jay21 Posted March 13, 2013 Share Posted March 13, 2013 one thing i have been thinking about is the universally accepted belief that GM has no competitive advantage. does GM have competitive advantage? consider these: 1. GM has been badly operated (not counting recently) for decades, decades! 2. GM has been saddle with HUGE pension obligations due to past management/unions (kind of related to above) Now people can argue GM went into bankruptcy recently, but it took a 2008 like event to put them into bankrupty also GM would not have had to file for bankrupty if they did want F did which was to raise tons of money before 2008 hit (not that could be attributed partially to luck for F and mostly due to bad management on GM part) And GM is still around and kicking (I understand it went through bankruptcy) now does GM have a competitive advantage? I think GM is not your typical manufacturing company selling some widgets the scale and complexity of cars provides some competitive advantage The question on competitive advantage, the operating leverage, and the pension are the biggest problems to me at first glance. Without too much digging, I would think that car companies can have an advantage due to scale and/or management. I don't think there is too much brand equity in cars. A management team that focuses on cost control (taking advantage of the scale) would probably do better than others and a new entrant would be hard pressed to develop a cost advantage. I think the operating leverage is also a little scary. It appears management is trying to reduce some liabilities through debt reduction. At least things seem to be improving, in which case the leverage can be beneficial (op margins expanding to 10%). Link to comment Share on other sites More sharing options...
racemize Posted March 18, 2013 Share Posted March 18, 2013 Hi All, looking for the SEC filings on the tarp warrants (or just the strikes/dividend adjustments/expiry dates), anyone have the info/link? (or how I can search for the tarp info on the SEC filing?) Thanks! Link to comment Share on other sites More sharing options...
compoundinglife Posted March 18, 2013 Share Posted March 18, 2013 Hi All, looking for the SEC filings on the tarp warrants (or just the strikes/dividend adjustments/expiry dates), anyone have the info/link? (or how I can search for the tarp info on the SEC filing?) Thanks! GM has a FAQ on their IR website that mentions the relevant data about the warrants, strike, expiration etc... They are not TARP warrants, they are a result of the bankruptcy, some were give to bondholders etc... They do not have the div reduction feature. I can't remember if the prospectus is linked of the IR website but the FAQ answers most of your questions. Link to comment Share on other sites More sharing options...
racemize Posted March 18, 2013 Share Posted March 18, 2013 Hi All, looking for the SEC filings on the tarp warrants (or just the strikes/dividend adjustments/expiry dates), anyone have the info/link? (or how I can search for the tarp info on the SEC filing?) Thanks! GM has a FAQ on their IR website that mentions the relevant data about the warrants, strike, expiration etc... They are not TARP warrants, they are a result of the bankruptcy, some were give to bondholders etc... They do not have the div reduction feature. I can't remember if the prospectus is linked of the IR website but the FAQ answers most of your questions. Ah, I see--that website was unavailable when I checked (I guess they have server issues), but I couldn't find the dividend adjustment from the cached version. Not having one makes sense, then. Link to comment Share on other sites More sharing options...
hyten1 Posted March 20, 2013 Share Posted March 20, 2013 i was wondering if anyone have any insight into why the GM b warrant are trading so low? - gm b warrant is getting cheaper relative to gm common - also if you look at jan 2015 call strike $18, it cost $10.95? the gm b warrant (strike is $18.33) is only $11.93 at the expire date is jul 2019 what gives? hy Link to comment Share on other sites More sharing options...
MYDemaray Posted March 21, 2013 Share Posted March 21, 2013 http://www.reuters.com/article/2013/03/21/germany-opel-bochum-idUSL6N0CDG0B20130321?feedType=RSS&feedName=cyclicalConsumerGoodsSector&rpc=43 Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 21, 2013 Share Posted March 21, 2013 SumZero analyzes GM: http://sumzero.com/headlines/automobile_and_transportation/GM/161-gm-is-a-radically-improved-business-stock-could-double $50 intrinsic value estimate is based on a simple average of P/E and EV/EBITDAP based valuation approaches. I arrive at a P/E based valuation of $46 by applying an 11x multiple to fully diluted 2014E EPS of $4.19. I use 2014E because by this year projected US auto demand is more normalized (16mm), and K2XX will be fully rolled out. My EPS estimate assumes little improvement in GME ($1.3bn EBIT loss). There is upside to my EPS estimate if the US market returns to my fully normalized assumption of ≥17mm units (each additional1mm adds $0.60 to EPS). Each 100mm of share repurchases adds $0.27 of EPS. If GM Financial doubles EBIT by expanding into prime lending ($1bn increase) this adds $0.40 to EPS. 11x is a reasonable multiple of sustainable mid-cycle earnings for a business with good downside protection. GM currently trades at a discount to most comps. I arrive at my EV/EBITDAP based valuation of $55 by applying a 4.0x multiple to my 2014E core auto EBITDAP of $17.1bn. To this I add projected net auto cash, GM Financial at book value, foreign JVs at 10x equity income, and the present value of NOLs using a 14% discount rate. I deduct pension/OPEB liabilities net of tax. 4.0x is a reasonable EBITDAP multiple for a solidly profitable auto business, and is a discount to most comps. Link to comment Share on other sites More sharing options...
