All of the risks that "the market" was supposedly worried about the past 3-4 years are starting to come to fruition, and all of a sudden "the market" doesn't care?  Not everyone should be able to afford a pickup or SUV > 1x their salary, yet they do.  That won't go on very much longer.  At some point all of the demand that can be pulled forward will have been pulled forward.

 

With that said, GM has not reached my estimate of intrinsic value based on normalized full cycle earnings (hint: less than they're earning now).

 

JRM,

What's your estimate of intrinsic value for GM and what are your cyclically adjusted earnings per share estimate?

[JRM]

Since I first bought GM shares and warrants in late 2014 my overall thesis hasn't changed much, but my estimate of IV has decreased mainly due to the ineffectiveness of the share buybacks.  Some things have changed that I couldn't have predicted.  Auto equity loans are actually a thing, and are growing in popularity.  This seems incredibly risky in the face of declining residual values for most cars in the near term.

 

There are a few assumptions that I make up front:

-ICE vehicles will remain prevalent, especially trucks and SUVs for at least the next 10 years (GM's profit driver will remain intact).

-Autonomous, self-driving vehicle technology will not impact car ownership habits in the next 10 years (big cities will get driverless cars first, but most people in cities don't own cars anyways).

-GM Financial is appropriately underwriting loans and passing on bad risks (I sense that this is the case, but I can't be sure).

-Share buybacks will not contribute meaningfully to EPS increases over the course of the next 10 years.

 

With a large company like GM there are so many moving parts that it is extremely difficult to account for factors such as interest rates that may help in some areas and hurt in other areas.  There are multiple cycles in progress simultaneously which don't necessarily correlate with each other; the automobile replacement cycle, gas prices, the interest rate cycle, secular growth in China, etc.  To properly value GM it should be valued in three parts: the auto-manufacturing business, GM Financial, and the "growth" businesses.  I assume the "growth" segments aren't worth anything, at least in terms of contributing to an EPS based valuation.  Although, the DB analyst says that this segment may be worth upwards of $30 billion in market cap.  I think GM would be wise to spin off the growth businesses and allow the market to capitalize them in line with their competitors such as Tesla, Uber, etc.

 

With all of that said I assume normalized earnings are $4.50 per share, and a P/E multiple of 10 should be applied.  Without getting into too much detail about probability of outcomes, this is toward the lower end of potential outcomes for my range of valuation.  A sum of the parts valuation is tougher for me because I have a hard time seeing the value in the growth businesses.  However, I think GM Financial doesn't get enough credit (bad pun?), and the growth businesses would likely be valued at a higher multiple if they were spun off.

 

I have already sold my warrants, which was not easy.  If GM reaches the DB analyst price target of ~$50 I will likely be selling my shares.

[RadMan24]

GM's plan for big cities https://www.gm.com/events/5262850.html

 

The financial and parts business will be pulling in $2b within the next 3 years give or take. That's non-cyclical compared to the auto business.

 

The auto business in China pulls in $2b a year.

 

The auto business in Europe had lost money over the past decade, and no longer an issue.

 

The S.A. and middle eastern markets were hit hard the past couple years, and should Brazil's economy and oil prices recover a little, that will pick up some slack in NA.

 

The NA business is healthy, focusing on margins rather than volumes. They can easily make sustained profits in N.A. of around $3b for several years if not through the next decade.

 

Shares outstanding ~1500. Share count will go down in future as Opel transaction finished, freeing up $2b in capital going forward.

 

Add it all up and you have base earnings of around 4.5 EPS. They are currently proving they can earn much higher than that. However, this has always been a multiple expansion bet. GM's ability to maintain strong margins and a strong balance sheet with cash flow accretive NOLs allow it to fund growth pathways including Cruize automation, Maven and Bolt (electric car infrastructure/IP).

 

For some additional perspective on Maven, I'd check it out - try it if you live in a big city. Maven is getting catchy with Millennials and the gig economy. Maven, which is pulling off a NetJets type business model, has users putting 100,000+ miles on chevy bolts, providing GM with valuable data not just on how the car performs engineering wise, but allowing GM to position EV stations in major cities as it finds out where people go. GM is well ahead of Tesla and German manufacturers regarding EVs in big U.S. cities. How many millennials living in big cities are going to drop $35-45 for a model 3 to sit in a garage 90% of the time? 1%.

