Author Topic: GM - General Motors  (Read 567082 times)



Gregmal

  • Hero Member
  • *****
  • Posts: 1618
Re: GM - General Motors
« Reply #1651 on: January 11, 2019, 06:14:39 AM »

dutchman

  • Full Member
  • ***
  • Posts: 106
Re: GM - General Motors
« Reply #1652 on: January 11, 2019, 06:57:27 AM »
guys the gm.ws.b warrants have to be sold/exercised before July or we'll lose are money right?

jeffmori7

  • Hero Member
  • *****
  • Posts: 661
Re: GM - General Motors
« Reply #1653 on: January 11, 2019, 07:56:29 AM »
guys the gm.ws.b warrants have to be sold/exercised before July or we'll lose are money right?

Exactly

JRM

  • Full Member
  • ***
  • Posts: 192
Re: GM - General Motors
« Reply #1654 on: January 11, 2019, 07:57:00 AM »
https://seekingalpha.com/news/3422387-gm-plus-6-percent-hiking-guidance

$6B FCF... $7 EPS. Peak auto bro...

...but..but...2008...bankruptcy...Tesla...how can this be?

fuzzhead1506

  • Newbie
  • *
  • Posts: 26
Re: GM - General Motors
« Reply #1655 on: May 03, 2019, 03:09:11 PM »
Some big picture thoughts that I have on GM:

Since the end of 2016, GM has added $5B to its cash horde via cash flows, offered $5B in dividends, and another $5B on the stock buyback.... investments in Lyft and Cruise have each gone up by $5B and GM spent an extra $3B for a restructuring expected to add immense value to shareholders.  That is at least ~$22B in value creation over the last 2 and a half years but shareholders have only seen the $3 from divvys and perhaps an extra $2 on the sp as a means of the investment (throw in an extra $1 for divvy reinvestment, perhaps) for a total CAGR of ~4-7%.  GM was valued at around $55B in December 2016.  Between short back of the envelope estimates above and the forward estimates provided by management for what free cash flow is going to be for 2020 (an extra $6B per year), I would estimate this stock should be valued at something closer to $100/share, yet most analysts have one year price targets in the 40-50 range while the stock buyback remains paltry.

It would seem to me that either management can't be trusted and analysts are accounting for this or I am missing something huge.  The conversation earlier on this thread would indicate the former, at this point...

Delays on, albeit ambitious, timelines (e.g. autonomous vehicle roll-out strategy [" in quarters not years"], and industry leaders - including GM - continually pushing back the estimated date of cost parity for electric vehicles) offer examples of an "over promise, under deliver" type of dynamic.

They have also said that they want to return all free cash flow to shareholders, yet the cash balance goes higher...

Does GM have visibility into an earnings shortfall that they are not divulging and/or know that the forward cash flow guidance given is not attainable or even possible?  Are the China trade deal or tariffs a much bigger issue than the pictures they are painting?  Why aren't they truly open to talks with activists (conversation with Einhorn stopped after he suggested issuing something similar to preferred debt)? 

Management should be bending over backwards to create a total shareholder return strategy now that the company is creating cash flows that are generally considered mouthwatering by industry standards and their AV strategy puts them at/near the top of the competition... but here we are?  Is management purposely waiting to create a total return strategy for some time after the B Warrants expire?

I believe Mary has done everything right for the company since her tenure started 5.5 years ago...but this.  Maybe building an extra $5B in cash this late in the cycle is the right strategy, but in my mind it should've gone toward knocking the share count down toward the 1.3B level. I know several of you share these sentiments, so has anyone else considered throwing in the towel, here?  I am not even sure a reported ROIC of ~25% and projected forward 20% FCF yield are sufficient to make up for failing to deliver on their promises the last few years.  Sentiment is the poorest it has ever been and there is no near term catalyst since they have indicated that the AV roll-out is still not quite ready for game time.

It would not be prudent to invest her money in the same manner as Elon Musk  :P, but it would seem to me that holding only $40M of stock while having been paid $100's of millions in her GM tenure is a slap in the face to shareholders.  I put this in perspective by considering Jamie Dimon, who was paid ~$130M over the last 4 years and now has ~$90M worth of stock.  Much of this is company issued stock options, but he has also made purchases using his own money of >$50M since 2007.  Mary hasn't made one open market purchase with her money in her 10 years of receiving awards from GM - Musk on the other hand has made several token purchases in his tenure while also having made a $100 Million purchase in 2013.  Mary is intelligent - why isn't she putting her money where her mouth is?  Even a token purchase of $1-2 million would go a very long way toward showing us that she truly believes in her own long term vision. 

DTEJD1997

  • Hero Member
  • *****
  • Posts: 1636
Re: GM - General Motors
« Reply #1656 on: May 03, 2019, 06:13:26 PM »
Some big picture thoughts that I have on GM:

Since the end of 2016, GM has added $5B to its cash horde via cash flows, offered $5B in dividends, and another $5B on the stock buyback.... investments in Lyft and Cruise have each gone up by $5B and GM spent an extra $3B for a restructuring expected to add immense value to shareholders.  That is at least ~$22B in value creation over the last 2 and a half years but shareholders have only seen the $3 from divvys and perhaps an extra $2 on the sp as a means of the investment (throw in an extra $1 for divvy reinvestment, perhaps) for a total CAGR of ~4-7%.  GM was valued at around $55B in December 2016.  Between short back of the envelope estimates above and the forward estimates provided by management for what free cash flow is going to be for 2020 (an extra $6B per year), I would estimate this stock should be valued at something closer to $100/share, yet most analysts have one year price targets in the 40-50 range while the stock buyback remains paltry.