hyten1 Posted March 27, 2013 Share Posted March 27, 2013 new CTS is out nice car http://www.autoblog.com/2013/03/26/2014-cadillac-cts-pictures-video-new-york-2013/ Link to comment Share on other sites More sharing options...
hyten1 Posted April 1, 2013 Share Posted April 1, 2013 2014 Chevy Silverado priced from *$24,585, V8 gets better economy than Ford EcoBoost V6 http://www.autoblog.com/2013/04/01/2014-chevy-silverado-priced-from-24-585-v8-gets-better-econom/ Link to comment Share on other sites More sharing options...
jay21 Posted April 2, 2013 Share Posted April 2, 2013 I am getting more interested in this idea. It has a few characteristics that historically have made for a good investment: 1. Post-Reorg equity with improved balance sheet and cost structure 2. "Forced Selling" Overhang 3. Investor stigma Add in economic tailwinds to boot. My initial concerns are: 1. Limited competitive advantage - I think scale is definitely here, but it seems brand equity is limited. Although, there must be some advantage in the more important pick up market as Ford and GM share a large percent of the market. Maybe it's a buy American thing. 2. Pension obligations/Unions - Probably more of a lack of knowledge on my part. How do most people view it? I need to dig some more into the capital allocation plan as well. With a lot of liquid assets and a seemingly depressed price, why aren't they buying shares? Are they going to try to buy another block from the Treasury? The estimated $40 to $60 ranges I see don't seem unreasonable. Link to comment Share on other sites More sharing options...
jay21 Posted April 2, 2013 Share Posted April 2, 2013 jay gm just recently bought 300mil shares from the treasury *200m I knew that, I meant open market purchases. I am guessing they are saving cash in case they want to buy more from the treasury? Have they communicated any plan on their >$20b in cash? Link to comment Share on other sites More sharing options...
thomcapital Posted April 2, 2013 Share Posted April 2, 2013 jay gm just recently bought 300mil shares from the treasury *200m I knew that, I meant open market purchases. I am guessing they are saving cash in case they want to buy more from the treasury? Have they communicated any plan on their >$20b in cash? I have heard GM is not buying back any shares atm b/c they don't want to potentially negate their NOL's (a rule I've heard of, but can't speak to, others are on this board could, involving 5%+ shareholders). The rules expire for GM in November. So far in 2013 the Treasury has sold ~$500M of GM stock, or about 6% of their stake: http://www.reuters.com/article/2013/03/12/gm-treasury-idUSL3N0C33OB20130312 Link to comment Share on other sites More sharing options...
ERICOPOLY Posted April 2, 2013 Share Posted April 2, 2013 I have heard GM is not buying back any shares atm b/c they don't want to potentially negate their NOL's (a rule I've heard of, but can't speak to, others are on this board could, involving 5%+ shareholders). The rules expire for GM in November. So far in 2013 the Treasury has sold ~$500M of GM stock, or about 6% of their stake: http://www.reuters.com/article/2013/03/12/gm-treasury-idUSL3N0C33OB20130312 Strange -- AIG never said anything like that. Link to comment Share on other sites More sharing options...
MYDemaray Posted April 2, 2013 Share Posted April 2, 2013 Most AIG repurchases were direct from Treasury no (vs. open market)? I imagine that the same Section 382 waiver applies to GM as it did to AIG (and...where are the complaints from Elizabeth Warren when it comes to GM?). Link to comment Share on other sites More sharing options...
MYDemaray Posted April 5, 2013 Share Posted April 5, 2013 More generous press for the new C7: http://online.wsj.com/article/SB10001424127887323611604578398691335681324.html?mod=WSJ_hp_EditorsPicks Link to comment Share on other sites More sharing options...
