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What Hedge Funds Think About General Motors Company (GM)

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Numerous individuals want to invest in equity markets and do the least amount of work possible, so particular investment products such as mutual funds or exchange-traded funds seem to be the best fit for such individuals. However, buying individual stocks can definitely be more rewarding, assuming investors pick the right stocks. But consider the following question: How can individual investors identify high-potential stocks? There are thousands of stocks individual investors can trade on a daily basis, and one way of narrowing down the search pool is to look at which stocks hedge fund vehicles love the most. Without further ado, let’s take a closer look at what the funds tracked by Insider Monkey think about General Motors Company (NYSE:GM) in this article.

Is General Motors Company (NYSE:GM) a cheap stock to buy now? The best stock pickers seem to be reducing their bets on the stock. The number of bullish hedge fund bets fell by four during the fourth quarter. GM was in 84 hedge funds’ portfolios at the end of the fourth quarter of 2015, compared to 88 hedge funds in our database with GM positions a quarter earlier. At the end of this article we will also compare GM to other stocks, including Time Warner Cable Inc. (NYSE:TWC), National Grid plc (ADR) (NYSE:NGG), and Baidu.com Inc. (ADR) (NASDAQ:BIDU) to get a better sense of its popularity.

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Today there are several formulas market participants use to value stocks. Some of the less utilized formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the S&P 500 by a significant amount (see the details here).

Before taking a look at the new action encompassing General Motors Company (NYSE:GM) across the hedge fund industry, let’s discuss possible reasons as for why some hedge fund managers are still bullish on the automaker. In a third-quarter letter to investors, investment firm Trapeze Asset Management, co-founded by Herbert and Randall Abramson, laid out the following thoughts on GM: “Beyond its undervaluation, there continues to be plenty that is noteworthy regarding General Motors. The company’s recently reported quarter had record unit sales in China and the company enjoyed an 18.2% North American market share in October. Additionally, the company’s longstanding target of 10% EBIT by 2016 appears to be a full year ahead of schedule. Additionally, the recent scandal at Volkswagen may help GM in China, its most important market. Our fair value estimate is $46 per share”.

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