The Top 5 Stocks Billionaire David Tepper Was Buying in Q4

2. General Motors Company (NYSE:GM)

Value of Appaloosa Management‘s 13F Position: $132 million

Number of Hedge Fund Shareholders: 92

Hedge fund ownership of General Motors Company (NYSE:GM) hit its highest level in over five years during Q4 thanks to an 18% jump in ownership of the stock during the quarter. David Tepper was among those taking a stake in the automaker, buying 2.25 million shares to make GM his ninth-largest holding.

After years of stiff challenges, General Motors Company (NYSE:GM) had a record-breaking year in 2021, earning an all-time of $7.07 in adjusted EPS. That was despite chip shortages limiting North American sales to just 2.3 million vehicles, more than 30% below 2018 levels. With chip supplies now improving, GM expects a big jump in deliveries in 2022, to the tune of 25% to 30%.

RLT Capital laid out some of the pros and cons of General Motors Company (NYSE:GM)’s legacy operations in its Q4 2021 investor letter:

“Despite my enthusiasm for GM’s competitive positioning in the years to come, it’s the decidedly unsexy legacy operations that keep GM’s cash registers ringing in the here and now. On that front, investor enthusiasm for the current manufacturing – and financing – of internal combustion engines remains pretty muted by most measures. And understandably so:

-GM’s operations are capital intensive,
-GM’s marketplace is highly competitive (and with excess capacity to boot),
-GM’s supply chain is super complex (e.g., semi shortage, tariffs, etc),
-GM’s labor force is (very) unionized,
-GM’s liabilities are aplenty and long-dated (e.g., warranties, recalls, lawsuits, etc),
-GM’s operations have ample – and unavoidable – commodity exposure (in both raw materials & the resulting impact on product demand/mix), and
-There’s no shortage of debt to consider.

Although that hardly represents a comprehensive accounting of the risks that crowd GM’s disclosures, it’s more than sufficient to obscure the many positives to be found under GM’s hood. Of particular note is GM’s strong showing across seemingly every facet of the changes looming over the broader automotive industry:

-Internal Combustion Engines (ICE): If you think all the talk about electric and/or autonomous vehicles is either total hogwash or still decades into the future . . . GM’s legacy business has you covered. For as long as consumers continue to demand ICE powered vehicles, GM will capably meet said demand. In fact, despite the many headwinds faced by the entire automotive industry in 2021, GM still capably sold ~6.3 million vehicles, and generated ~$113.6 billion of automotive-related revenues…” (Click here to see the full text)