A very famous investor recently sold his entire stake in General Motors (NYSE:GM), but he might actually miss out on the deal of the year. Indeed, value seekers ought to take a close look at General Motors while it’s trading at a bargain-basement price. So, even if a renowned investor sold GM stock, I am still bullish on it right now.
General Motors is an iconic Detroit-based automaker that produces huge quantities of internal combustion engine (ICE) vehicles and electric vehicles. It’s been a challenging year for General Motors and other Detroit car manufacturers in 2023, though, especially with workers’ strikes hindering operations.
This issue may be nearing resolution, though, offering General Motors an opportunity to progress and showcase its worth to shareholders. Hence, contrarian investors have an opportunity to consider investing in General Motors as the company is poised to potentially accelerate its performance in 2024.
Which Famous Investor Sold All of His General Motors Stock?
So, here’s the scoop. Reportedly, famous financier Warren Buffett, Berkshire Hathaway’s (NYSE:BRK.A) (NYSE:BRK.B) CEO, sold his entire General Motors stock position. Bloomberg states that Berkshire Hathaway did this during the third quarter.
This can be frustrating, as financial filings don’t reveal why Buffett exited his stake in General Motors. Investors might wonder whether he saw something bad happening with the company.
Yet, sensible investors don’t need to jump to any conclusions. Berkshire Hathaway regularly shuffles its holdings around and might exit and re-enter a stock position at any given moment. Worrying about Buffett’s stock trades isn’t the most productive use of your time.
I’d say it’s more useful to monitor Buffett’s purchases than his sales. Besides, General Motors still presents great value for investors. Would you believe that General Motors has a GAAP trailing 12-month price-to-earnings (P/E) ratio of just 4x? To provide some perspective, the sector median P/E ratio is 15.9x.
It’s also worth mentioning that General Motors has an excellent track record of beating quarterly EPS consensus forecasts, including a huge beat in 2023’s third quarter. Besides, General Motors pays a forward annual dividend yield of 1.3%, exceeding the consumer cyclical sector average dividend yield of around 1%.
Labor Union Approves Deal with General Motors
Already, you should be getting the impression that GM stock is a terrific deal at its current price. You’d think Buffett would want to buy this stock, not sell it. Maybe a recent update could convince him to re-enter his share position in General Motors.
At long last, members of the United Auto Workers (UAW) approved an agreement to end its strikes against General Motors. Granted, it was a fairly close vote, with 19,683 (54.7%) UAW members voting “yes” to the deal and 16,274 (45.3%) members voting “no.”
Being a close vote really doesn’t matter right now, though, as General Motors’ shareholders can breathe a sigh of relief since the UAW strikes are over. Going forward, it’s only a question of how quickly General Motors can recover from the prior production issues caused by the strikes.
Most likely, those issues have already been priced into GM stock. Again, just look at the chart and think about the aforementioned P/E ratio. General Motors might actually be the most underpriced business in all of 2023.
Is GM Stock a Buy, According to Analysts?
On TipRanks, GM comes in as a Moderate based on 11 Buys, five Holds, and one Sell rating assigned by analysts in the past three months. The average General Motors stock price target is $44.71, implying 62.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell GM stock, the most accurate analyst covering the stock (on a one-year timeframe) is Ryan Brinkman of JPMorgan Chase (NYSE:JPM), with an average return of 13.53% per rating and a 62% success rate. Click on the image below to learn more.
Conclusion: Should You Consider GM Stock?
Are you going to avoid General Motors stock because Buffett sold his position in it? That’s up to you, but I encourage you to think for yourself and decide whether General Motors can recover from the now-finished UAW strikes.
I expect that General Motors will recover, even though it might take some time. If you really want to be like Buffett (in principle, if not trade-for-trade), consider buying GM stock for the solid earnings, great value, dividends, and the recovery story that may only be getting started now.