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In expanding on our GM (GM) thesis, we argued that the company has not been given credit for its improved competitive and financial position post-bankruptcy. At $24.75 per share, GM trades at 8x this year's earnings of about $3 per share. GM is poised to benefit from continued recovery in the U.S. market, a significant product upgrade cycle, eventual restructuring in Europe, and continued growth in China and Brazil. We view the government stake as an opportunity, rather than an overhang. Post-election, we expect the government to sell its shares, and GM has the funds to be the buyer in what would be a highly accretive transaction. Should the government decide to keep its stake, GM could achieve the same benefit through open market buybacks. Assuming the buyback, all told, GM has the ability to earn $8 of (untaxed) cash earnings per share in 2014 in a mid-cycle environment.
From Greenlight Capital's third quarter letter.
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