GM, Tesla, Ford: Hedge Funds’ Favorite Auto Manufacturers

The automobile industry has been facing headwinds since the start of the year, as the sector seems to have plateaued after surging to record sales of 17.4 million units in 2015. In the first seven months of 2016, U.S. auto sales totaled 4.253 million units, a decline of 7.7% compared to the same period of last year.

In this article, we’ll take a look at the top automobile stocks liked by the smart money investors in our database to see how they’re positioning themselves in auto stocks amid the sales declines.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

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Thor Industries, Inc. (NYSE:THO)

– Number of Hedge Funds With Long Positions (as of June 30): 23

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $213.71 million

23 hedge funds in Insider Monkey’s database held $213.71 million worth of stakes in Thor Industries, Inc. (NYSE:THO) at the end of the June quarter. The Indiana-based company’s stock has gained over 45% so far this year, making it one of the best performing stocks in the sector. In August, Wunderlich Securities downgraded Thor Industries Inc. (NYSE:THO) to ‘Hold’ from ‘Buy’ given the stock’s appreciation, but reiterated its $80 price target on it. Chuck Royce’s Royce & Associates owned 1.62 million shares of the RV manufacturer on June 30.

Fiat Chrysler Automobiles NV (NYSE:FCAU)

– Number of Hedge Funds With Long Positions (as of June 30): 27

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $534.79 million

27 funds in our system owned $534.79 million worth of Fiat Chrysler Automobiles NV (NYSE:FCAU)’s stock on June 30, down from 28 funds with $645.66 million in positions on March 31. Fiat Chrysler Automobiles NV (NYSE:FCAU) posted a 3% rise in sales for the month of August, mainly due to the strength of its Jeep brand and fleet sales, which accounted for 24% of its total sales during the month. The SUV brand’s sales rose by 12%, with Cherokee sales up by 41% compared to last August. In contrast to Jeep’s success, Chrysler brand sales decreased by 22%. Fiat Chrysler’s stock has lost over 26% so far this year.

On the next page we’ll take a look at the three auto manufacturers that are the most beloved of hedge funds.

Ford Motor Company (NYSE:F)

– Number of Hedge Funds With Long Positions (as of June 30): 31

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $685.18 million

Of the 749 hedge funds tracked by Insider Monkey which filed 13F’s for the June 30 reporting period, 31 were bullish on Ford Motor Company (NYSE:F) at the end of the second quarter, down from 33 a quarter earlier. The Michigan-based automaker reported an 8.8% decline in sales for the month of August, compared to the same period of last year, and even worse than analysts’ already-modest estimate of an 8.2% decline.  Ford’s Lincoln sales in the U.S. increased by 7% in August on a year-over-year basis. Overall, the U.S. car and truck manufacturer’s sales totaled 214,482 vehicles, an 8% decline. Ford Motor Company (NYSE:F) has reportedly decided not to proceed with its plans to produce a new compact car family for emerging markets like India and China. Ford shares have lost over 11% of their value so far this year.

Tesla Motors Inc (NASDAQ:TSLA)

– Number of Hedge Funds With Long Positions (as of June 30): 36

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $1.13 billion

At the end of the second quarter, 36 hedge funds were long Tesla Motors Inc (NASDAQ:TSLA), down 39 three months earlier. According to Bloomberg, Tesla CEO Elon Musk has called for cost cutting measures in a recent email to Tesla’s employees. Tesla needs capital as it ramps up its Model 3 production, and for its planned $2.6 billion acquisition of SolarCity Corp (NASDAQ:SCTY). Tesla reported a second quarter adjusted loss of $1.06 per share, nearly double the estimated loss of $0.56 per share. Revenue for the quarter came in at $1.30 billion, also well below the consensus mark of $1.62 billion. Tesla’s stock has lost 17% of its market value since the start of 2016. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital owns 60 million shares of Tesla Motors Inc (NASDAQ:TSLA) as of June 30.

General Motors Company (NYSE:GM)

– Number of Hedge Funds With Long Positions (as of June 30): 65

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $3.29 billion

A total of 65 hedge funds in our system, including legendary investor Warren Buffett of Berkshire Hathaway, had stakes in General Motors Company (NYSE:GM) at the end of the second quarter, making it by far the most popular auto manufacturer among hedge funds. GM sold 256,429 units in August, a 5.2% decline, but better than analysts’ forecast of 255,151 units. Crossovers and SUV’s continue to show their strength even in the current tough market conditions. Sales of General Motors Company (NYSE:GM)’s Chevrolet Colorado and Canyon pickups were also up by 35% and 39% respectively year-over-year for the month. 2016 sales totaled 2.3 million through August, an 8.1% jump on a year-over-year basis.

Disclosure: None