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Shares of Ford and GM Lower on May US Auto Sales Data

One of the stocks that lost some ground today is Ford Motor Company (NYSE:F), which is over 3% in the red on a volume above average. The drop comes following the release of auto sales data for May, which showed that Ford’s sales declined by 5.9% on the month to 235,997 units. Even though the figure missed the estimates of some analysts, Ford showed a 9% growth in truck sales to 90,676 units, but passenger car sales slid by 25% to 67,315 units. Nevertheless, Ford’s decline in new car sales was better than General Motors Company (NYSE:GM)‘s, which registered a drop of 18% to 240,540 units and a 12.7% drop in truck sales. Edmunds expected Ford to report a decline in sales of 3% and General Motors’ decline was expected at 13.1%.

Ford Motor Company (F), NYSE:F, Yahoo Finance,

Industry experts don’t see the decline in sales as a sign of an overall decline of the auto industry and attribute the drop in sales to fewer business days in May. However, weak sedan sales can suggest that, despite low interest rates and low gasoline prices, the demand for new cars is cooling down after several years of growth. Both Ford’s and General Motors’ stocks have declined since the beginning of the year and the smart money sentiment towards both of them is also decreasing as we will discuss later on in this article.

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM).

Ford Motor Company (NYSE:F) was in 33 hedge funds’ portfolios at the end of March, which compares to 39 funds with long positions at the beginning of the first quarter. With General Motors, the situation is similar and even though the stock is more popular among the funds in our database, the number of investors bullish on the stock slid by 17 to 67 during the first three months of 2016.

Among Ford Motor Company (NYSE:F)’s shareholders in our database, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Ford Motor Company (NYSE:F), which was worth $248.9 million at the end of March. On Pzena Investment Management’s heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which reported a $78.8 million position in its latest 13F filing. Other members of the smart money with similar optimism comprise David Harding’s Winton Capital Management, and Israel Englander’s Millennium Management.

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However, since Ford Motor Company (NYSE:F) has witnessed falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers that slashed their full holdings by the end of the first quarter. Ken Heebner’s Capital Growth Management sold off the largest position of the 760 funds watched by Insider Monkey, worth close to $52.6 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $41.6 million worth.

On the next page, we are going to take a closer look at the hedge fund activity surrounding General Motors.

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