 

Like you said JRM, people in major cities are not buying cars - but they love the ability to rent a sustainable vehicle like a chevy bolt on their own terms (hour, day, week, month), which plays right into the hands of GM and Maven. This is honestly the secret sauce behind GM, it has years to play out obviously, but the growth prospects are intriguing. Moreover, automation would just fit right into this ecosystem (Uber has a private market cap around GM, yet sit back and think how big of a competitive advantage GM has compared to Uber)

 

Why should a auto company with a bright future and solid management team not deserve a higher multiple than 10? A PE multiple of 13.5 gives it a 2.5% dividend yield, $60 stock price and a $90,000B market cap - half of Toyota.

 

With warrants having a $18.33 strike price, they would be valued around $40-42 and are eligible for cashless exercise, delaying tax consequences and allowing one to take a part of GM's yield. Warrants bought in the $10-17 range offer quite a return in this scenario, and I'm not selling. I'm surely biased given my position in both the stock and warrants; however, in today's market, investing in a company with such a low multiple means all you need are one or two things to work out well to earn a double or triple, especially from 2014 levels. I bought the warrants beginning in 14' and as recently as $17, and have owned the stock since aug. 12'.

 

At the same time, we all know what the risks are, so keeping an eye out on monthly sales data and product announcements/reviews are imperative. There was a time in which Chevy couldn't make a decent looking small car. This is a new GM - the Chevy Cruze wouldn't have been possible with the Old GM. GM is starting to prove the naysayers wrong simply because they are turning the business around and putting products out there that consumers want. In my opinion, that speaks volumes to what they will be able to accomplish in the future.

[JRM]

I think a Lyft IPO would be good for GM.  Their $500 million investment should show a nice return. 

 

I like your optimistic outlook RadMan, but for the time being GM is making its money by selling vehicles (and GM Financial) rather than through its services. 

 

In my mind there is no advantage to being the first with autonomous cars, because it will shortly be commoditized.  It will be like cruise control.  Maven may be different.  There will be stiff competition, because their model is essential what Lyft and Uber are looking to do once autonomous cars are available.

 

The buybacks were central to my original thesis.  However, for every dollar spent repurchasing shares, only .55 shares have been retired.  I'm afraid of what will happen if GM decides to stop buying back shares.   

 

The main factor for me selling my warrants was that theta decay will be much more pronounced the closer we get to expiration.  It's a tough call, I don't disagree with the logic for holding with the intent on converting at expiration.

 

I agree with everything you said RadMan.  I am just not as optimistic as you.

[Txvestor]

JRM,

I mostly agree with your valuation. That said, Mary Barra appears from the outside to be operationally better than any of her predecessors, but doesn't seem to care much about the valuation of the enterprise as much.

She certainly has levers at her disposal like partial spinoff of the "growth segments", more aggressive buyback of shares, and there is always cost pruning that can happen in a company the size of GM. She could do with a lesson or two on capital allocation from Omaha!

Her better contributions to the enterprise have been her investments in future growth segments, her unemotional retrenchment from perpetual loss centers, hence curbing empire building tendencies that have befallen her predecessors, her ability to take ownership of a crisis and be seen to handle it fairly, her relative operational discipline and her ability to secure the support of major influential shareholders.

I do see a near term ceiling in the mid 40s to 50, unless Ms. Barra can demonstrate more capital allocation skills. Another interesting factor is thst Mr Buffett has not added many shares ala AAPL after one of his lieutenants put on the initial $1B position(think they are at 60M shares) and its for sure on his radar as any Billion dollar investment would be. The company is of adequate size that he could easily put a $5B allocation towards it if he had any serious level of conviction.

I think for many people its sensitivity to the economic cycle, combined wih the usual worker union issues, and emerging disruptive threats are adequate to make a PE of around 10 a ceiling rather than a floor. I hold the warrants for now as the momentum is with the sector, but don't feel the need to keep them till conversion.

[Dalal.Holdings]

https://medium.com/kylevogt/how-we-built-the-first-real-self-driving-car-really-bd17b0dbda55

 

Kyle Vogt on Cruise Automation and GM:

 

This kind of development requires full alignment, teamwork, rapid communication, and compromise between dozens of teams. Since Cruise is a fully owned subsidiary of GM, we’ve avoided the seemingly impenetrable wall of politics, competitive fears, NDAs, liability concerns, data ownership, asset financing, long-term alignment, and a host of other issues that plague other relationships and partnership models. We have none of that, which means more time is spent focusing on what matters most. We’re very proud to be a part of GM.

