Kyle Bass, founder of Hayman Capital Management LP, said General Motors Co. is one of the cheapest stocks in the Standard & Poor’s 500 Index after a recall and government investigation into an ignition flaw sent the stock down this week.
“When you look at GM’s enterprise value and what they’re going to earn this year, it’s trading less than 2.8 times EBITDA,” Bass said in an interview on CNBC, referring to earnings before interest, taxes, depreciation and amortization. “GM should trade in the high 40s and maybe 50 in the next 12 to 18 months.”
Bass said in December the largest U.S. automaker should increase in value by more than 40 percent during a similar timeframe. The Detroit-based automaker has dropped from a peak of $41.53 on Dec. 17 to $34.09 yesterday after the Justice Department started an investigation into how GM handled the recall of 1.6 million vehicles with faulty ignition switches linked to multiple deaths.