The auto industry is one that could benefit significantly from the improving U.S. economy and the strengthening of consumers’ confidence. In 2014, auto sales in the U.S. reached the highest level since the Financial Crisis of 2008, which is a clear sign that the auto industry is on a strong upward trend. This industry had a great start to the current year and has been further supported by a strong increase in retail sales. It’s commonly known that all companies do better when the economy is growing and improving, however, the auto industry has seen relatively strong growth thanks to other tailwinds as well, including the lower fuel rates that have made car ownership more attractive. With that in mind, let’s check out the list of the top five automaker stocks among the hedge funds and firms we track at Insider Monkey, based on our recently compiled data from the March 31 13F reporting period.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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General Motors Company (NYSE:GM) is the most popular stock among the hedge funds we track. At the end of the most recent quarter, 103 hedge funds held positions in the company compared to 107 at the end of 2014. While ownership dipped slightly, the aggregate value of these positions increased to $6.74 billion from $6.07 billion. Regardless of the fact that General Motors Company (NYSE:GM) is likely to face criminal charges as the company delayed the recall of its vehicles with a faulty ignition switch, the stock is up more than 2% in 2015. Therefore, this issue’s resolution will most probably signify a bullish signal for the company going forward, so it would be wise to keep an eye on this leading stock within the automaker industry. Mohnish Pabrai’s self-named hedge fund and Frank Brosens’ Taconic Capital both increased their equity holdings in General Motors Company (NYSE:GM) during the first quarter.
A shining star of the automaker industry that is totally worth your attention is Fiat Chrysler Automobiles N.V. (NYSE:FCAU). The number of hedge funds that hold equity stakes in the seventh-largest automaker in the world increased to 40 from 19, while the value of these stakes more than doubled, rising to $1.49 billion from $738.13 million. Fiat Chrysler Automobiles N.V. (NYSE:FCAU) outperformed the European auto industry’s sales growth for the fourth month in a row, achieving an increase in passenger car sales of 13.4% year-over-year to almost 79,000 cars, while its European car sales have increased for 20 consecutive months. Fiat Chrysler Automobiles N.V. (NYSE:FCAU)’s stock has increased by more than 37% since the beginning of the year, which surely has not disappointed its investors, which include Ken Heebner’s Capital Growth Management.
Another interesting automaker pick included in the list is Ford Motor Co. (NYSE:F). 33 hedge funds own equity holdings in this company as of the end of the latest quarter compared to 45 at the end of 2014. The value of these holdings also plummeted, decreasing to $832.06 million from $1.03 billion. Ford Motor Co. (NYSE:F)’s CEO, Mark Fields, has recently declared that the company intends to design a self-driving car that would be accessible to everyone, not just the rich. Moreover, in spite of Ford’s tough competition in the fast-growing Chinese market, Fields claims that the company has been delivering strong results in China, achieving a record market share of 4.5%. Although Ford’s stock has been on a downtrend recently, the slightly more than 1% decline it its share price since the beginning of the year might represent a good buying opportunity for investors. A number of hedge funds, such as Jerome Debs’ Bodri Capital Management and Ken Heebner’s Capital Growth Management, are among the funds that seem to believe in Ford Motor Co. (NYSE:F)’s future performance
The fourth place on our list of top five top automaker stocks goes to Tesla Motors Inc. (NASDAQ:TSLA). The number of hedge funds holding equity stakes in the electric-car maker increased to 29 from 25. However, the total value of the stakes was reduced by 24% during the first quarter, decreasing to $1.04 billion from $1.38 billion. Despite the fact that the stock has increased by over 11% since the start of 2015, the price can go even higher in the upcoming months as the company unveils its secret weapon, a mobile retail store. Therefore, Tesla Motors, Inc. (NASDAQ:TSLA) will be able to meet its customers at different locations and will be able to enhance the company’s revenue streams, since the demand for their cars can be met only in the relatively limited number of Tesla retail stores. Daniel Benton’s Andor Capital Management is one of the hedge funds that still owns a sizable stake in Tesla Motors, Inc. (NASDAQ:TSLA).
Tata Motors Limited (NYSE:TTM) is the fifth of five automaker stocks on our list. The fund ownership rose by over 26% during the last quarter, increasing to 24 from 19. By the same token, the value of the total fund ownership increased to $716.73 million from $626.18 million. A while ago, Tata Motors Limited (NYSE:TTM) announced the launch of the latest version of its Indian mini-car, called GenX Nano. The company is planning on exploiting the emerging market of India by selling the mini-car priced under $5,000. Moreover, Societe Generale has recently upgraded the stock to “Buy” from “Neutral”, which clearly indicates that Tata Motors is likely to benefit from the launch of the above-mentioned mini-car. Since the stock has been on a downtrend throughout the recent months, it seems that now is the right time to buy this promising stock. Richard Driehaus’ Driehaus Capital and Ken Fisher’s Fisher Asset Management are among the hedge funds that increased their holdings in Tata Motors Limited (NYSE:TTM) during the first quarter.
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