General Motors is the largest U.S.-based car and truck manufacturer. A high cost structure and a mountain of employee pension and post-retirement healthcare liabilities put GM into bankruptcy in 2009. A restructured GM - smaller, more efficient, and unburdened of most unfunded off-balance sheet liabilities – came back to the public equity market in 2010 at a price of $33. Despite a strong stock market, GM stock traded at only $27 earlier this year. We have been positive on the prospects for the auto market, believing that many investors focus too much on auto demand cycles in the U.S. and Europe, instead of on the strong secular growth in emerging markets, which now account for more sales than either the U.S. or Europe. And despite GM’s struggles, it has built very strong positions in these growing markets while maintaining its dominant, and highly profitable, position in North American pick-up trucks. We believe that with a management team that can now focus on building cars and trucks, instead of serving its retirees, and with a stock priced at less than 8 times 2014 earnings estimates, GM has become an attractive investment.
From Bill Nygren's second quarter 2013 commentary.