David Tepper’s Appaloosa Management disclosed in a new filing with the U.S. Securities and Exchange Commission that the fund supports Harry J. Wilson’s plans regarding General Motors Company (NYSE:GM). Mr. Wilson, who was a senior member of a group that helped General Motors Company (NYSE:GM) in restructuring in 2009, is seeking election to the board of directors of General Motors Company (NYSE:GM), and wants the company to buyback $8 billion in shares.
New Jersey-based Appaloosa Management was founded in 1993 by David Tepper and Jack Walton. The hedge fund manages $16 billion. It makes investment in public equity and fixed income markets around the world. Mr. Tepper earned $3.5 billion in 2013, and he was listed in 2014 as one of the 25 Highest-Earning hedge fund managers in 2013.
Mr. Wilson sent a letter to General Motors Company (NYSE:GM), putting himself up for election to the company’s board at the 2015 annual meeting of stockholders. In addition, Mr. Wilson is calling the company to repurchase $8 billion in shares.
Mr. Wilson’s election plan and stock buyback proposal are being supported by Frank Brosens’ Taconic Capital, Parag Vora’s HG Vora Capital Management, and Kyle Bass’ Hayman Advisors. Collectively, these funds owns about 34.4 million shares, or about 2.1%, of the company’s common stock. As of the end of September 2014, Appaloosa Management held 14.86 million shares of General Motors Company (NYSE:GM).
Appaloosa Management expressed its support for Mr. Wilson’s shareholder proposal as the company’s best means of enhancing shareholder value.
“We have in the recent past discussed a number of critical issues with GM’s management team, including the need for greater discipline and efficiency in allocating the shareholders’ capital. In addition, we highlighted the lack of transparency in GM’s executive compensation program and questioned whether it properly incents effective capital deployment. Finally, we pointed out the need for greater shareholder-oriented representation on its board of directors. We believe that Harry Wilson will be a highly effective advocate for shareholders on the company’s board of directors. We invite and encourage GM to address these issues productively and refrain from acrimony,” Appaloosa Management notes in the filing.
In a news release, General Motors Company (NYSE:GM) states that Mr. Wilson first informed the company of his intention at a meeting with the company’s chief executive officer. According to the company, Mr. Wilson’s proposed director nominee will be evaluated by company’s board and corporate governance committee.
As we reported previously, General Motors Company (NYSE:GM) saw its fourth quarter earnings topple analyst’s estimates mostly driven by strong sales on high margins SUV’s as well as trucks in North America on record low fuel costs. Chuck Stevens, chief financial officer at General Motors Company (NYSE:GM), appeared in an interview on CNBC, and he affirmed that the company is in the process of increasing its dividend yield by 20% from $0.30 a share to $0.36.
“Our planned increase in the dividend is very consistent with our stated objective, which is then to have a growing and sustained dividend underpinned by strong business performance. Announcing it today in conjunction with our strong 2014 performance as well as our expectation of better performance in 2015 including improved profitability in all four automotive regions is consistent with that objective,” said Mr. Stevens.
General Motors Company (NYSE:GM) reported a 91% increase in profit for the fourth quarter with earnings per share coming in at $1.19, beating analyst estimates of $0.83 on revenues of $39.6 billion. The company posted net income of $1.1 billion, up from $900 million reported a year earlier. North America continued to act as a key market for the automaker accounting for a quarter of the total earnings, which the CFO attributes to increased sales of the SUVs and pickup trucks.
Other hedge fund betting big on General Motors Company (NYSE:GM) include Warren Buffett’s Berkshire Hathaway, which reported owning 40 million shares of the company at the end of September 2014. Orbis Investment Management, led by William B. Gray, held 8.89 million shares as of the end of September, according to our record.
Disclosure: none
