Warren Buffett Buys 10 Million Shares of GM

Warren Buffett Buys 10 Million Shares of GM

Warren Buffett must have been a wealthy lemming in a past life, because when he dives from a cliff others follow — often into a pit of money. His latest plunge involved acquiring 10 million shares of General Motors, which could signal future strength for the company.

Only three years ago GM declared bankruptcy, a move that to this day left 32 percent of the company in Federal control. Buffett’s reputation as an investment guru grew out of his shrewd ability to notice undervalued companies early, but those investments usually don’t go to larger companies like GM.

To be fair, it wasn’t actually Buffett that invested money, it was Berkshire Hathaway, his investment firm. The total money put in was $256.6 million, which was enough to make it the automaker’s 20th largest investor. Since that investment, the stock has already jumped 4.3 percent.

In 2010 when GM went public, the shares started at $33, but closed Tuesday at $21.42. This isn’t the only stock GM is currently drawing attention to either. The company also just announced that it plans to pull all its advertising from social media giant Facebook, a decision that pulls $10 million in ad revenue from the site, which is expected to be going public this week. Despite that, Facebook’s current value continues to jump, most recently reaching $16 billion.

GM decided to pull the ads because it said they didn’t effectively reach the target audience. That move in tandem with the Buffett investment could be a good thing for the company as a signal that despite its stock prices being lower than they were two years ago, it is remaining dynamic and working toward improvement.