Berkshire Hathaway, the conglomerate where Warren Buffet is Chairman and CEO, owns 72,500,000 shares of General Motors. Berkshire acquired 10 million GM shares in 2012, only two years after GM’s post-bankruptcy IPO. Over time, Berkshire has continued to acquire GM shares to reach this current 72.5 million share level according to its most recent 13F filing. There are reports that Berkshire’s initial 10 million GM share purchase was worth $260 million. At yesterday’s closing price, the value of Berkshire’s GM stake is now worth $3.8 billion. The value of GM stock has increased 67% over the past 12-months (the stock is up 213% since the pandemic-induced lows of March 2020).
Historically, Warren Buffet is a long-term value investor. However, it seems that General Motors is transitioning from a traditional value investment company that pays a nice dividend to a growth technology company that currently is not paying a dividend at all.
Yes, I believe that GM is rapidly becoming a technology company!
If Tesla is considered a growth technology company, then it should be acknowledged that GM is aggressively transitioning to a technology company as well. Investors are beginning to take notice. GM’s strategic investments in the future of transportation are as compelling as the technology and business investments at Tesla.
GM is building its own battery production facility in a joint venture with LG Chem. Tesla has battery production facilities with Panasonic.
The company has developed a new modular battery technology useful across a range of vehicle types. Tesla has developed proprietary battery technology.
GM is committed to an all-EV future with the introduction of 30 EVs through 2025, and a commitment to only selling fully-electric vehicles by 2035. Tesla only sells electric vehicles.
GM acquired Cruise Automation in 2016 for $1 billion, and is now developing self-driving technology. This Cruise subsidiary is now valued at $30 billion after investments by SoftBank, Honda and others. Tesla continues to develop its FSD feature on current vehicles (full self drive).
The company announced it will build a fully-electric, autonomous passenger transportation vehicle designed for new revenue in a future transportation-as-a-service business. There have been no announcements for this type of autonomous commercial passenger vehicle from Tesla. However, the company believes FSD will allow Tesla vehicle owners to utilize their vehicles as an autonomous taxi service.
GM is also attacking the commercial EV market with an all-new commercial vehicle division and a new fully-electric commercial vehicle. Tesla is developing an electric Class 8 truck for commercial usage.
What might Warren Buffet think about this transition of GM’s business? Based on comments over the years, we know that Buffet is impressed with GM’s CEO, Mary Barra, believing she’s doing a wonderful job at the company. Additionally it is known that Buffet is not immune to owning shares in technology stocks as well. Berkshire’s largest holding is Apple, with ownership of over 887 million shares of that company. The company owns slightly over 533,000 shares of Amazon. There are also investments in Verizon, T-Mobile and Verisign. It would seem that Buffet would be pleased with the profits being generated from GM’s legacy vehicle business ($6.4 billion for 2020). And given the rapid disruption occurring in the automotive industry, it would seem Buffet would be a cheerleader for GM’s strategy to be a leader in that future.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.