Big investors are dumping GM

Hedge funds and other heavyweights are also selling stakes in eBay, Vodafone and Dollar General. But they love Ally Financial and Google.

By MSN Money Partner Aug 18, 2014 2:49PM
Caption: The General Motors logo is seen on display at an auto show in Detroit
Credit: © Paul Sancya/APBy William Watts, MarketWatch

Big investors fell out of love with General Motors (GM) in the second quarter but hedge-fund titans including Dan Loeb rushed to snap up shares of Ally Financial (ALLY), the troubled auto maker's former financing arm that was rescued by the U.S. government, according to an analysis of freshly-filed regulatory documents.


Hedge funds and other heavyweights were also eager to take up new stakes in pharmaceutical firm Allergan (AGN), Google (GOOG), The Williams Companies (WMB) and DirecTV (DTV) while eliminating stakes in eBay (EBAY), SLM Corp. (SLM), Vodafone (VOD) and Dollar General (DG), according to Whalewisdom.com, a website that tracks 13F and other regulatory filings.


Institutional investment managers with more than $100 million in certain types of assets have until 45 days after the end of a quarter to file a 13F form listing securities holdings with the Securities and Exchange Commission. The second-quarter filing deadline was Thursday. Whalewisdom provided a breakdown of the biggest aggregate purchases and sales by the 600 most closely-followed investors on its site.


Among Ally’s most ardent supporters, Loeb's Third Point hedge fund acquired 45.6 million shares in the second quarter. The position made Ally Loeb's second-largest holding as of June 30, according to the filing, equal to 13.4 percent of his overall portfolio and worth $1.09 billion at the end of the quarter.


Fellow hedge-fund titan John Paulson was also in the Ally camp, albeit on a smaller scale, holding a little over 2 million shares, worth nearly $48 million as of June 30. Stephen Feinberg, head of Cerberus Capital Management, took a Loeb-sized stake in the firm, snapping up more than 41.5 million shares worth nearly $993 million as of the end of the quarter.


Ally Financial was rescued by the U.S. government during the financial crisis. It made its debut in an initial public offering on April 10, a transaction that saw the Treasury Department raise nearly $2.4 billion by selling shares at $25 each. Ally soon dipped below its offering price and changed hands at $24.13 in recent action Friday, a 0.4 percent daily decline. Shares are down 0.2 percent since the beginning of the current quarter.


Now, 13F filings don’t offer a full picture of an investors' positions. Also, the holdings are at least 45 days old. But they can offer insights into the thinking of big investors.


Big investors appeared to trade heavily during the second quarter in shares of Allergan, the pharmaceutical firm fighting a takeover effort by rival Valeant Pharmaceuticals. That takeover quest has been pushed by activist investor Bill Ackman, whose Pershing Square hedge fund added nearly 28.3 million shares to its stake in Allergan during the quarter. Allergan was Ackman's top holding with a value of nearly $4.9 billion.

Other activists, including Paulson (who acquired a new stake of 5.6 million shares) also bought into Allergan. Shares of Allergan are up 41.3 percent since the beginning of the year, but have dropped 7.3 percent since June 30.


Also worth noting, hedge-fund legend George Soros significantly loaded up on puts on the SPDR S&P 500 ETF (SPY) while also adding to a smaller holding of calls on the same product. The move raised eyebrows among analysts, who pondered whether it belied a growing sense of caution for the otherwise apparently bullish Soros. 


Meanwhile, positions in eBay were eliminated entirely by around 5.7 percent of filers, topping the list of sold-out positions, with big investors dumping a total of nearly 14.7 million shares. Billionaire investor Carl Icahn in April backed away from his contentious demand that eBay spin off its PayPal unit.


Icahn, however, was a buyer of eBay in the second quarter, his 13F filing showed, picking up 3 million shares. EBay shares have rebounded 5.3 percent since the beginning of the third quarter, trimming its year-to-date loss to 4 percent.


General Motors was dumped entirely by 5 percent of big filers as it worked through numerous recalls and scrutiny over vehicle safety.


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1Comment
Aug 18, 2014 4:38PM
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I do not know a single person that would purchase a GM vehicle at this point. That sounds like a good reason to dump GM stock.
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