Greenlight Capital Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -21.5% for the quarter, underperforming its benchmark, the S&P 500 Index which returned -19.60% in the same quarter. You should check out Greenlight Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Greenlight Capital highlighted a few stocks and General Motors Co (NYSE:GM) is one of them. General Motors designs, builds and sells trucks, crossovers, cars and automobile parts worldwide. Year-to-date, GM stock lost 32.7% and on May 15th it had a closing price of $22.63. Its market cap is of $35.4 billion. Here is what Greenlight Capital said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
As you can see even Ford Motor Co (NYSE:F) is hit hard by the coronavirus pandemic. In Q4 2019, the number of bullish hedge fund positions on GM stock decreased by about 1% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with GM’s downside potential.
Disclosure: None. This article is originally published at Insider Monkey.