GM Under The Grip Of Activists

It seems the recent upbeat results and raise in dividends by General Motors Company GM were not enough to satisfy some shareholders. It was revealed today, February 10, that four hedge funds have combined their powers to fight for a seat in the company’s board and push for a massive buyback. CNBC's Kate Kelly recently reported on this surprise move by activist hedge funders.

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The Move

“A big move by four hedge funds to pool their stakes in this enormous company; to push for change at the board level,” Kelly said.

“Appaloosa, Taconic, Hayman Capital and HG Vora: four hedge funds with a combined position of 2.1 percent in GM are backing Harry Wilson, a former leader of Obama administration’s Auto Task Force and a restructuring advisor with his own firm, as a candidate for GM’s board this season.”

She continued, “They are also pushing for a share buyback of at least $8 billion, which would be in addition to a quarterly dividend just raised to $0.36 per share for the second quarter.

“The news this morning has send shares of GM, already a popular hedge fund name, soaring. And some are saying that the proposal makes a world of sense. With the stock relatively cheap, now could be a very good time to buy back shares goes the thinking.”

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GM Defending Turf

Kelly also mentioned balance sheet issues that need to be resolved. “Kyle Bass, one of the fund manager behind the push, has been arguing for balance sheet improvements to GM for years now. GM for its part is already defending its turf saying it will evaluate the proposals and also touting that recent dividend hike.

“ It also noted in a statement this morning that Wilson will collect a percentage of any returns enjoyed by the hedge fund activists if their plan succeeds, a detail that is laid out in the group’s 95-page proposal to the car maker dated yesterday.”