Greenlight Capital, a hedge fund run by billionaire hedge fund manager David Einhorn, purchased nearly 9.5 million General Motors shares during the first quarter of 2015.
At the current value of $35 per share, 9.5 million shares would cost $332.5 million.
Revealed during a required quarterly filing with the SEC via a form commonly known as a 13F, the purchase was the only major new purchase for the hedge fund during the quarter. The buy puts General Motors among Greenlight’s top five holdings.
What’s noteworthy about Greenlight’s investment is that the hedge fund doesn’t have much turnover — new stock purchases and sales of existing stocks. Instead, the fund is known for making long-term investments. Apple and Micron have been among the top three holdings for the fund for nearly five years. To whit, Micron and Apple prices have increased over 100 percent during the last 24 months. By comparison, GM’s stock is currently valued roughly the same as when Greenlight made its purchase.
It’s worth noting that Greenlight purchased GM’s stock following a campaign by a hedge fund consortium led by Harry Wilson. The coalition’s goal was to secure a seat on GM’s board of directors in order to increase capital returns to shareholders. As a response, GM established a Capital Allocation Framework that would return $5 billion to its shareholders via buybacks, which will finish by the end of 2016. Analysts find the move notable given GM’s $56 billion market capitalization.
But even after announcing the Capital Allocation plan, GM’s shares haven’t performed as well as those of its competitors. During the last three months, The General’s stock has dropped roughly 5 percent in value. By comparison, Toyota and Honda shares increased in value by 5 percent during the same time period.
Much of the reason has been a lack of confidence in GM’s ability to grow from its current position as an automaker that more or less maintains its position in the marketplace, while more aggressive competitors grow sales and market share at its expense.
But GM is embarking on its most powerful turnaround in decades, with an aggressive push for the bread-and-butter Chevrolet brand that involves all-new vehicles and associated marketing campaigns in segments that the brand has traditionally been outsold by rivals. In addition, GM’s luxury Cadillac brand is in the midst of its biggest turnaround yet, one that will likely take half a decade, if not longer. And outside of expanding into untapped markets or improving performance in markets in which it has traditionally been weak, both of these Chevrolet and Cadillac efforts represent significant opportunities for the automaker to grow sales, revenue, profits, and — ultimately — return part of it to shareholders.
Here’s to hoping that GM’s shares start a quick and steady climb, as it will be good for shareholders, for the automaker itself, as well as for GM fans and enthusiasts.