Started a GM position, hoping to add

[MichealKnight]

In case this turns into a "noun, verb, and car company X is better and I had a bad experience with my model YZ" I'll respectfully let the participants enjoy themselves. I'm merely writing this as an observation.

I'm not a big stock market guy.

And to be sure - I am NOT some corporate insider here but I have a rather unique vantage point into a few aspects of GM business from my own personal business life.

Barring some crooked book-cooking.... I believe them and have reason to believe that indeed, they ARE going to be profitable even in this environment and they are indeed able to break-even should a 2009 situation arise.

It's never been a 'sexy' stock. Sadly it has tons of cash and makes good profits so naturally not of interest these days...but those things interest me.

Furthermore, it is nothing but PURE fact that even during Covid unemployment....buyers are scooping up high-margin GM trucks. Many Ford F150s are coming in on trade and dealers are borderline violently pleading with GM for more trucks - - stuff GM makes lots of money on.

True - much of the famed GM stupidity *still* exists in their corporate culture - it's obvious to the blind but despite that.....they are churning out trucks and people are buying them up.

My *guess* is that their EV rollout might be lackluster - only because ALL my life I've known GM corporate to botch these things up - and it's usually a few corporate burnouts in Detroit running promotions and one hand has NO clue what the other does.

Nevertheless - - the media (coastal media types are hardly GM cheerleaders) is reporting that GM's EV investments are for real - - and may indeed command a value one day.

I started buying in the 24-25 range.

If we have another dip and it breaks 20....I am going to overbuy.

Whether one loves or hates GM - fact remains it's one of the globe's larges automakers. NO European Union troubles. TONS of economies of scale. I'm not sophisticated enough to know how this ends.....but it's a done deal that the auto industry will consolidate one day and when it does - GM has cash to be a buyer......but it would also be an attractive target for someone who wants a global distribution network and synergies all over the place.

People - even middle class people are buying up trucks @$40,000-$60,000 likes it's normal. $800 car payments are no big deal for them. Demographically....fast growing segments like Hispanic Americans - LOVE the trucks and many times - MANY times - their truck monthly payment equals their apartment rent payment.

Frankly I'm hoping for a dip. I regret not buying a few months ago.

FWIW (prolly nothing

 

[njhowie]

Please go review the trajectory that GM shares took when they ended out in bankruptcy last time around. To me, it looks to be exactly the same repeating itself.

People - even middle class people are buying up trucks @$40,000-$60,000 likes it's normal. $800 car payments are no big deal for them. Demographically....fast growing segments like Hispanic Americans - LOVE the trucks and many times - MANY times - their truck monthly payment equals their apartment rent payment.

And does that make lots of sense? Go review subprime auto loans and what happened last time around.

 

[MichealKnight]

Trust me - I know subprime auto loans slightly intimately - and for years - banks are approving car financing that makes NO sense at all--- but mind you - that is America. Houses, cars, $2,000 handbags, nights out to eat - people are living it up. Last time - GM's troubles were not absorbed via the bankruptcy - this time they are. (Toyota Motor Credit approves even riskier transactions than does GM Financial btw)

All I'm saying that it's a company making oodles of cash pre-covid, and still profitable during Covid. And if their claim is to be believed. they can breakeven in a worse climate than this.

I believe GM will be a player when the "next "chapter in auto industry begins - perhaps it'll be as a big car company, perhaps as someone who bought a competitor, or someone who got bought out .

If it goes under 20 again wish me luck - that's my cue to buy more.

 

[Mr. Tightwad]

I predict you'll get that dip you are looking for and the price goes below 20.

I also predict you'll be sorry you bought GM.

 

[wolf]

OP. Good luck ! Hope your theory is correct. IMHO, I would not touch GM.

 

[aja8888]

While this chart is not all telling, it kind of points towards where market share has been headed for GM:



Oh, and in 2009, GM stock went to about $1/share. So hang on, you may get it as cheap this time around.

 

[OldShooter]

Michael, IIRC you have asked more than once here about buying individual stocks. Are you doing this with a small amount of "play around" money that is outside of a well-diversified portfolio? Are you quite young with a well-paying career ahead of you? If neither answer is "Yes," then I think you are playing with fire.

Two observations from investment guru William Bernstein apply:

(on investing for retirement) “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

“Do you think that by choosing a portfolio of only a few stocks that you hope will score big, you are maximizing your chances of becoming wealthy? Indeed you are, but you are also maximizing the chances of a retirement of cat food cuisine”​

 

[MichealKnight]

sorry just saw this - thanks for replying.

About 5% of my nest egg is set aside to sort of 'play' but within reason and this would be part of that.

Retirement-wise, an average return of 4.75% does it for me.......and 5.5% means living like a king.

The 5% of portfolio I set aside would be unrelated to that goal - - I'd like to make a few nice buys every now and then. In this case - it's a non sexy company - but one with cash and profits with their highest margin merchandise in hot demand all over the nation - not to mention some promise in future electric endeavors. Hardly an expensive stock either.

Thus far I have 2000 shares@ 24.77. I guess in a few years we'll see what happened....

If it dips below 20, buying more.

 

[Lakewood90712]

You had me worried, . Just buying GM stock, that's OK. When I read the post title, I was afraid you un-retired and went back to work as a General Manager.

 

[MichealKnight]

A General Manager has to do real work. I'd rather avoid that.

 

[aja8888]

GM has pretty much eliminated their small car line in the U.S. focusing on guzzling trucks and SUV's. God help them when gasoline goes much higher in price. Plus, they are losing market share to RAM in pickups.

They have been touting future EV's in the Cadillac family and that doesn't sound like a competitive model line, although nothing battery powered is exiting the factory assembly line in that area. They keep moving the target date out for EV's (like most players).

