RadMan24 Posted October 9, 2018 Share Posted October 9, 2018 RedMan, reread the thread, you are talking past me. I agree that they did a pretty good job but they could have done all that AND work the balance sheet. I also agree that the stock price will take care of itself eventually and wouldnt mind if it stayed at same price even after the buybacks...because by now they would have been in a position to either continue the buyback at an even cheaper market cap or the stock would have increased. Either way they would have locked in that created value. And I guess thats the point. When you have all the ingredients AND a very cheap stock its a no brainer, low risk way to enrich remaining owners. And I believe the multiple will correct at some point and returns will be reasonably good, however why not make them great? I wont repeat why they didnt, its obvious Balance sheet has to be where it is. They burn cash during recession. BMW will rake in cash just because it’s working capital is structured differently than GM. Buybacks are all the rage but even Apple started late and look how well it’s done with its capital return. Link to comment Share on other sites More sharing options...
vince Posted October 9, 2018 Share Posted October 9, 2018 I've taken the cash burn into consideration based on amounts stated by mgmt. They have all but ceased doing any buybacks and changed the wording on their latest announcement with regards to the date of completion. Basically they have stopped and told the market not to expect any Link to comment Share on other sites More sharing options...
vince Posted October 9, 2018 Share Posted October 9, 2018 RedMan, reread the thread, you are talking past me. I agree that they did a pretty good job but they could have done all that AND work the balance sheet. I also agree that the stock price will take care of itself eventually and wouldnt mind if it stayed at same price even after the buybacks...because by now they would have been in a position to either continue the buyback at an even cheaper market cap or the stock would have increased. Either way they would have locked in that created value. And I guess thats the point. When you have all the ingredients AND a very cheap stock its a no brainer, low risk way to enrich remaining owners. And I believe the multiple will correct at some point and returns will be reasonably good, however why not make them great? I wont repeat why they didnt, its obvious Balance sheet has to be where it is. They burn cash during recession. BMW will rake in cash just because it’s working capital is structured differently than GM. Buybacks are all the rage but even Apple started late and look how well it’s done with its capital return. I would argue that Apple made a huge mistake NOT being more aggressive. Just because the stock rerated doesnt mean they maximized their capital allocation. Far from it....a well executed buyback really shines through when the stock rerates. In addition last time I looked they are still very overcapitalized and the much higher stock price means that they missed their chance. And before u say it, I think Apple has done an extraordinary job creating value and not burning capital on acquisitions. But they had over 200 billion of cash and the market cap (ex cash) was like 400 billion with earnings of 50 billion and growing. Link to comment Share on other sites More sharing options...
vince Posted October 9, 2018 Share Posted October 9, 2018 And not to beat a dead horse but if Apple would have bought back 20 more percent of their stock, the price per share would be 27 percent higher at the same current multiple or roughly 285 dollars a share. Its just the way the math works that you get an extra kicker (27 percent return on a 20 percent buyback) on top of all the other beneficial aspects of a well executed buyback. Link to comment Share on other sites More sharing options...
Spekulatius Posted October 9, 2018 Share Posted October 9, 2018 ^ and if it doesn’t work, you get a GE. Apple was a more straightforward case than GM, because of their profitability and the clean balance sheet. Link to comment Share on other sites More sharing options...
vince Posted October 9, 2018 Share Posted October 9, 2018 ^ and if it doesn’t work, you get a GE. Apple was a more straightforward case than GM, because of their profitability and the clean balance sheet. How so? Did GE buy in stock at 4 times operating earnings with an overcapitalized balance sheet and then fall apart because of the buyback? I mean to pick a high profile disaster and compare it with something that doesnt even remotely resemble the circumstances of GM makes no sense. Sometimes you will make mistakes, its obviously not going to work everytime but that doesnt mean you dismiss a rational economic strategy. GM does have a clean balance sheet and substantial earnings, thats why I think they should do it. If the ingredients arent there then dont do it. Can you imagine mgmt saying we are scared to do it cause GE fell apart? Link to comment Share on other sites More sharing options...
