General Motors Co (GM), one of the 10 most popular stocks for hedge funds at the end of last year, fell out of favour in the first quarter as slower growth in China and discounts in the US dimmed the automaker’s prospects.
Bill Ackman’s Pershing Square Capital Management LP, Barry Rosenstein’s Jana Partners LLC and David Tepper’s Appaloosa Management LP were among the 49 hedge funds who sold their entire GM stakes as of March 31, according to regulatory filings compiled by Bloomberg. In total, 81 hedge funds sold GM in the quarter, including Daniel Och’s Och-Ziff Capital Management Group LLC (OZM) and George Soros’s Soros Fund Management LLC.
“We’ve seen some very smart people sell fairly soon,” said Peter Nesvold, a Jefferies & Co analyst in New York. “It’s probably going to take longer than expected to get paid for holding GM, and investors can always just come back into it.”
GM has dropped 6.6 per cent in New York trading from the shares’ $33 initial public offering price in November. Investors expected demand to prop up US vehicle prices and predicted a long-term boom in China’s auto market, Nesvold said. Instead discounts at home climbed more than 10 per cent and GM’s China sales fell last month for the first time since December.
GM slid 13 cents to $30.83 yesterday and has declined 22 per cent from an intraday high of $39.48 on January 6.
Chief Executive Officer Dan Akerson touted GM’s “high- quality shareholder base” with “marquee names” in a Bloomberg Television interview in November, after the largest US automaker’s IPO. GM doesn’t comment on individual investments in the company, said Jim Cain, a spokesman. GM had the 10th most hedge fund investors as of December 31, with 112 owning the shares, according to Goldman Sachs Group Inc’s Hedge Fund Trend Monitor report released in February.