General Motors Corp (GM)

[msmithgold]

Why David Einhorn Publicly Went Activist on GM

Summary of David Einhorn's 1Q17 Letter on GM

Prefer to avoid public activism and the last time we did this was with Apple in 2013 after owning the stock for 3 years
Similar situation; had owned GM for years before advancing our idea to management
When we offer companies private advice and they reject the idea, we understand the reasoning and prefer not to press the issue; sometimes, we agree to disagree, and then decide whether to hold or exit the position
In the case of GM, felt the need to press the issue as we believe there is a lot of value to unlock and the company did not fairly evaluate our idea
Management made a decision and spent a great deal of effort to justify that decision
To poison our idea, went so far as to misrepresent the proposal to the credit agencies
Ironically, our idea was designed to be credit positive and the least invasive way to unlock billions of dollars of shareholder value
This sort of behavior leaves us no room to agree to disagree
We know this is a tough fight but the math is on our side and the ultimate decision will be made by fellow shareholders
Believe others recognize that stock is deeply undervalued and when shareholders grasp the math and the extent of GM’s behavior, they will vote with their wallets and for needed change at the Board level