General Motors stock rose early Monday after it was revealed that a small but influential hedge fund had bought a stake in the automaker and supported GM’s plans to go all-electric.
The hedge fund engine No. 1, which won three board seats at ExxonMobil earlier this year, claims to have received a stake in GM.
The other GM news of the day was that it entered into a strategic supplier agreement with Wolfspeed, Inc. to develop and provide silicon carbide power devices for future electric vehicles that increase range and reduce charging times. GM does not disclose the terms of the agreement or any financial details, but Wall Street responded.
By noon, GM’s share price was up 2.88% to $ 54.66. That surge slowed to 1.52%, or $ 53.94, by the afternoon. It closed the day at $ 53.98, up 1.60% from the previous day’s closing price.
The San Francisco-based hedge fund said it had “very constructive and collaborative discussions with GM,” adding specific value to GM’s commitment to electric vehicles and supporting the business case for the company’s transition plans.
“For the first time in years, GM is ready to regain market share. The company’s advantages in battery technology and its plans to invest $ 35 billion in battery electric vehicles by 2025 position it well against the competition, ”said Edward Sun, portfolio manager at Engine No. 1, in a statement on Monday.
Engine No. 1, Steve Murray, declined to comment on the amount of the fund’s stake in GM but said it came about in the first quarter.
One person familiar with the hedge fund’s involvement said it was not an activist position. The person who has been asked not to be named as they are not authorized to share this information with the media.
Engine # 1 became famous after its campaign against ExxonMobile. The fund started in December 2020 with a position of 0.02% in the oil giant. However, the fund spent several months running for seats on the Exxon board of directors, winning three seats out of its four nominees for the 12-member board.
The founder of Engine No. 1, Chris James, noted similarities between Exxon and GM in an interview Monday at CNBC’s Squawk Box. He said every company is in an industry that is changing and GM is taking actionable steps for long-term success.
James said he sees himself as an active owner rather than an “activist investor”.
“We’re not hostile at all, we think they’re doing the right thing,” James told CNBC about GM’s EV strategy, adding that CEO Mary Barra and GM’s senior management were open to discussions about future goals.
“GM’s goal to be 100% electric by 2035 signals one of the greatest changes in automotive history and provides an opportunity to re-center the battery supply chain in America,” James said in a statement from Engine No later.
GM has announced that it will launch 30 new EVs by 2025 and aims to have all of its light vehicles zero emissions by 2035. By the end of the year, GM will launch the first of these new EVs, the 2022 GMC Hummer EV Pickup built at Factory ZERO in Detroit and Hamtramck.
“The company’s early leadership in battery technology, along with Mary Barra and the leadership of the board, creates tremendous benefits,” James said in the statement. “There’s a narrative that only technology companies can move quickly to embrace change and win when the world changes. We don’t think that’s true. “
James cited examples of GM’s emerging leadership position in transformation, including GM’s investments in locating its battery plants, creating its new Ultium battery platform, and planning to capitalize on its size.
“With the right leadership at the board and management level, incumbents can transform themselves and their own industries by investing aggressively in the short term to drive long-term value creation,” said James. “GM has that leadership.”
In response to the move by Engine No. 1, GM spokesman Jim Cain issued a statement: “GM is making ever faster strides toward an all-electric future, serving the long-term interests of our shareholders, customers, employees, dealers, suppliers and the planet. We value the prospects of all stakeholders as we continue to work towards an emission-free future. “
GM stock is up about 30% over the year. James said on CNBC that GM can become a growth company again.
“We believe this stock could triple in the next five years, and that’s something we’re pretty excited about for us,” he told Share. “
Contact Jamie L. LaReau: 313-222-2149 or firstname.lastname@example.org. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for ours Auto newsletter. Become a subscriber.