Cunninghamew Posted April 24, 2013 Share Posted April 24, 2013 Ford earnings are out http://corporate.ford.com/our-company/investors/investor-news-detail/pr-ford-posts-first-quarter-pretax-37920 Highlights * Most profitable quarter in North America, but Europe still sucks * In North America quarter-o-quarter revenues were up 20%. Operating margins were down slightly, but they are ramping up investment here, so everything looks solid * Regarding Europe... company expects a $2 billion loss for the year * Solid results from the financing division * For full year 2013, the company's guidane remains unchanged, so pre-tax profit equal to 2012 * Looks like Ford took some market share in the US and China 15.2 to 15.9% * Random piece of info that I did not know... the Ford Focus is the world's best selling passenger car Link to comment Share on other sites More sharing options...
PlanMaestro Posted May 7, 2013 Author Share Posted May 7, 2013 GM wins approval to build $1.3 billion Cadillac plant in China http://www.autonews.com/article/20130507/GLOBAL03/130509908/gm-wins-approval-to-build-1-3-billion-cadillac-plant-in-china#axzz2SddDdtje Link to comment Share on other sites More sharing options...
merkhet Posted May 14, 2013 Share Posted May 14, 2013 be careful http://www.sec.gov/Archives/edgar/data/1549575/000154692713000077/dalalstreet132013q1v3.txt it looks like he has swap GM common for GM warrants which is something that i done a little while ago GM'B warrant is a long long term option, it a better way to leverage your GM shares, most of my GM investment are in warrants EDIT: GM is pabari's second largest holding by value Pabrai raising cash as well? He sold GM last quarter. http://www.dataroma.com/m/holdings.php?m=PI I can feel the warm fuzzy feeling of validation washing over me. I love it when someone I admire does the same thing that I've done. Notably, I think it's interesting that (assuming an AUM of $600M) Pabrai seems to have invested a notional value of 30% of his fund into GM based on the warrants. (5,928,876 warrants x $31 per share of GM.) Link to comment Share on other sites More sharing options...
PlanMaestro Posted May 27, 2013 Author Share Posted May 27, 2013 Not satisfied with OnStar's steady profits, GM wants to create a global 4G powerhouse http://www.autonews.com/article/20130527/OEM/305279958#ixzz2UWuWDQf8 Link to comment Share on other sites More sharing options...
hyten1 Posted June 3, 2013 Share Posted June 3, 2013 General Motors will replace HJ Heinz in the S&P 500 and 100 indexes. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 17, 2013 Author Share Posted June 17, 2013 General Motors won’t release production data http://www.autonews.com/article/20130617/BLOG06/130619885/why-gm-can-only-get-hurt-keeping-data-secret#axzz2WVdcJorg Link to comment Share on other sites More sharing options...
hyten1 Posted June 19, 2013 Share Posted June 19, 2013 J.D. Power has released the results of its latest Initial Quality Study (IQS), "Porsche Leads Brand Rankings, Two GM Brands among Top Five Porsche ranks highest among nameplates included in the 2013 IQS, with an average of 80 problems per 100 vehicles (PP100). GMC ranks second with 90 PP100, and Lexus ranks third with 94 PP100. Infiniti (95 PP100) and Chevrolet (97 PP100) round out the top five. Overall initial quality for the industry averages 113 PP100." http://www.jdpower.com/content/study-auto/vURhToQ/2013-u-s-initial-quality-study-results.htm?page=2 Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 27, 2013 Author Share Posted June 27, 2013 Peugeot family ready to step aside for GM, report says http://www.autonews.com/article/20130627/COPY01/306279967#ixzz2XS3cu1nG "GM faces the same overcapacity situation with Opel, and that's why PSA is trying to convince them to merge the two," Link to comment Share on other sites More sharing options...
PlanMaestro Posted July 4, 2013 Author Share Posted July 4, 2013 Ford's 2013 Fusion Dominates the Chevy Malibu http://www.fool.com/investing/general/2013/06/02/fords-2013-fusion-dominates-the-chevy-malibu.aspx The Malibu is the only weak point of all the Detroit automakers lineup. Link to comment Share on other sites More sharing options...
PlanMaestro Posted July 5, 2013 Author Share Posted July 5, 2013 http://farm4.staticflickr.com/3736/9217281369_3d81336abb_o.png Link to comment Share on other sites More sharing options...
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