General Motors shares have seen plenty of activity in recent weeks as Wall Street’s big movers bought and sold millions of dollars worth of stock as the automaker continues its path toward an all-electric future.
Notorious billionaire investor George Soros sold his 1.26 million shares in GM earlier this year, but well-known investor and Tesla bull Cathie Wood, who founded Ark Investment Management, shocked Wall Street on May 10 by selling 15,862 shares of Tesla, worth about $12.7 million, to buy 158,187 shares of GM, worth about $6 million.
The stock market moves illustrate just how fresh and influential automakers can be to woo investors and believers as they transform into electric vehicles, analysts say.
“There’s so much uncertainty about who’s going to win and who’s not, that some big money carriers are opposed,” said Erik Gordon, a business professor at the University of Michigan.
Taking opposing bets
The moves are important because of who the movers are, Gordon said.
Wood is known as a star stock picker, particularly at innovative tech companies, and her arch manages around $60 billion in assets, according to Forbes. Wood has always been a critic from legacy automakers, but after meeting with GM CEO Mary Barra, Wood told Yahoo Finance that she likes GM’s progress in electric vehicles and self-driving cars with the GM-owned Cruise in San Francisco.
Soros, born in Budapest in 1930, is a legendary hedge fund manager. Many consider him one of the most successful investors of all time, rivaling Warren Buffett. Its fund management Soros had at least $7.3 billion under management at the end of last year, according to documents filed by the Security and Exchange Commission.
Both Wood and Soros are considered successes, but each has an opposing game when it comes to electric vehicles.
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“Some people are looking at GM and Ford and see it as a buying opportunity because when they start producing more EVs, they’ll come back with their dealer networks and those little ones won’t matter anymore,” Gordon said. GM and Ford have dealerships across the country to sell and service cars, which they say gives them an edge, while electric vehicle startups sell directly to consumers.
But Tesla, Lordstown Motors and Rivian will also have electric pickups, so will consumers prefer the Ford F-150 Lightning or Chevrolet Silverado EV over Rivian’s model?
“Who knows? We don’t know,” Gordon said. “It’s a sign of the uncertainty of the future. Even Soros doesn’t know that because he invested in Fisker and now he’s not.”
GM spokesman Jim Cain said he couldn’t speculate on why individual investors are moving in and out of GM stock.
“But there is growing recognition in many circles that electric vehicles will be a catalyst for growth at GM,” Cain said. “We are now entering a rapid launch cycle due to the investments we have made over the past few years.”
GM’s stock has lost about a third of its value so far this year. It closed down 5.96% at $35.83 on Wednesday.
But GM will be rolling out many new electric vehicles over the next few years. The 2022 GMC Hummer pickup built at Factory ZERO in Detroit and Hamtramck is available now, but it starts at just over $100,000. An SUV version is expected to follow next year, as are lower-priced editions of the Hummer pickup.
Over the next two months, GM will release the 2023 Cadillac Lyriq SUV and GM promises a 2024 Silverado EV pickup, as well as all-electric Equinox and Blazer SUVs in the near future.
“We’re going to get to that $30,000 price point and in volume (with the Equinox) we’ll get to that with the Blazer as well,” GM Chairman Mark Reuss said at the World Automotive Congress on Wednesday. “Those two vehicles are very important for adoption. It’s a $30,000 vehicle that ‘I can take my kids in and go from Michigan to Cedar Point’ and that’s super important.”
To prove his confidence in GM, Chief Financial Officer Paul Jacobson bought 35,000 GM shares at $38.79 on April 28, according to an SEC filing. On May 12, GM board member Wesley Bush bought 10,000 shares at $35.23, according to an SEC filing. Bush is the former CEO of Northrop Grumman.
When asked why Jacobson chose to buy stock at the time, Cain said Jacobson told Barron’s that his stock purchase “speaks for itself.” Cain didn’t know Bush’s reason.
Despite GM’s promises to bring 30 new electric vehicles to market globally by 2025, Soros sold all of his GM shares earlier this year.
As of December 31, Soros Fund Management held 1.26 million GM shares. As of March 31, it had liquidated all of the shares, according to filings with the SEC. The amount is tiny given that GM has 1.38 billion shares available to the public, Gordon said.
“So the effect on GM is not a big deal,” Gordon said. But it’s important because “Soros is a celebrity investor who a lot of other investors are following closely. He’s into the mobility space and he left GM for new ventures.”
Morningstar automotive analyst David Whiston said he pays attention to what celebrity investors are doing, “in the interest of idea generation, or maybe a client might ask me why say that Buffett bought CarMax years ago.”
The reason for Soros’ exit is unknown and he does not have to disclose why he sold the shares. Soros spokesman Michael Vachon told the Free Press that the fund is not commenting on its purchase of public securities beyond what is in the SEC filing.
“You should note that the filing reflects positions at the time approximately 45 days ago,” Vachon wrote in an email. “So beyond the fact that the record pointed to XYZ, it’s hard to draw any meaningful conclusions.”
Whiston said what well-known investors are doing might be interesting, but it doesn’t always deliver gold.
“I don’t know why Soros sold,” Whiston said. “It could be specific reasons like asset allocation to something else or could he think macroeconomic issues like inflation were coming or many other unknown reasons. There are a lot of data points there, but it’s not something to panic about as an investor.”
A loss of faith?
But Gordon said the fact that Soros sold all of his shares, not just some, is significant.
“If he had sold some of the stocks, it might be, ‘I’m just rebalancing my portfolio, but I still have faith in them,'” Gordon said. “I read this as Soros sold himself and pulled out of GM, that’s how I read it as another investor. Why is he exiting? Who knows.”
Soros has taken other interesting moves involving electric vehicle companies, all of which were first reported by The Street Monday.
For example, in the March 31 filing, he showed he had sold all 317,300 shares of luxury electric vehicle maker Fisker. Then he added 600,000 shares of rival luxury electric vehicle maker Lucid Motors.
Soros also bought two promissory notes worth about $100 million from Chinese electric vehicle maker Nio, said Gordon, who studied the government report filed by the Soros fund. A promissory note is similar to a loan that Nio must pay to Soros, with interest.
“The advantage of a promissory note is that if the company gets into financial difficulty and closes, the people who are owed money, including the people holding the notes, are paid before the shareholders. “, Gordon said. “The downside… if all goes well, your advantage is in the interest you get paid, unlike stocks where it maybe doubles. So you have a limited advantage. It’s a more conservative way to earn money. money with Nio.”
Then there’s Rivian, headquartered in Irvine, Calif., but with offices in Plymouth., Mich. As of December 31, Soros owned 19,835,761 Rivian shares. In late March, he added a call option for an additional 6,045,000 shares, Gordon said. Shares of Rivian closed at $27.29 on Wednesday. A call option means that Soros paid a commission to whoever sold him the call option to reserve the right to buy those six million shares at a fixed price for a certain period of time.
“So if the agreed price was $10 on the call option, but let’s say Rivian shares go to $11, Soros can say, ‘OK, I want my six million shares. He’s selling it for $11 a share,” Gordon said. “But that’s a bet on the positive side. But it’s a cautious upside bet since he didn’t buy the shares.”
Writer Eric D. Lawrence contributed to this article. Contact Jamie L. LaReau at 313-222-2149 or [email protected]. Follow her on Twitter @jlareauan. Learn more about General Engines and subscribe to our automotive newsletter. Become a subscriber.