Author Topic: GM - General Motors  (Read 434065 times)

Packer16

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Re: GM - General Motors
« Reply #20 on: July 06, 2012, 07:42:29 PM »
In looking at most of the large multinationals (Damlier, Ford, GM, Hond and Nissan) the cap-ex is 3 to 5% of sales except Toyota where it is closer to 7 to 8%.

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CONeal

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Re: GM - General Motors
« Reply #21 on: July 06, 2012, 10:01:57 PM »
I don't have a dog in this fight but keep in mind that the pickups will come out with a new body style in 2013.  Might get a little push from the diehards upgrading.

CONeal

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Re: GM - General Motors
« Reply #22 on: July 06, 2012, 10:10:28 PM »
One other thought, if as of today the gov't would lose 15 billion, why can't they just take the 10 billion gain from AIG and sell GM at $33 and breakeven between the two and be rid of the headache?

Packer16

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Re: GM - General Motors
« Reply #23 on: July 07, 2012, 06:03:47 AM »
Another way to look at GM is based upon seprating the net cash and the financing sub.  GM has net cash of $20 b for the auto co, net equity of $4.2b in its finance sub and $1.5 b in income from China JVs.  If the China JV is valued at 8x (the current mulitple of Tata) and the underfunded pension less tax shield and NOLs are subtracted along with the preferred the resulting non-operating assets value is $21.7 billion.  The total market cap is only $38 billion.  The resulting net market cap is $16.3 billion which over the past 2 years has generated on average $6.2 billion of FCF.  So GM is selling for a net of 2.5x FCF in a challenging economic environment.

I also reviewed the GM warrant terms and it appears they have the same anti-dilution terms as the TARP warrants but dividends can be issued with no change to the warrarts.

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« Last Edit: July 09, 2012, 10:13:47 AM by Packer16 »

hyten1

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Re: GM - General Motors
« Reply #24 on: July 20, 2012, 08:00:09 AM »

PlanMaestro

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Re: GM - General Motors
« Reply #25 on: August 09, 2012, 05:45:21 PM »
Still chewing this Morningstar analysis, but it looks excellent on a first glance

What's Really Changed At The New GM?
http://seekingalpha.com/article/790771-what-s-really-changed-at-the-new-gm

GM's U.S. hourly labor cost per North American vehicle produced has improved--down to $1,606 from $3,295 in 2005. Since the IPO, GM has disclosed that its break-even point for the all-important GM North America (GMNA) segment is now a U.S. industry sales rate of about 10.5 million units with 18%-19% share, compared with industry sales of 15.5 million and 25% share in third-quarter 2007. According to GM, retiree healthcare was about $4 billion of the $16 billion total U.S. hourly labor cost in 2005, so eliminating U.S. retiree healthcare obligations has helped im­mensely, as has reducing hourly head count by 57%. Also critical is that GM's U.S. all-in hourly labor cost is now about $56 per hour, compared with $78/hour under Old GM. For comparison, Toyota is about $55/hour. We think investors con­cerned with continued U.S. market share loss should consider that GM can break even at sales levels that occurred right after the collapse of Lehman Brothers and, as discussed in our report "Why U.S. Auto Sales are Still Too Low," we believe the U.S. is on its way back to normalized annual demand levels of between 16.1 million and 17.3 million units. GM has stated that it is able to run GMNA capacity at up to 150% utilization (three shifts with overtime) if U.S. industry demand reaches at least 16 million units.
....


