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 should take a close look at General Motors as it trades at a bargain-basement price. So, even if a famous investor sold GM stock, I’m still bullish on it now.
General Motors is an iconic car manufacturer based in Detroit that produces huge quantities of vehicles and internal combustion engine (ICE) electric vehicles. It’s been a tough year for General Motors and other Detroit automakers in 2023, however, especially with worker strikes hampering operations.
This issue may be nearing resolution, however, offering General Motors an opportunity to make progress and demonstrate its value to shareholders. Therefore, 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 His General Motors Shares?
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 so during the third quarter.
This can be frustrating because financial filings are not revealing why Buffett exited his investment in General Motors. Investors might wonder if he saw anything wrong happening with the company.
However, prudent investors need not jump to any conclusions. Berkshire Hathaway regularly shuffles its holdings and may exit and re-enter a stock position at any time. Worrying about Buffett’s stock trades is not the most productive use of your time.
I’d say it’s more useful to monitor Buffett’s purchases than his sales. In addition, General Motors still represents great value for investors. Would you believe that General Motors has a GAAP trailing 12-month price-earnings (P/E) ratio of just 4x? To provide some perspective, the sector average P/E ratio is 15.9x.
It’s also worth noting that General Motors has an excellent track record of beating quarterly EPS consensus forecasts, including a huge bump in the third quarter of 2023. In addition, General Motors pays a trailing annual dividend yield of 1.3%, beating the consumer cyclical sector average dividend yield of about 1% .
Labor Union Approves Agreement with General Motors
By now you should be getting the impression that GM stock is a great deal at its current price. You would think that Buffett would want to buy this stock, not sell it. Perhaps a recent update could convince him to re-enter his stock position in General Motors.
Finally, members of the United Auto Workers (UAW) approved an agreement to end its strikes against General Motors. Granted, it was a pretty 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 now, because General Motors shareholders can rest easy now that the UAW strikes are over. Going forward, it’s just a matter of how quickly General Motors can recover from the previous production problems caused by the strikes.
Most likely, those things were already priced into GM stock. Again, just look at the chart and think about the aforementioned P/E ratio. General Motors may be the cheapest 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. General Motors’ average stock price target is $44.71, which implies a 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 time frame) is JPMorgan Chase’s Ryan Brinkman (NYSE:JPM), with an average return of 13.53% per rating and a 62% success rate. Click the image below to learn more.
Conclusion: Should You Consider GM Stock?
Will you 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 if General Motors can recover from the now ended UAW strikes.
I expect General Motors to recover, although it could take some time. If you really want to be like Buffett (in principle, if not business-for-business), consider buying GM stock for the solid earnings, great value, dividends, and the recovery story that may just be starting now.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.