Gilp Posted October 9, 2018 Share Posted October 9, 2018 They can start buying back now, the stock getting cheaper every day. Link to comment Share on other sites More sharing options...
vince Posted October 9, 2018 Share Posted October 9, 2018 They can start buying back now, the stock getting cheaper every day. Well you are exactly right but I wouldnt get my hopes up. I have watched as the stock has done this a few times in last few years and been very dissapointed. They have bought back some stock and I applaud them for it but cant help but feel that it was totally because of pressure they were receiving from a few names. And judging by the average prices paid across the whole buyback, its obvious that they dont get excited in the high 20's and low 30's. Lets just say they are good operators...at least when their end markets are healthy. Link to comment Share on other sites More sharing options...
Gregmal Posted October 10, 2018 Share Posted October 10, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Link to comment Share on other sites More sharing options...
vince Posted October 10, 2018 Share Posted October 10, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Link to comment Share on other sites More sharing options...
vince Posted October 11, 2018 Share Posted October 11, 2018 I'm still giggling Link to comment Share on other sites More sharing options...
rb Posted October 11, 2018 Share Posted October 11, 2018 ^ and if it doesn’t work, you get a GE. Apple was a more straightforward case than GM, because of their profitability and the clean balance sheet. How so? Did GE buy in stock at 4 times operating earnings with an overcapitalized balance sheet and then fall apart because of the buyback? I mean to pick a high profile disaster and compare it with something that doesnt even remotely resemble the circumstances of GM makes no sense. Sometimes you will make mistakes, its obviously not going to work everytime but that doesnt mean you dismiss a rational economic strategy. GM does have a clean balance sheet and substantial earnings, thats why I think they should do it. If the ingredients arent there then dont do it. Can you imagine mgmt saying we are scared to do it cause GE fell apart? It seems to me that your whole criticism of why GM is so shit at capital allocation is that they didn't take their balance sheet for a spin to lever up as much as they can to buy stock. Well here's the thing: Companies that go through bankruptcy proceedings and come out the other end tend to not take their balance sheets for spins. They've had enough fun already and they're not looking for more. You should expect that. However, that's not such a big deal. If you think they're wrong you can fix it for them. They pay a 4.7% divvy. You can reinvest that in order to increase the buyback. If you think their capital structure is incorrect you can lever it up by using margin. Your increased risk will be mitigated by their pristine balance sheet. Link to comment Share on other sites More sharing options...
rb Posted October 11, 2018 Share Posted October 11, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted October 11, 2018 Share Posted October 11, 2018 Yeah! What is so funny about GM? Women are now represented on the BOD. When are shareholders going to get representation? If shareholders were represented, maybe some of things being discussed on this thread would take place. Link to comment Share on other sites More sharing options...
vince Posted October 11, 2018 Share Posted October 11, 2018 Well I think its pretty clear what made it funny, at least for me, you should read the entire thread. And when you read it you will also see that I never recommended them lever up as much as they can but I clearly think they have excess cash and could afford some fixed debt. Do you know how much cash they keep or how much debt they have? Do you realize that their after tax cost of debt (and probably even pre tax cost of debt) would have been lower than their dividend yield when stock is in the low 30"s?. It doesnt take a masters in economics to see a very high probability of value enhancement. The fact that you dont agree with me doesnt mean you should try and make your case against something I didnt say. And dont take it personally, its just my opinion. Link to comment Share on other sites More sharing options...
Spekulatius Posted October 12, 2018 Share Posted October 12, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. The new board member has no discernible automotive and as it looks not even really business experience. I think it is fair to say that she would never been elected, if she were male. What exactly does an “expert in geopolitical and macroeconomic climate” do and how is this relevant for GM, one might want to ask? Link to comment Share on other sites More sharing options...
Jurgis Posted October 12, 2018 Share Posted October 12, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. The new board member has no discernible automotive and as it looks not even really business experience. I think it is fair to say that she would never been elected, if she were male. What exactly does an “expert in geopolitical and macroeconomic climate” do and how is this relevant for GM, one might want to ask? Edit: Screw it. Life is too short. CoBF is completely toxic board now. Good bye and thanks for all the fish. Have fun. Link to comment Share on other sites More sharing options...
JRM Posted October 12, 2018 Share Posted October 12, 2018 This podcast episode talked a lot about the optionality in GM, and they seemed surprisingly well informed. https://www.fool.com/podcasts/industry-focus/2018-10-11-energy-the-tesla-fatigue-podcast Link to comment Share on other sites More sharing options...