At year-end, GM's U.S. hourly worker plan had a projected benefit obligation (PBO) of $71 billion and assets of $61 billion, while the U.S. salaried plan had a PBO of $36 billion and assets of $33 billion. The international plan was underfunded by $12 billion, for a total underfunding of $25 billion. We calculate the overall funding percentage to be 81.1%, compared with 79.2% at Ford. On June 1, GM announced a groundbreaking way to de-risk part of its U.S. salaried pension plan obligation, which has 118,000 retirees. GM will offer participants a buyout if they retired between October 1997 and Dec. 1, 2011--this would apply to about 42,000 people. Those who do not take the buyout, as well as U.S. salaried plan participants who retired before October 1997, will have their obligations transferred to Prudential (PRU) via a group annuity contract starting in January 2013. To compensate Prudential for assuming $26 billion of PBO, GM will transfer approximately $29 billion of plan assets to Prudential to purchase the annuity contract, funding $3.5 billion-$4.5 billion of this purchase from GM's existing cash rather than from the plan. The exact amount is uncertain as it depends on the take rate of the buy-out of­fers, which we expect to be low. The remaining $10 billion of U.S. salaried PBO will stay with GM and be underfunded by about $2 billion. GM will then freeze the U.S. salaried plan on Oct. 1, 2012, and workers will move into a 401(k) plan.
....


We stress that New GM continues to transform itself into a global automaker. We see tremendous economies of scale yet to be realized, as the firm only builds about 50% of its pro­duction on global architectures--far short of its planned 90% by 2018 (Ford will be at 85% by 2013). The important U.S. market will see 70% of GM's nameplates new or refreshed in 2012 and 2013. Critical GMNA product holes from cutbacks during the crisis will be filled next year with the highly profitable new generation of full-size pickups and the next-generation Chevrolet Impala full-size sedan. Cadillac finally will return to the compact segment with the ATS out this fall, and the new full-size XTS replaces the STS and DTS. In China, GM's largest market at 28% of global unit volume, the company is expanding capacity by 25% through 2013 and will launch more than 60 new and refreshed vehicles in the next five years. Opel will unveil 23 new models through 2016. These product innovations are possible because New GM is investing $8 billion a year in capital expenditure regardless of the state of the economy. Old GM would cut back on capital expenditure in hard times, which caused it to fall further and fur­ther behind competitors. We model nearly $9 billion of annual capital expenditure in the outer years of our five-year forecast period.

BargainValueHunter

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Re: GM - General Motors
« Reply #26 on: August 09, 2012, 08:57:37 PM »
Americans discover easy lending when it comes to automobiles
http://www.washingtonpost.com/business/economy/americans-discover-easy-lending-when-it-comes-to-automobiles/2012/07/05/gJQAdTiVQW_story.html

But there’s another, less-noticed factor: Investors and private-equity firms are rushing to buy securities made up of bundles of car loans, seeing these assets as both safe and lucrative. In the first six months of this year, the nation’s largest auto lenders, such as GM Financial and Santander Consumer USA, have pawned off $10 billion of their subprime auto loans on investors, a 20 percent increase over the same period last year. That gives these lenders more capacity to loan to consumers with questionable credit histories and, in turn, helps drive auto sales even higher.

It may seem surprising that private-equity firms and other investors are willing to pour billions into auto-backed securities after getting burned by similar mortgage-backed securities when the housing bubble burst. But, analysts say, the auto market is different than housing in several key respects.

For one, Americans appear to be less willing to default on their car payments than to walk away from their houses — even in the depths of the recession, auto loans performed better than most. And, in the event of a default, it’s easier for a lender to repossess a car and sell it off, especially right now, when prices for used cars are so high.

Yet the fact that the subprime auto market is expanding so rapidly — with some buyers paying interest rates in excess of 10 percent — has led to some concern.


http://blogs.barrons.com/incomeinvesting/2012/08/07/google-steering-cash-into-auto-abs-out-of-treasuries/?mod=BOLBlog

Quote
So far, asset-backed securities still represent less than 1% of Google’s cash. But the story notes how Google, the fourth-most cash-rich company in the S&P 100, joins such corporate titans 3M Co. (MMM )and Automatic Data Processing Inc. (ADP) that also have purchased asset-backed securities this year.

These ABS typically carry triple-A ratings, 3M’s treasurer notes that the auto and credit card ABS sectors performed relatively well during the financial crisis. The auto portion of a key ABS index has returned 2.34% this year on deals with an average maturity of just over two years, compared with 0.30% for comparable Treasurys this year. Some recent ABS have been priced to yield as little as 0.5%, but even that is a big bump over two-year Treasurys yielding 0.2%.
« Last Edit: August 09, 2012, 08:59:43 PM by BargainValueHunter »
Albert Einstein called compound interest "the greatest mathematical discovery of all time".

