Warren Buffett, legendary investor, has faith in General Motors and really believes in the company.
Berkshire Hathaway, Warren Buffett’s holding company, purchased roughly 3,000,000 shares of GM stock during the second quarter, we learned according to a Securities and Exchange Commission regulatory filing.
The vote of confidence from one of the biggest investors in America comes on the heels of GM’s struggle to recover from the historic recall crisis. GM had to recall millions of vehicles due to faulty ignition switches and other problems during the year, and the fund that they set up to compensate victims has already received 63 death claims so far since being created.
Shares of General Motors have dropped nearly 17% so far during this year. Even though the stock rallied during the second quarter, shares fell by 11% in July.
The combined cost of victim compensation coupled with the recalls has cut GM profits by roughly 80% during the second quarter when compared to a year ago. This quarter was the second straight that the recall costs have wiped out profits from this company.
Buffett is well-known for making long-term investments in businesses when shares are being offered at a discount. He’s widely recognized as one of the best investors throughout the world. Berkshire Hathaway Class A shares have risen above $200,000 per share for the first time this past Thursday. It is also the highest priced stock on the stock market in the United States.
Buffett and Berkshire Hathaway are one of the largest shareholders of General Motors stock, and Buffett is also a staunch supporter of Mary Barra, the current CEO.
“She’s dynamite, you couldn’t have a better executive,” he said to CNN this past May.
Buffett Supports Mary Barra, GM CEO
In addition to purchasing more shares of General Motors stock, Buffett proudly owns General Motors cars. In July, he purchased a new Cadillac CTS and was very pleased with the overall buying experience. He decided to send a glowing letter to the CEO praising the sales staff of the local Cadillac dealership in Omaha, Nebraska.
General Motors has staged a major comeback since the federal government rescued the company during the financial crisis. After coming through bankruptcy during 2009, General Motors came back to the public market one year later. Buffett has invested in the company since 2012.
Despite the current recall problems, General Motors vehicle sales have remained strong during the second quarter. United States sales rose by 7% to 806,000 cars and trucks. Its overall market share stayed unchanged during the second quarter.
GM has reported record sales in China, its current largest market. European and South American sales decline’s left global sales little changed at 2.5 million vehicles. The company did post increased revenue.