GM buys after takeover of # 1 hedge fund engine
General Motors shares rose on Monday after news broke that a small but influential hedge fund had bought a stake in the automaker and was backing GM’s plan to go all-electric.
Hedge Fund Engine No. 1, which was recognized after winning three seats on Exxon Mobil’s board earlier this year, said it had acquired a stake in GM.
As of noon, GM’s stock price was up 2.88% to $ 54.66. That increase slowed to 1.52% or $ 53.94 by mid-afternoon.
The San Francisco-based hedge fund said it has had “very constructive and collaborative two-way conversations with GM” and places tangible value on GM’s commitment to electric vehicles and supports the business case business transition plans.
“For the first time in years, GM is on the verge of regaining market share. The company’s advantages in battery technology and its plans to invest $ 35 billion in battery-electric vehicles by 2025 position it well among its competitors, ”said Edward Sun, portfolio manager at Engine No . 1, in a statement Monday.
No.1 engine spokesperson Steve Murray declined to comment on the size of the fund’s stake in GM, but said it started in the first quarter.
A person familiar with the hedge fund’s involvement said it was not a militant position. The person has asked not to be named as they are not authorized to share this information with the media.
Engine No. 1 rose to prominence after its campaign against Exxon Mobile. The fund started with a 0.02% position in the oil giant in December 2020. But the fund spent several months bidding for seats on the board of Exxon and won three seats out of its four nominees. 12-member board of directors.
Engine No. 1 founder Chris James noted similarities between Exxon and GM in an interview Monday on CNBC’s Squawk Box. He said every business is in a transforming industry and GM is taking concrete steps for long-term success.
James said he sees himself as an active owner rather than an “activist investor.”
“We’re not going hostile at all, we think they’re doing the right thing,” James told CNBC of GM’s EV strategy, adding that CEO Mary Barra and GM executives were open to discussions. on future goals.
“GM’s goal of becoming 100% electric by 2035 signals one of the biggest transformations in automotive industry history and creates an opportunity to refocus America’s battery supply chain,” he said. James said in an Engine No. 1 release later.
GM has announced that it will launch 30 new electric vehicles by 2025 and aims for all of its light vehicles to be zero-emission by 2035. By the end of the year, GM will launch the first of these new electric vehicles, the 2022 GMC Hummer EV pickup. built at Factory ZERO in Detroit and Hamtramck.
“The company’s early advance in battery technology, with Mary Barra and the leadership of the board, creates huge benefits,” James said in the statement. “There is a narrative that only tech companies can act quickly to embrace change and win as the world changes. We don’t think that’s true.”
James listed examples of GM’s emerging leadership in the transformation to include GM’s investments in locating its battery factories, creating its new Ultium battery platform, and its plan to leverage its scale.
“With the right leadership at the board and management level, incumbent companies can transform and transform their own industry by aggressively investing in the short term to generate long-term value creation,” James said. “GM has that leadership. “
In reaction to the No.1 engine decision, GM spokesperson Jim Cain issued a statement: “GM is making increasingly rapid progress towards a fully electric future to serve the long-term interests of our customers. shareholders, customers, employees, dealers, suppliers and the planet. We value the views of all stakeholders as we continue to move towards a zero emissions future. “
GM stock is up about 30% for the year. James has told CNBC that GM can go back to being a growing company.
“We think that title could triple in the next five years, and that, for us, is something that excites us enough,” he said. “We believe that for the first time, they have the ability to win a huge amount of market share.”