RadMan24 Posted October 12, 2018 Share Posted October 12, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. The new board member has no discernible automotive and as it looks not even really business experience. I think it is fair to say that she would never been elected, if she were male. What exactly does an “expert in geopolitical and macroeconomic climate” do and how is this relevant for GM, one might want to ask? Edit: Screw it. Life is too short. CoBF is completely toxic board now. Good bye and thanks for all the fish. Have fun. No kidding. Link to comment Share on other sites More sharing options...
RadMan24 Posted October 12, 2018 Share Posted October 12, 2018 Well I think its pretty clear what made it funny, at least for me, you should read the entire thread. And when you read it you will also see that I never recommended them lever up as much as they can but I clearly think they have excess cash and could afford some fixed debt. Do you know how much cash they keep or how much debt they have? Do you realize that their after tax cost of debt (and probably even pre tax cost of debt) would have been lower than their dividend yield when stock is in the low 30"s?. It doesnt take a masters in economics to see a very high probability of value enhancement. The fact that you dont agree with me doesnt mean you should try and make your case against something I didnt say. And dont take it personally, its just my opinion. You just don't get it. That's what I've concluded after reading the entire thread. Link to comment Share on other sites More sharing options...
Gregmal Posted October 12, 2018 Share Posted October 12, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. The new board member has no discernible automotive and as it looks not even really business experience. I think it is fair to say that she would never been elected, if she were male. What exactly does an “expert in geopolitical and macroeconomic climate” do and how is this relevant for GM, one might want to ask? Edit: Screw it. Life is too short. CoBF is completely toxic board now. Good bye and thanks for all the fish. Have fun. I know. Somewhere along the lines people decided that it's blasphemous to dare express differing opinions or have the gall to disagree... What a shame. This is the straw that broke the camels back; questioning the benefit to shareholders of an unqualified board appointee. Link to comment Share on other sites More sharing options...
Gregmal Posted October 12, 2018 Share Posted October 12, 2018 I mean IDK, maybe some off us are off.. If others are exuberant about the fact that this company has drove through one of the greatest autos booms ever, in the midst of the greatest equity market rally ever, WITH NOTHING TO SHOW FOR IT; absolutely zero, cool, I guess. IMO Excuses are for losers. Link to comment Share on other sites More sharing options...
Spekulatius Posted October 13, 2018 Share Posted October 13, 2018 Another guardian of shareholder value https://finance.yahoo.com/m/d6139960-08bc-34cd-9e41-ed48e5d34594/general-motors-adds-another.html I wonder how much stock she owns? Hahahahahahahahahaha, I'm cracking up!!! Maybe you could share with the rest of us what's that funny. The new board member has no discernible automotive and as it looks not even really business experience. I think it is fair to say that she would never been elected, if she were male. What exactly does an “expert in geopolitical and macroeconomic climate” do and how is this relevant for GM, one might want to ask? Edit: Screw it. Life is too short. CoBF is completely toxic board now. Good bye and thanks for all the fish. Have fun. Other than some over the top rhetoric , I don’t think this thread in GM is toxic. The new board a member certainly has a very lightweight resume, which can be questioned as far as eligibility is concerned for a board like GM. I do disagree on bashing management based on lack of stock performance, especially since many peers haven’t done better and some of them much worse. Link to comment Share on other sites More sharing options...
Gregmal Posted October 24, 2018 Share Posted October 24, 2018 Will be interesting to see what gets reported next week. Been adding a bit recently. If you take Cruise out of the picture at the Softbank valuation, this is exceptionally cheap, even if we see annual declines in sales. That's said, I'm expecting another dud from Barra and Co and saving some funds for prices below $30. Can't imagine what Einhorn is thinking right now lol... Link to comment Share on other sites More sharing options...
txvalue Posted October 24, 2018 Share Posted October 24, 2018 Ford's release this afternoon was better than expected and it looks like Truck sales are hanging tough, which should be favorable for GM. Two interesting articles have come out specific to GM in the past few days. This Reuters piece states that Cruise is making progress but that they are missing self-imposed deadlines that will likely push back the 2019 commercialization goal based on current an former employee interviews: https://www.reuters.com/article/us-gm-selfdriving-cruise-insight/gms-driverless-car-bet-faces-long-road-ahead-idUSKCN1MY0CK The other piece is focused on frustrated share holders and the CEO's performance: https://www.reuters.com/article/us-gm-barra/frustrated-gm-investors-ask-what-more-ceo-barra-can-do-idUSKCN1MT2QM For what its worth I am still adding at these levels and I am hopeful GM finds a way to close the valuation gap I feel is being presented in the market. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now