It would seem to me that either management can't be trusted and analysts are accounting for this or I am missing something huge.  The conversation earlier on this thread would indicate the former, at this point...

Delays on, albeit ambitious, timelines (e.g. autonomous vehicle roll-out strategy [" in quarters not years"], and industry leaders - including GM - continually pushing back the estimated date of cost parity for electric vehicles) offer examples of an "over promise, under deliver" type of dynamic.

They have also said that they want to return all free cash flow to shareholders, yet the cash balance goes higher...

Does GM have visibility into an earnings shortfall that they are not divulging and/or know that the forward cash flow guidance given is not attainable or even possible?  Are the China trade deal or tariffs a much bigger issue than the pictures they are painting?  Why aren't they truly open to talks with activists (conversation with Einhorn stopped after he suggested issuing something similar to preferred debt)? 

Management should be bending over backwards to create a total shareholder return strategy now that the company is creating cash flows that are generally considered mouthwatering by industry standards and their AV strategy puts them at/near the top of the competition... but here we are?  Is management purposely waiting to create a total return strategy for some time after the B Warrants expire?

I believe Mary has done everything right for the company since her tenure started 5.5 years ago...but this.  Maybe building an extra $5B in cash this late in the cycle is the right strategy, but in my mind it should've gone toward knocking the share count down toward the 1.3B level. I know several of you share these sentiments, so has anyone else considered throwing in the towel, here?  I am not even sure a reported ROIC of ~25% and projected forward 20% FCF yield are sufficient to make up for failing to deliver on their promises the last few years.  Sentiment is the poorest it has ever been and there is no near term catalyst since they have indicated that the AV roll-out is still not quite ready for game time.

It would not be prudent to invest her money in the same manner as Elon Musk  :P, but it would seem to me that holding only $40M of stock while having been paid $100's of millions in her GM tenure is a slap in the face to shareholders.  I put this in perspective by considering Jamie Dimon, who was paid ~$130M over the last 4 years and now has ~$90M worth of stock.  Much of this is company issued stock options, but he has also made purchases using his own money of >$50M since 2007.  Mary hasn't made one open market purchase with her money in her 10 years of receiving awards from GM - Musk on the other hand has made several token purchases in his tenure while also having made a $100 Million purchase in 2013.  Mary is intelligent - why isn't she putting her money where her mouth is?  Even a token purchase of $1-2 million would go a very long way toward showing us that she truly believes in her own long term vision.

With the amount of money that Mary has been paid, why should she risk any amount in anything?  She has as much as she and her family could ever reasonably want.  Investing $5MM million in GM to make $10MM over 4-5 years is simply of no use/interest.

That is one of the problems with American publicly traded corporations...management has "captured the capital".  They get paid handsomely NO MATTER WHAT.  If the company makes money, then they REALLY do well.

As to Mary, will paying her $100MM vs. $50MM make her work twice as hard?  Twice as good?

I think once you start passing $2mm or so per year for salary (with full benefits), shareholders are getting the shaft in regards to executive compensation.

sleepydragon

  • Hero Member
  • *****
  • Posts: 644
Re: GM - General Motors
« Reply #1657 on: May 03, 2019, 07:50:41 PM »
You guys are not happy with Mary. Who else is better? Elon musk? ;)

fuzzhead1506

  • Newbie
  • *
  • Posts: 26
Re: GM - General Motors
« Reply #1658 on: May 03, 2019, 08:04:35 PM »
I am happy with Mary. 

I suppose the problem is that she is wealthy beyond her means. That is why I brought up Jamie Dimon and Elon Musk.  Both men are also incredibly wealthy.  Any time they bought shares, sentiment in their respective stocks changed materially, regardless if it was a drop in the bucket.  If she can find $1 million between the couch cushions, it would mean a lot if she would plunk it down as a gesture.  What is that to her... like 2% of her net worth? Even if she already has 60% of it already in the company via her current ownership.

GM is partly right to have her compensation tied to ROIC as that generally is how shareholders should value a company, but it would be better if the company tied her compensation to total shareholder return.  ROIC has greatly improved and most investors canít/wonít see it because they never bother to dig past the companyís P/E ratio. 

I donít even mind so much paying a giant salary to a CEO given some value creation, I just want boards to rethink how it gets paid out.  If, as part of a larger pay package, companies offered long-dated OTM call options to execs (for example) that would incentivize the companyís management to offer total shareholder return instead of sitting on their hands while a share price languishes its actual intrinsic value.

Edit: grammar
« Last Edit: May 03, 2019, 08:22:53 PM by fuzzhead1506 »

Spekulatius

  • Hero Member
  • *****
  • Posts: 2767
Re: GM - General Motors
« Reply #1659 on: May 04, 2019, 05:04:33 AM »
Top execs should be required to hold several years worth of annual compensation in company stock, just to make sure they are aligned with owners.

Itís one thing I look at and consider when voting on compensation and I vote no a lot.
To be a realist, one has to believe in miracles.