PlanMaestro

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Re: GM - General Motors
« Reply #27 on: September 04, 2012, 11:12:48 PM »
http://www.ft.com/cms/s/0/17858506-f68f-11e1-9fff-00144feabdc0.html#ixzz25ZaBEF9u

The big three US automakers have reported significantly stronger-than-expected domestic August sales, a rebound that is expected to be hailed at this week’s Democratic party convention. General Motors, which owns the Chevrolet, Cadillac and Buick brands, announced sales up 10 per cent on August 2011 to 240,520 vehicles on Tuesday, while Ford recorded US sales up 13 per cent to 197,249 vehicles. Chrysler, the smallest of the big three US manufacturers and whose brands include Dodge, Ram Truck and Jeep, said monthly sales rose 14 per cent against August 2011 to 148,472. All the figures were well ahead of analysts’ forecasts.
...

“Pent-up demand has been building for a while,” she said. “There’s a good chance that people will replace their old vehicles. The total light vehicle fleet’s average age is now close to 11 years old, which is pretty old.”

The sales figures showed smaller cars’ growing popularity. The manufacturers attributed this to rising fuel prices and significant improvements in new cars’ fuel economy compared with older ones. Chrysler reported passenger car sales up 21 per cent year-on-year to 40,895, while GM said sales of its Chevrolet passenger cars, including the new Cruze, Sonic and Spark models, were up 25 per cent on the same month last year. Ford reported car sales up only 7.1 per cent but attributed part of its 37 per cent year-on-year growth in utility vehicles to growing interest in more fuel-efficient compact utilities.







giofranchi

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Re: GM - General Motors
« Reply #28 on: September 05, 2012, 12:19:16 AM »
PlanMaestro,
I know that probably you won't care, because you don't hold him in much regard, but GM is Mr. Einhorn's second largest long position, just after Apple. It is a position he established in 2011 Q3, and below is what he had to say about GM:

"GM is the largest auto manufacturer in the United States. After the business failed under its legacy high-cost structure during the recession, the U.S. government bailed out the company and took over most of the ownership. Last November, GM completed an IPO of about 30% of its stock at $33 per share. The government continues to own about one-third of the company. After the IPO, the shares initially advanced to almost $40 before retreating. When the shares broke the IPO price, we determined that the shares were attractive, but only purchased a small position, believing that there might be a better opportunity later when the government exited the rest of its stock. Instead, during a weak third quarter where the market punished all cyclical stocks, the shares fell well below the
price where we planned to add to our position. We decided that the shares were cheap enough that we were more than fully compensated for the possible overhang of the government’s stake, and we established a position at an average price of $25.78 per share.

GM is being priced by the market as a cyclical company trading at less than 6x this year’s earnings. While some may see it as normal to value cyclicals at low multiples of peak earnings, we believe that 2011 is not a peak and, in fact, is below mid-cycle. Prior to the crisis, U.S. auto sales ran between 15 and 19 million units for many years. While sales have bounced from the recession low to about 13 million units, GM is poised to grow earnings from both a return to mid-cycle volumes, which we estimate to be 15 million units, and from a coming major refresh of its North American product portfolio. The market appears focused on GM’s “legacy liabilities.” However, the new GM does not
have pension and healthcare liabilities that are likely to over-run the company. Instead, GM sits with $33 billion of gross cash which represents nearly its entire current market capitalization. We see potential for GM to begin to return capital to shareholders over the next year. While we are cognizant of the various investment risks that include near-term global economic weakness and the government ownership overhang, we think these concerns are more than priced in at current levels and see significant upside even if the U.S. experiences a very slow "new normal" type of economic recovery."

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PlanMaestro

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Re: GM - General Motors
« Reply #29 on: September 05, 2012, 11:21:40 AM »
PlanMaestro,
I know that probably you won't care, because you don't hold him in much regard, but GM is Mr. Einhorn's second largest long position, just after Apple.

Good for him. I don't have it. Think independently, think correctly.
« Last Edit: September 05, 2012, 11:27:43 AM by PlanMaestro »