Last year was an interesting one for auto manufacturers. From one side, companies engaged in the manufacturing of automobiles have been under scrutiny of regulators amid large safety recalls, which also affected the attitude of consumers. On the other side, despite this, the sales of vehicles in the U.S went up significantly with the best sales figures being reported in many years. As Autodata, a tracking company, stated in its latest report, during 2014, around 16.5 million new vehicles were sold, up by 1.0 million versus 2013. There are many reasons for this growth: a growing economy that drags down unemployment figures, low gas prices, and accessibility of different financing options for purchasing new cars.
However, despite growth in sales, the auto manufacturing industry returned a mild 6.7% during the last year and investors seemed to lose confidence in these companies as our data shows. Generally, auto manufacturers are large-cap companies, such as General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F) and Tesla Motors Inc (NASDAQ:TSLA). Our strategy that involves tracking the activity of some of the best investors in the world shows that generally large-cap picks can’t help investors in beating the market, but these stocks have a lot of benefits such as the possibility of being able to invest large amounts of capital with significant long-term return prospects, with less risk. Even though our strategy is focused primarily on small-cap stocks, following larger companies can also provide some interesting insights for retail investors.
Let’s get back to our auto manufacturer stocks. The most popular of them at the end of 2014 was General Motors Company (NYSE:GM), for obvious reasons, as it is one of the largest auto manufacturers in the world. Among 737 funds that we track, General Motors could be found in the 13F filings of 107 of them, down from 118 funds in the previous quarter. However the value of the positions held by these funds inched up to $6.07 billion, from $6.04 billion in the previous quarter. One of the top shareholders of General Motors Company (NYSE:GM) was Warren Buffett, who owned 41.0 million shares as of the end of 2014, adding 1.0 million shares during the fourth quarter.
General Motors Company (NYSE:GM) was affected the most by safety recalls, which cost the company over $4.0 billion in 2014. In this way, even though the company’s revenues for 2014 went up on the back of strong sales, and totaled $155.93 billion, from $155.43 billion in 2013, the company’s EPS slumped to $1.75 from $2.71. The company is however optimistic that it will be able to handle recall costs and that sales will remain robust as it has raised its dividend by 20% to $0.36 (hasn’t been approved by the board) and plans to further increase it in the near future.
Ford Motor Company (NYSE:F) witnessed a significant increase in investors’ capital during the last three months of 2014 as 45 funds reported holding $1.03 billion worth of the company’s stock, versus 47 funds with $766.41 million worth of stock in the previous quarter. Opposite to GM, Ford witnessed a decline in sales and its revenue slipped to $144.08 billion in 2014, from $146.92 billion in the previous quarter and EPS fell to $0.81 from $1.82. Ford Motor Company (NYSE:F), however, had warned investors that 2014 would be a sort of “transitional” year.
The company, however, is hoping that its F-150 truck sales will have a significant improvement in the current year’s financial figures. Ford announced a new truck with a new design and full-aluminum body in 2014 and it had to shut down its plant for some time in order to adjust for the production of the new model. Nevertheless, taking into account that the F-150 has been the most popular vehicle in the US for years, the changes will be worth it and will most likely beneficially reflect in Ford Motor Company (NYSE:F)’s financial results. Richard S. Pzena of Pzena Investment Management seems to think the same thing, as he initiated a stake containing 15.05 million shares during the fourth quarter of 2014.
Even though its production numbers don’t stay even close to Ford’s and GM’s, Tesla Motors Inc (NASDAQ:TSLA) has also been a popular stock among funds that we track. The $25 billion market cap company was included in the equity portfolios of 25 funds at the end of 2014, down from 31 funds in the previous quarter. In addition, the company saw a withdrawal of these investors’ capital, which fell to $1.38 billion, from $1.73 billion in the previous quarter. Investors also seem to be more interested in holding debt of Tesla Motors Inc (NASDAQ:TSLA), rather than stock, as the shareholder with the largest long position among funds that we track is Daniel Benton‘s Andor Capital Management, which owned 1.25 million shares as of the end of 2014.
Tesla Motors Inc (NASDAQ:TSLA)’s stock gained 40% during 2014 as the company strengthened its position in major markets outside the US, such as China and the UK. Tesla gained popularity as one of the most innovative companies in the automotive space taking electric vehicles to a new level with its luxurious Model S sedan. The company is also expected to start deliveries of its Model X SUV any time now, but what everyone is really looking forward to is its Model 3 car scheduled to be released within the next couple of years. Model 3 is expected to be a fully-electric, low-priced and mass-produced vehicle for which Tesla Motors Inc (NASDAQ:TSLA) is currently building its Gigafactory in Nevada.
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