The auto industry is one that could benefit significantly from the improving U.S. economy and the strengthening of consumers’ confidence. In 2014, auto sales in the U.S. reached the highest level since the Financial Crisis of 2008, which is a clear sign that the auto industry is on a strong upward trend. This industry had a great start to the current year and has been further supported by a strong increase in retail sales. It’s commonly known that all companies do better when the economy is growing and improving, however, the auto industry has seen relatively strong growth thanks to other tailwinds as well, including the lower fuel rates that have made car ownership more attractive. With that in mind, let’s check out the list of the top five automaker stocks among the hedge funds and firms we track at Insider Monkey, based on our recently compiled data from the March 31 13F reporting period.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
General Motors Company (NYSE:GM) is the most popular stock among the hedge funds we track. At the end of the most recent quarter, 103 hedge funds held positions in the company compared to 107 at the end of 2014. While ownership dipped slightly, the aggregate value of these positions increased to $6.74 billion from $6.07 billion. Regardless of the fact that General Motors Company (NYSE:GM) is likely to face criminal charges as the company delayed the recall of its vehicles with a faulty ignition switch, the stock is up more than 2% in 2015. Therefore, this issue’s resolution will most probably signify a bullish signal for the company going forward, so it would be wise to keep an eye on this leading stock within the automaker industry. Mohnish Pabrai’s self-named hedge fund and Frank Brosens’ Taconic Capital both increased their equity holdings in General Motors Company (NYSE:GM) during the first quarter.
A shining star of the automaker industry that is totally worth your attention is Fiat Chrysler Automobiles N.V. (NYSE:FCAU). The number of hedge funds that hold equity stakes in the seventh-largest automaker in the world increased to 40 from 19, while the value of these stakes more than doubled, rising to $1.49 billion from $738.13 million. Fiat Chrysler Automobiles N.V. (NYSE:FCAU) outperformed the European auto industry’s sales growth for the fourth month in a row, achieving an increase in passenger car sales of 13.4% year-over-year to almost 79,000 cars, while its European car sales have increased for 20 consecutive months. Fiat Chrysler Automobiles N.V. (NYSE:FCAU)’s stock has increased by more than 37% since the beginning of the year, which surely has not disappointed its investors, which include Ken Heebner’s Capital Growth Management.