General Motors Company (NYSE:GM) is up 8% today on the news that the company will be repurchasing a large number of shares from the Federal Government. The Treasury Department still owns a large stake, but claims that it is committed to selling the rest of its shares in the next year or so- implying that it is willing to take a large loss on its shares, as the current stock price is well below breakeven for the government. Read our latest analysis of GM compared to its peers such as Ford Motor Company (NYSE:F), Toyota Motor Corporation (NYSE:TM), and Honda Motor Co Ltd (NYSE:HMC).
One of the winners from this move in the stock price is Warren Buffett: Berkshire Hathaway owned 15 million shares at the end of September (find Warren Buffett’s stock picks). Another winner is Greenlight Capital, managed by billionaire David Einhorn. Greenlight had increased its stake in GM by 24% during the third quarter of 2012, to a total of 21.6 million shares (see Einhorn’s favorite stocks), and at the Value Investing Congress in early October Einhorn had listed GM as one of his two long picks. Since the beginning of October GM is up 19%; an investor who bought on October 4th- two days after Einhorn’s presentation- would be up 12%. This means that once again Einhorn made a good call on a public investment presentation, as has been the case several times in the past. Let’s see how the rest of Einhorn’s picks have done in the last two and a half months:
Einhorn’s other long pick was health insurer CIGNA Corporation (NYSE:CI). Chalk this one up as a win for Einhorn as well: Cigna is up 13% this quarter (the S&P 500, incidentally, is about flat). At a market capitalization of $15 billion, Cigna trades at 10 times trailing earnings; partly because of recent acquisitions, revenue and earnings were up strongly last quarter from the third quarter of 2011. Wall Street analyst estimates have the stock priced at 9 times consensus earnings for 2013, and a five-year PEG ratio just below 1; we think that the markets are generally giving insurance companies low prices due to uncertainty over future government regulation of the healthcare sector. Cigna had been one of hedge funds’ favorite healthcare stocks during the third quarter.