Ford Motor Company (F), General Motors Company (GM): What Could Drive This Automaker Higher?

S&P expects that the U.S. automobile industry will perform nicely over the interim thanks to pent-up demand. S&P estimates light-vehicle sales in the U.S. to grow to 15.4 million units from 14.4 million for 2012. Global auto sales are also expected to be higher despite weakness in Europe. This will be on the back of robust growth in China. The big tailwinds to drive the U.S. auto market higher are expected to be a loosening of credit and the fact that the average vehicle is upwards of 11 years old.

General Motors Company (NYSE:GM) had, by far, the most hedge-fund interest among the major automakers; there were a total of 98 hedge funds long the stock going into 2013. The top owner (by market value) was billionaire Warren Buffett and Berkshire Hathaway, with a $721 million position (check out Buffett’s high upside picks). Meanwhile, fellow billionaire David Einhorn of Greenlight Capital wasn’t far behind with a $610 million position.

Ford Motor Company (NYSE:F) had 58 hedge funds long the stock, with Bill Miller’s Legg Mason Capital having the largest position, making up 2.8% of the fund’s 13F portfolio (check out Legg Mason’s best small caps). Honda Motor Co Ltd (ADR) (NYSE:HMC) had a mere nine hedge funds long the stock at the end of 2012, a 10% decrease form the previous quarter. The company’s largest hedge-fund owner was billionaire Jim Simons’ Renaissance Technologies, with only a $9.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio (check out Simons’ cheap picks). Toyota had little hedge fund interest as well, albeit a bit more than Honda. There were a total of 14 hedge funds long the stock going into 2013.

Ford Motor Company (NYSE:F) appears to be effectively working its turnaround and is also relatively cheap. Ford trades at only 9.3 times forward earnings, compared to General Motors Company (NYSE:GM)’s 10.6, Honda’s 18.5 and Toyota’s 20.9. This is also encouraging when you consider that Ford has an ROE of 34% and GM is at 18%, with both Toyota and Honda at only 7%. Oh, and Ford pays investors a solid 2.9% dividend yield (read more about Ford’s great dividend).