 

[COcheesehead]

You had me worried, . Just buying GM stock, that's OK. When I read the post title, I was afraid you un-retired and went back to work as a General Manager.

+1

 

[OldShooter]

... The 5% of portfolio I set aside would be unrelated to that goal - - I'd like to make a few nice buys every now and then. In this case - it's a non sexy company - but one with cash and profits with their highest margin merchandise in hot demand all over the nation - not to mention some promise in future electric endeavors. Hardly an expensive stock either ...

Good job. This kind of thing can be a lot of fun as long as you're not gambling the rent! I have long since stopped playing with individual stocks, but GM does have some attractive characteristics, mostly because as you say it is not sexy and hence you're not buying hot air. Also, with all the speculators ga-ga over Tesla, the price may actually be depressed vs its intrinsic value. Finally, your "a few years" plan is the attitude of an investor and not a speculator. I wish you well.

 

[Speed Racer]

This guy is looking pretty smart. I kept contemplating buying in, but went with more Ford instead. Not a bad move, either.

 

[Ducati52]

This guy is looking pretty smart. I kept contemplating buying in, but went with more Ford instead. Not a bad move, either.

Of course, even with today's jump, GM still trails the S&P 500 in YTD returns . . .

 

[Speed Racer]

Of course, even with today's jump, GM still trails the S&P 500 in YTD returns . . .

That's not when he purchased, though. Over the past 6 months, GM is up 60%, while the S&P 500 is up about 22%. GM (and Ford) were not great buys at the beginning of the year. With recent changes and announcements, I wouldn't have a problem buying either. GM is going to be a serious player in the EV industry, with Ford not far behind.

 

[MichealKnight]

Well, looks are deceiving

This guy is looking pretty smart. I kept contemplating buying in, but went with more Ford instead. Not a bad move, either.

Yes, so far i'm pleased. I had bought the 2000 i posted about and added another 500. I was very sure the stock would do well, and I continue to think so. The SOLE reasons I didn't make it a huge part of my portfolio:

*The young CFO had resigned her position after a short tenure. Perhaps it was innocent, she didn't like the job. Or maybe it's just another young person who wants to work for a "cool" company and not a stodgy old one. OR.....was there something in the books she saw, and didn't like? That last possibility worried me....and for me, a confessed investing newbie and scaredy-cat, I rarely would put "alot" into one stock.

As an aside - I continue to have a unique vantage point and I can tell you with certanity that GM has become VERY VERY tight with cash. OK, COVID. Bravo, most companies have tightened up cash and again - this could be totally innocent. But to do give an idea - in the past, GM was fine if a dealership leased its property from GM. Now, for the last 5 years.....when a dealership is sold - GM is intent on the buyer purchasing the real estate.

Could it mean GM is just being very very smart with cash? Sure.

Does it mean that they want to hoard cash to buy someone, or maybe increase their value to be bought out by someone? Or protect themselves against being bought out? Any of it is possible, I have no idea.

But the CFO change plus cash tightening was my only worry otherwise I'd have been greedy and put 5-10% of portfolio into GM.

Regardless what Coastal Media says, regardless what the "cool kids" say..... those "gas guzzlers" and "big trucks" are delivering huge profits to GMs bottom lines. Those millenials who were happy in little apartments are now buying houses just like Ma and Pa did. And when they have more than "a dog" - - they too are looking for more space. Immigrants - Latino Immigrants, the largest growth consumer..... LOVES trucks and SUVs and i can tell you authoritatively - many of them will have a $1,200 rent......and be happy with a monthly payment on a truck for $800 bucks a month - it's normal.

Yes, things will ebb and flow. Yes, small cars are a HUGE business and the imports have cornered it. I'm merely reporting facts on the ground that I have lived in daily for 20 years right up to today. The EV thing is a cherry on the top in that it gets Coastal Media and the "Cool Kids" excited and they bid the stock up a little. But, barring scandal or cataclysmic events.....if things slowly return to anything *close* to pre-Covid sales levels........GM will again spit out profits and poop cash out like it was doing pre-covid.


Honda recently made a deal to partake in GMs EV technology and to me that is a decent endorsement for the future as the fleet *slowly* electrifies.

I'm going to be Early-Retired by December 31st. I'm 46 and mildly optimistic, but also slightly terrified of course. But, right now.....I am going to add some to my GM stake. I think GM will be 2% of my total portfolio which is rather muscular for me. The only individual stocks that will make up 4-5% of my portfolio will maybe be AAPL and PEP.

In the end, I'm not sophisticated to know GM or the auto industry future, but I BANK on consolidation. Consolidation amongst suppliers. For SURE amongst dealerships (trust me, i'm in the middle of that one) meaning less competitors and more cost savings and higher profits. ALSO, I think there will be consolidation at the OEM levels as the majors have to take on the new rising stars. Whether that means GM is bought for a premium, or GM buys others, I have no idea. But I firmly believe that 10-15 years from now, some OEMs we know of today, will be combined with others tomorrow and on that score- GM has cash, profits, and an amazingly large global footprint. One can't get carried away because in the end, some of the incestuous smug stupid corporate culture instilled by burnout Detroit executives still remains and will remain for quite awhile but all that being said, yeah, GM will be 2% of my holdings and I bought a little more at 35-ish yesterday.

 

[Koolau]

I have no problem with taking a bet on GM - especially if you have any (legal) info not generally available to most. Betting on a stock or stocks is better than going to Vegas (We call Vegas the 9th Island 'cause it is our #1 vacation destination. It's so popular with our people that Vegas now has Zippys restaurant - a formerly Hawaii only fast food place.)

I just think the better approach is index investing. Clearly, you stand a better chance of making a killing on single (or a few) stocks. You also stand a better chance of losing a big chunk. You pays your money and takes your chance since YMMV.