General Motors’ stock has seen a lot of activity in recent weeks as the big money movers on Wall Street have bought and sold millions of dollars in shares while the automaker plugs along on its path to an all-electric future.
Famous billionaire investor George Soros earlier this year sold his 1.26 million shares in GM but known investor and Tesla bull Cathie Wood, who founded Ark Investment Management, shocked Wall Street on May 10 by selling 15,862 shares of Tesla, worth about $12.7 million, to buy 158,187 shares in GM, worth about $6 million.
The stock market moves illustrate just how fresh and influential the automakers can be wooing investors and believers as they transform to electric vehicles, say analysts.
“There is so much uncertainty over who is going to be a winner and who is not going to make it, that some pretty big movers of money are on opposite sides,” said Erik Gordon, a business professor at the University of Michigan.
Taking opposing bets
The moves are significant because of who the movers are, said Gordon.
Wood is known as a star stock-picker, especially in innovative tech companies, and her Ark manages about $60 billion in assets, according to Forbes. Wood has historically been a critic of legacy automakers, but after meeting with GM CEO Mary Barra, Wood told Yahoo Finance that she liked GM’s progress in EVs and self-driving cars with the GM-owned Cruise in San Francisco.
Soros, born in Budapest in 1930, is a legendary hedge fund manager. Many consider him one of the most successful investors of all time, rivaling Warren Buffett. His Soros Fund Management had at least $7.3 billion under management as of the end of last year, according to Security and Exchange Commission filings.
Both Wood and Soros are considered successful, yet each has an opposite play when it comes to EVs.
“Some look at GM and Ford and see a buying opportunity because when they start putting out more EVs, they’ll steamroller-back with their dealer networks and these little ones won’t matter,” Gordon said. GM and Ford have nationwide dealerships to both sell and service cars which, they say, gives them an advantage, whereas EV startups sell directly to consumers.
But Tesla, Lordstown Motors and Rivian will have electric pickups, too, so will consumers prefer the Ford F-150 Lightning or the Chevrolet Silverado EV to Rivian’s model?
“Who knows? We don’t know,” Gordon said. “It’s a sign of the uncertainty of the future. Even Soros doesn’t know because he was invested in Fisker and now he’s not.”
‘Catalyst for growth’
GM spokesman Jim Cain said he can’t speculate on why individual investors are moving in and out of GM stock.
“But there’s increasing recognition in many circles that EVs will be a catalyst for growth at GM,” Cain said. “We are now entering a rapid launch cycle because of the investments we made over the last several years.”
GM’s stock has lost about a third of its value so far this year. It closed down 5.96% at $35.83 on Wednesday.
But GM is rolling out many new EVs in the next few years. The 2022 GMC Hummer pickup built at Factory ZERO in Detroit and Hamtramck is out now, but it starts at just over $100,000. An SUV version is expected to follow in the next year, as will lower-priced editions of the Hummer pickup.
In the next couple of months, GM will deliver to market the 2023 Cadillac Lyriq SUV and GM promises a 2024 Silverado EV pickup, along with all-electric Equinox and Blazer SUVs in the near future.
“We’re going to hit that $30,000 price point and in high volume (with the Equinox), we’ll do it with the Blazer as well,” GM President Mark Reuss said during the Automotive News World Congress Wednesday. “These two vehicles are very key for adoption. It’s a $30,000 vehicle that ‘I can take my kids in and go from Michigan to Cedar Point’ and that’s super important.”
To prove faith in GM, CFO Paul Jacobson purchased 35,000 shares of GM stock at $38.79 on April 28, according to an SEC filing. On May 12, GM Board of Directors member Wesley Bush bought 10,000 shares at $35.23, according to an SEC filing. Bush is the former CEO of Northrop Grumman.
When asked why Jacobson chose to buy stock at this time, Cain said Jacobson told Barron’s his stock purchase “speaks for itself.” Cain did not know Bush’s reason.
Despite GM’s promises to deliver 30 new EVs globally to market by 2025, Soros sold all of his GM shares earlier this year.
As of Dec. 31, Soros Fund Management held 1.26 million GM shares. By March 31, he had liquidated all the shares, according to SEC filings. The amount is miniscule considering GM has 1.38 billion shares of stock publicly available, Gordon said.
“So the effect on GM is not a big deal,” Gordon said. But it matters because, “Soros is a famous investor who a lot of other investors follow carefully. He is interested in the mobility space and he has moved out of GM and into newer companies.”
Morningstar’s auto analyst David Whiston said he pays attention to what famous investors do, “for the sake of idea generation, or maybe a client may ask me why say Buffett bought CarMax years ago.”
The reason for Soros’ exit is unknown and he does not have to disclose why he sold the shares. Soros spokesman Michael Vachon told the Free Press the fund does not comment on its purchase of public securities beyond what is in the SEC filing.
“You should note that the filing reflects positions at the time approximately 45 days ago,” Vachon wrote in an email. “So beyond reporting that the filing said XYZ, it’s hard to draw any meaningful conclusions.”
Whiston said what well-known investors do might be interesting, but it doesn’t always deliver gold.
“I don’t know why Soros sold,” Whiston said. “Could be specific reasons like asset allocation to something else or could be he thought macro problems like inflation were coming or many other unknown reasons. There are a lot of data points out there but this isn’t something to freak out about as an investor.”
A loss of faith?
But Gordon said the fact that Soros sold all, not just some, of his shares is significant.
“If he’d sold some of the shares, it could be, ‘I’m just rebalancing my portfolio, but I still have faith in them,’ ” Gordon said. “I read this as Soros has sold out and gotten out of GM, that’s how I read it as another investor. Why is he getting out? Who knows.”
Soros made some other interesting moves involving EV companies, all of which was first reported by The Street Monday.
For example, in the March 31 filing, it showed he had sold all 317,300 shares in luxury electric vehicle maker Fisker. Then he added 600,000 shares of rival luxury EV maker Lucid Motors.
Soros also purchased two promissory notes worth about $100 million in Chinese EV maker Nio, said Gordon, who studied the government report Soros’ fund filed. A promissory note is similar to a loan that Nio must pay Soros, with interest.
“The upside of a promissory note is if the company gets into financial trouble and closes, the people who are owed money including the people who hold the notes get paid before the shareholders,” Gordon said. “The disadvantage … if everything goes well, your upside is in the interest you get paid, unlike stock where maybe it doubles. So you have a limited upside. It’s a more conservative way of making money off Nio.”
Then, there is Rivian, which is headquartered in Irvine, California but has offices in Plymouth, Mich. As of Dec. 31, Soros owned 19,835,761 shares of Rivian. At the end of March, he added a call option for another 6,045,000 shares, Gordon said. Shares of Rivian closed at $27.29 Wednesday. A call option means Soros paid a fee to whoever sold him the call option to reserve the right to buy those six million shares at a fixed price for a certain amount of time.
“So if the agreed price was $10 on the call option, but let’s say Rivian shares go to $11, Soros can say, ‘OK I want my six million shares.’ He sells it for $11 a share,” Gordon said. “But it’s a bet on the upside. But it’s a conservative bet on the upside since he didn’t buy the shares.”
Staff writer Eric D. Lawrence contributed to this article. Contact Jamie L. LaReau at 313-222-2149 or firstname.lastname@example.org. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.
This article originally appeared on Detroit Free Press: Famed investors George Soros, Cathie Wood make opposing bets on GM