GM

GM just announced a loss for Q2-2006. However, the major cause was the restructing costs (previous post on GM). The car business itself did better than expected. Non-US did well, but US-cars did better than expected too. The stock chugged up from $26 to $32 over about a week of the announcement.

After the flurry of news about Nissan/Renault’s Goshn meeting Wagoner, things have gone quiet. Reading Jerry Flint’s Forbes article I had a thought: wat if Goshn’s long-term plan is not a Nissan-Renault-GM triumvirate? What if he really wants a GM-Nissan partnership, ditching Renault (and his French government partners) when the time is right?

Updated: Nov 22nd, 2006 – I closed my long GM position today as I don’t expect it to do much in the near future. I started a long GM position by shamelessly and blindly following the Longleaf guys into the stock. I got lucky when Kerkorian agreed with them and when he pushed for a tie up with Nissan. I still think GM is probably a stock for the long haul — the uncertainity comes from not knowing how the 2007 union-contract renewal will turn out.

Today, a negative remark by the UAW president reminded me that I had planned to sell just before people started to take the union seriously. The likely scenario is that the union will be completely uncompromising leading up to June/July 2007, and might even make investors really nervous about the stock. So, that’s the time I’ll get back in; because I believe the union will end up “giving up” far more than most people expect.

Update Jan 2009: I’m glad I got out of GM (at a marginal profit). I gave up on my plan of getting back into GM, as Kerkorian and Nissan walked away.

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