This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Warren Buffett's Latest Bet on America Is GM

Stocks in this article: F GM UPS

DETROIT ( TheStreet) -- Warren Buffett, famous for his bets on the U.S. economy and eternal optimism about this country's future, has become a buyer of one of the nation's biggest market symbols, auto maker GM (GM).

Buffett's Berkshire Hathaway (BRK.B) disclosed in its quarterly portfolio holdings filing with the Securities and Exchange Commission on Tuesday afternoon that it bought 10 million shares of GM during the quarter, the first time Buffett's company has bought into the automaker since it emerged from bankruptcy in 2009. Berkshire's stake, which was small enough to have been a portfolio selection made by one of Buffett's two recent hedge fund manager hires -- Todd Combs and Ted Weschler -- was valued at $256.5 million as of March 31, but was worth $214 million at Tuesday's close.

GM comprised a small fraction of the firm's $75 billion in holdings at the end of the first quarter, but it does represent Buffett's only play on the U.S. auto industry. Berkshire's only other U.S. transportation stock holding is UPS (UPS): the firm owns 1.4 million shares valued at $115 million.

Buffett has had for several years a large stake in Chinese automaker BYD, known primarily for its electric car lineup. That big auto bet, originally recommended by Buffett right hand man and Berkshire chief operating officer Charlie Munger, recently turned somewhat sour, as BYD's profit declined precipitously in 2011 and early this year.

GM has the biggest market share in the world's two biggest auto markets, China and the U.S. So far this year, GM stock is up 2%, while Ford (F) stock is down 7%. While U.S. auto sales have been rising for three years, after hitting a 27-year low in 2009, sales are slumping badly in Europe and growth in China has slowed.

>>View Warren Buffett's Portfolio

In the first quarter, GM beat estimates, earning $1.6 billion or 93 cents a share excluding items, while analysts surveyed by Thomson Reuters had estimated 85 cents. Nevertheless, S&P Capital IQ analyst Efraim Levy downgraded his rating from strong buy to buy and reduced his full-year estimate to $3.94 from $4.29. "We find GM's valuation attractive, but near-term challenges limit our enthusiasm," Levy wrote.

Buffett is closely associated with the Obama administration's economic policies. Obama agreed to lend bankrupt GM money so that it could emerge as a lower-cost, better run company at a time when global auto sales were about to begin a rebound. The auto bailout has become fodder for a campaign trail war of words between the White House and Mitt Romney, and a focus for Obama re-election campaign early advertising .

Buffett's company also revealed a new stake in Viacom (VIA) in the first quarter.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs