Category Archives: $F

Buffett sells $10mm shares in General Motors…should you?

As $GM continues to recall vehicles, should you hold on to the stock?

The negatives
– there is still the US DOJ hanging over GM and the potential fine it could slap on could be big – Toyota was $1bn – but the problems were at the old GM not new, so legally the fine could be contested. Best is for the DOJ to fine GM $500mm and be done!
– the recalls could be hurting the brand

The positives
-the company has $28bn in CASH
-sales have not been affected so far and the cars produced today are of high quality
-China has big potential for GM – like Russians they love American Cars
-the stock is holding the $34 level – so this could be a floor – for now..
-The recalls are more cautionary to ensure the slate is wiped clean

Buffett still has 30mm shares and recently came non CNBC saying what a great job Barra is doing.

FV=45 for GM, Dividend yield = 3.5%. Hold (or buy at 34 if you you like GM)- target – $44, Stop $29 for 2:1 risk reward, 3.5% carry, 7x 2015 P/E!

Comparable: Ford FV=16.5 vs 15.75px, carry= 3%, 2015 P/E = 8x

2CentView has core position in $GM opened at 34.

$F and $GM still good value, FV 26 and 52

More upside on $F following $GM’s run up in the last quarter. US Government has now sold all its stake in $GM for a loss of $10bn, not a bad price to pay for saving countless jobs!
$F held back by uncertainty over CEO Alan Mullaly – a top CEO who really knows about running large scale engineering firms. Not sure he is the right man for Microsoft – they need the Marissa Meyer type. If you are light on Auto’s in your portfolio $F could be a good bet for 2014 – Mullaly has done a great steering Ford through the credit crisis – the next CEO’s should just reap the rewards from this hard work and a bouyant US Economy!

Look for break above $17.50 in $F then hit the trigger – TP $23 stop 14.75 for 2:1 Risk Reward if you like $F