Buffett raises stake in GM by 60%

Buffett raises stake in GM by 60%
David Shepardson and Melissa Burden
The Detroit News
31 Comments
Warren Buffett
Warren Buffett (Matt Kryger / Associated Press)
Washington — Billionaire Warren Buffett’s investment arm Berkshire Hathaway Inc. boosted its stake in General Motors Co. by 60 percent to 40 million shares, the conglomerate disclosed in a filing early Thursday. That brings Berkshire Hathaway’s holdings to 2.9 percent of outstanding GM stock.

The firm initially purchased 10 million shares in 2012, when the stock was trading in the low $20-per-share price. It closed Thursday at $34.55, down $1.02. At current prices, the stake is worth more than $1.38 billion.

Buffett acquired the new shares in GM in the three months ending June 30. That’s the same period during which the U.S. Treasury has been steadily selling off its holdings in GM it received as part of its $49.5 billion bailout.

GM North America President Mark Reuss told reporters Thursday in Detroit that Berkshire’s stock purchase is a positive boost for the company.

“We work really hard every day to do the right things and make the right cars that people want to buy. When someone does something like that it makes us all feel we’re on the right track…,” he said. “Frankly, it’s been a tough four years coming out the financial crisis we were in and a little bit of validation here and there is OK. But we’ve got a lot of work to do, and we’ve got to keep our heads down here and keep it going.”

GM returned to the S&P 500 during the second quarter of 2013, a milestone triggered in part by the U.S. Treasury reducing its GM stake.

Buffett’s preference for buying stocks and businesses rather than bonds has helped his company weather a spike in interest rates this year. Omaha-based Berkshire Hathaway’s equity portfolio, which is about three times larger than its fixed-income holdings, rallied past $100 billion in the second quarter.

“His portfolio has been moving up nicely,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken students to meet Buffett in Omaha. His allocation to stocks “not only has been the right strategy until now, it’s very likely to be the right strategy going forward.”

Berkshire Hathaway has major investments in auto insurance, life insurance, annuity sales and sales of jewelry. It holds large stakes in other major companies, including Coca-Cola Co.

Bloomberg News contributed
dshepardson@detroitnews.com

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