 

Note the contrast with other automakers: FCA has a "partnership" with Google. Ford just announced a similar "partnership" with Lyft. But there are many advantages to having the driverless division as a fully owned subsidiary. No way that Google lets FCA have access to the real technology behind its vehicles. FCA will just be a mindless provider of Pacifica vans while Google develops the brains. So GM is uniquely positioned with its acquisition of Cruise versus its automaker peers (and again why I laud Barra on the acquisition).

 

Some people also confusing Super Cruise (which has been developed by GM engineers and soon to be deployed in Cadillac) and the technology developed by Cruise Automation (which is a separate, IMO much more impressive feat).

 

I don't think spinning off or IPO'ing the "growth areas" makes sense (at least for the time being) as it would eliminate all the advantages GM-Cruise get of full ownership. If GM can develop the tech on its Bolt vehicles, unleash a fleet of driverless cabs, it would immediately sink Uber and Lyft and allow a GM dominance in a completely new business line, likely one with nice returns on capital if GM is in the lead on driverless vehicles. Barra seems to understand that the old model of making money on selling cars might be on the way out, and so seems open to developing new revenue lines. I think it's worth exploring rather than spinning off these areas at such an early stage of development.

[Dalal.Holdings]

Bingo!

 

http://www.businessinsider.com/gm-stock-price-autonomous-car-could-come-soon-2017-10?IR=T

 

"General Motors' autonomous vehicles will be ready for commercial deployment, without human drivers, much sooner than widely expected (within quarters, not years)," Rod Lache, an analyst at Deutsche Bank said in an Oct. 1 note to clients.

 

The company is close to this major milestone thanks to its strong artificial intelligence foundation, gained through an acquisition of Cruise Automation as well as the development of GM's in-house capabilities.

 

While the company could sell their autonomous cars to individual consumers, Lache said GM is working on its own ride-hailing service that would utilize the new vehicles. The service could be highly disruptive to Uber and Lyft, and could lead to a natural monopoly in major cities according to Lache.

 

Stock making all time highs bc of this...

 

While we do not assign much value to these prospects at GM in our own assessment, it is an enticing prospect whose probability grows with each milestone at Cruise. Regardless, the company trades at a very low multiple to REAL cash earnings from its traditional car biz and has a significant buyback program in place.

[chesko182]

I thought this part was the highlight from Deutsche's comments:

 

"GM is equally convinced that the Mobility Business opportunity will be very significant for their stock and GM did not refute the logic that we used to conclude that this business will most likely be spun off to shareholders"

 

Straight from a page of the Fiat playbook.

[CorpRaider]

:'(

[Gregmal]

I would be shocked if we didn't see a dividend increase with the ER.

[dyow]

Don't own GM but I thought this stock was was never going to go up EVER! 

 

The last week or so i had CNBC on and GM has become a darling.  Everybody saying how cheap it is now, and a bunch of upgrades.  I am also upgrading this stock to a high conviction buy. 

 

But seriously......if this bull market continues these type of crappier value stocks should catch up to the market...money should start pouring into these names just because their is nowhere else to put your money.  But what the hell do i know...

 

[Liberty]

https://www.nbcnews.com/business/autos/gm-going-all-electric-will-ditch-gas-diesel-powered-cars-n806806

[Gregmal]

$130+ bull case from Citi

[dutchman]

Can someone post the report  :)

[Dalal.Holdings]

http://fortune.com/2017/10/04/gm-self-driving-car-california/

 

General Motors Co’s (GM, +2.53%) self-driving unit, Cruise Automation, has more than doubled the size of its test fleet of robot cars in California during the past three months, a GM spokesman said on Wednesday.

 

As the company increases the size of its test fleet, it has also reported more run-ins between its self-driving cars and human-operated vehicles and bicycles, telling California regulators its vehicles were involved in six minor crashes in the state in September.

 

“All our incidents this year were caused by the other vehicle,” said Rebecca Mark, spokeswoman for GM Cruise.

 

Cruise automation progressing well, though difficult to assign a valuation to it. Regardless, GM trades at low valuation to its real cash earnings when compared to other automakers and the market. Means that the upside can be in a large range, difficult to tell, but it seems to be a classic limited downside nice upside situation.

 

Again, Cruise seems to be a deft acquisition by management just 1.5 years or so ago and it's the Cruise Automation unit, not Super Cruise which seems to be doing the real groundbreaking stuff.