well what I meant was income to common stockholders and I was again incorrect. 2011 was over that threshold at 7.6 billion, but that was with substantial help from a $1.6 billion gain on sale of delphi automotive and a negative tax rate from a change in valuation allowance.
yeah that was stretching the truth a bit. GM hasnt actually earned $6 billion since 1999 I believe. However, I believe they are now approaching that capability again as they pay off the 9% preferred stock at the end of the year.
It's been quite some time since Berkshire has really been investing its float. Cash + bonds easily surpass total float. My guess is that he's talking about the return on midamerican a equity which for some time has hovered in the 10-11% range. Certainly this reflects goodwill to acquire additional utilities. The regulated renewable projects have been given pretty favorable rates of return with the Iowa wind project being granted a ROE of 11.625%
I found it interesting that he said that the utility business should return 8-9%. I find that disappointing. I would have thought returns would be in the range of 10%
I bought gm stock today for the first time. It looks cheap to me. 9x earnings ex-charges and that's fully deducting taxes. They still have $32 billion in deferred tax assets. Balance sheet is very strong with only about $7 billion in non-financial debt, that's automotive interest coverage of about 20. There is still about $7 billion of pension underfunding but the discount rate is reasonable and obligations are only going down as the defined being it plan was phased out several years ago in favor of a dc plan. Yes it's a cyclical business which is why the balance sheet is so important and gm's is among the strongest.
BMW also looks very very strong but it's a pain to buy as no ADR
yeah I dont buy that. Other fast doing just fine, mcdonalds is having trouble with their brand and with their level of service. I'm amazed that the market still gives Mcdonalds a 16-17x multiple.
GM earns $6 billion a year easily (about $600 a car). That's less than 9 times earnings here. That's with fully deducting taxes, although they still have $32 billion in deferred income taxes. Pension obligations will be a thing of the past with a pure defined contribution only plan. Balance sheet is among the strongest in the industry with only $7 billion of non-financial debt. Automotive interest expense in a normal year has an interest coverage of 20. In my opinion, this is a great pocket of value in an otherwise expensive market.
these are some good points. 13% possible dilution is not that bad. Even at $60 that's only about 6-7%, could be worse.
I just think its a short term headwind once tesla passes the 200k limit and the credit gets phased out. Its true GM and Nissan wont be far behind. Toyota, Kia, Hyundai, BMW, Mitsubishi, etc though likely will and tesla will be at a short term disadvantage. The size of that disadvantage depends on the size of the EV market. If EV sales increase only a little bit from its 100k level than that disadvantage is somewhat significant in my view, if EV sales increase to a 500k level or higher then its not worth worrying about.
25% gross margin is very high for an automaker. GM is very profitable on 12% gross.
Well its the weakest months where many of the improvements are taking place. January is generally the weakest month for solar and this year january cap factor was at 17.3% a big jump over last years 13.1% and the year before that was only 9.3%. This years numbers have been very strong across the board as advanced plants have been coming online rapidly.
Shorting successfully requires a very special talent, beyond my ability so im definitely not short. I do think its a headwind for a short time but i think the reality is that if it dies affect teslas sales it wont take that long for other manufacturers to hit the 200k threshold, particularly for gm and nissan
It is getting more efficient though, particularly slower. In june solars capacity factor was over 28%, up from 22% the year before, progress thats been seen in every momth this year. Its getting more efficient as its getting cheaper.