Harris, Berkshire Buy GM as U.S. Sells Automaker Shares

Harris Associates LP, State Street Corp. (STT) and Berkshire Hathaway Inc. (BRK/B) led purchases of General Motors Co. (GM) last quarter as the U.S. government continued selling shares and GM rejoined the Standard & Poor’s 500 Index.

Harris, a Chicago-based investment-management firm, bought 51.9 million shares, the most among GM investors and vaulting it to No. 5 stockholder, according to data compiled by Bloomberg. Michael Neary, a Harris spokesman, declined to comment.

State Street, a financial holding company based in Boston, was the second-largest buyer of GM during the quarter, with 17.4 million shares, followed by Warren Buffett’s Berkshire (BRK/A) Hathaway acquiring 15 million shares, BlackRock Inc. (BLK)’s 13.9 million and Vanguard Group Inc.’s 11.7 million.

“The big thing would have been getting back in the S&P,” Kevin Tynan, an auto analyst for Bloomberg Industries in Skillman, New Jersey, said in an e-mail yesterday. “Index funds and such must buy stocks included in the index.”

GM, the largest U.S. automaker, is introducing 18 new and refreshed vehicles this year in the U.S., transforming its lineup into one of industry’s newest from one of its oldest.

The redesigned vehicles include the Chevrolet Silverado, among Detroit-based GM’s most profitable vehicles, and the Impala, which received Consumer Reports magazine’s highest rating among all sedans, marking the first time in at least 20 years that a U.S. automaker outscored all Japanese and European competitors in that segment.

‘Right Track’

Berkshire’s increased stake and other investors’ share purchases make “us all feel like we’re on the right track,” Mark Reuss, president of GM’s North America operations, told reporters yesterday at a Detroit event. “A little bit of validation here and there is OK, but we’ve got a lot of work to do.”

The automaker’s new products, along with the U.S. government’s plans to exit its ownership of GM, have given investors increased confidence in the company. The shares have climbed 19 percent this year, compared with a 16 percent increase for the S&P 500. (SPX) GM fell 0.5 percent to $34.38 at the close in New York.

The U.S. Treasury said in December it planned to sell its GM stake within 15 months. Canada’s government has begun a search for investment banks to sell its position in GM, a person familiar with the matter said this month.

The automaker returned to the S&P 500 during the second quarter, a milestone triggered in part by the U.S. Treasury reducing its GM stake. The shares on May 17 topped the $33 initial public offering price for the first time in two years, and a union retiree medical trust has begun selling its stock.

With the S&P 500, “autos represent less than 1 percent of the index, so if you can own those stocks when they’re performing, it’s almost like making an out-of-benchmark bet,” Matthew Stover, auto analyst at Guggenheim Securities based in Boston, said in a telephone interview. “That’s the beauty and the beast of the autos.”

To contact the reporter on this story: Tim Higgins in Detroit at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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