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General Motors Stock Surges As Activist Hedge Fund Engine No 1 Reveals Stake

GM shares leaped higher after activist investor Engine No 1, the hedge fund that successfully pushed for board changes at Exxon, revealed a stake in carmaker.

General Motors  (GM) - Get General Motors Company (GM) Report shares powered higher Monday after activist investor Engine No 1, the hedge fund that successfully pushed for board changes at Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report, said its built a stake in the biggest U.S. carmaker.

Engine No 1  founder Chris James told CNBC Monday that his fund is both a new investor in General Motors as well as a supporter of its planned transition to electrified vehicle production, which he says merits a higher market valuation for the Detroit-based carmaker. James also told the New York Times' 'Dealbook' that the fund has met with CEO Marry Barra.

"The beliefs that lead us to Exxon are the same beliefs that lead us to GM," James told CNBC. "GM sits within an industry going through transition, as is Exxon, but that's where the analogy stops."

"GM, with the support of a strong management team, a great board, has decided they are going to embrace the future," he said. "They themselves can go in and disrupt and industry and be successful during this transition."

General Motors shares were marked 3.3% higher in early trading Monday, against a 1.4% decline for the S&P 500, to change hands at $54.92 each. 

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Engine No. 1, a San Francisco-based hedge fund that owned only 0.2% of Exxon shares, managed to corral support from major investors such as BlackRock and the California Public Employees' Retirement System (CalPERS) in its effort to pressure Exxon CEO Darren Woods to change course following the oil major's first annual loss as a public company last year. 

Exxon ultimately conceded to the group's request, putting three of its recommended names onto the oil major's board of directors in late June.

Chevron  (CVX) - Get Chevron Corporation Report, as well, pledged to triple its capital investment plans over the coming years as it accelerates its transition to lower carbon businesses amid reports it met with executives at Engine No. 1 last month. 

Last week, GM posted a steep decline in third quarter U.S. car sales Friday, but repeated its full-year profit forecast as the ongoing shortage in global semiconductor supplies continues to hit the country's biggest automakers.

GM said third quarter deliveries were down 32.8% from the same period last year, with an overall tally of 446,997 vehicles shifted in the United States. That puts the industry one pace for full-year sales of 13.4 million units, GM said, down from a pace of 15.5 million at this point in October of 2020.

GM CFO Paul Jacobson told an investor conference last month that he expects "a more stable year" for semiconductor supplies in 2022, while the company boosted its full-year profit guidance to between $11.5 billion and $13.5 billion following its second quarter earnings.