In the last five to six quarters, the Warren Buffet-led conglomerate has been gradually been dumping the GM stock in troves. Now, it has shed its entire holding in the legacy automaker’s stock.
While the thinking behind the decision has not been disclosed, perhaps one or more of these developments were a factor:
🚃 In June, GM CEO Mary Barra said the company was having trouble getting hundreds of thousands of ready, new vehicles to dealerships owing to a national rail car crunch.
✊ Disruptions from the United Auto Workers (UAW) 46-day strike did not aid GM’s case. Although a tentative agreement has been reached, it is yet to be ratified. Some unions are already voting against it.
⚡ Buffett doesn’t want to take on Elon Musk. At a shareholder meeting earlier this year, the Oracle $ORCL of Omaha said, “We don’t want to compete with Elon in a lot of things,” referring to the world’s richest man’s dedication to innovation. Musk’s EV company, Tesla $TSLA, is the clear market leader in the emerging market for electrics and a viable threat for GM—especially since the Detroit carmaker has seen its own EV rollout crippled by slow battery production.
Berkshire Hathaway and the GM stock, by the digits
22 million: GM shares Berkshire held in August after nearly halving its shareholding in the stock from 40 million
0.2%: Share of Berkshire’s stock portfolio GM accounted for, prior to the total exit
$7 billion: Worth of stock Berkshire sold in the third quarter, a majority of which came from liquidating stakes in GM and Proctor & Gamble.
$1.7 billion: Worth of stock Berkshire sold in the third quarter. One of the new companies it bought a stake in is Atlanta Braves Holdings, which indirectly controls the MLB team.
16%: How much GM’s shares have dropped so far this year
10 million: How much Berkshire bought GM shares for back in 2012 at $25 a pop. The current share price is around $28.
Charted: Berkshire Hathaway’s portfolio stars
Quotable: GM is still an attractive stock
“Valuation hasn’t typically been a case to own Ford $F/GM — investors argue they are cheap for a reason. Yet we believe given historically depressed multiples, attractive upside exists.”
—Barclays analyst Dan Levy in a note to clients earlier this month