Chesapeake Energy Corporation (CHK), Goldman Sachs Group, Inc. (GS), General Motors Company (GM): Mohnish Pabrai Is Bullish on This Natural Gas Player, But Cutting His Stake Elsewhere

Published on May 20, 2013 at 12:33 pm by The Motley Fool in Hedge Funds

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The leading U.S. automobile maker with a strong balance sheet

Mohnish Pabrai sold his entire stake of more than 2 million shares in General Motors Company (NYSE:GM). The reason for his move might be to release the cash for more stake in Chesapeake Energy. General Motors is still the leader in the U.S. automobile industry with more than 18.7% market share. Ford Motor Company (NYSE:F) stayed in second place with around 15.9% market share. After receiving government support and selling several brands such as Hummer, Saturn, and Saab, General Motors Company (NYSE:GM) has become a much stronger company.

In the first quarter of 2013, General Motors Company (NYSE:GM)’ revenue was $36.9 billion, a bit lower than the revenue of $37.8 billion in the first quarter last year. Its EPS came in at $0.58 per share, around 3.3% lower than the EPS of $0.60 in Q1 2012. Although the company experienced a lower EBIT of $1.4 billion, its European operation narrowed the loss, from $0.3 billion last year to $0.2 billion this year. David Einhorn has been quite bullish about General Motors, stating that its cost has been reduced and the pension liability is now in a more manageable position. General Motors was his second biggest position, representing more than 9.5% of his total portfolio. General Motors is trading at $31 per share with a total market cap of $42.6 billion. The market values General Motors Company (NYSE:GM) at only 4.73 times EV/EBITDA.

My Foolish take

Among the three, I like Chesapeake Energy Corporation (NYSE:CHK) the most with its valuable natural gas assets. Moreover, investors could feel more confident when following successful investors including Carl Icahn, Mason Hawkins, and value investor Mohnish Pabrai. After asset sales, I am quite confident that Chesapeake’s share price could head much higher in the next year. General Motors Company (NYSE:GM), with its U.S. market leading position and low valuation, could be a decent long-term buy for investors.

The article Mohnish Pabrai Is Bullish on This Natural Gas Player, But Cutting His Stake Elsewhere originally appeared on Fool.com and is written by Anh Hoang.