The recent recall crisis at General Motors Co. has wiped out $3 billion in shareholders’ value in just four weeks, but many of the carmaker’s institutional investors remained confident in its stock. GM chief executive Mary Barra has apologized for the fatalities linked to faulty ignition switches and vowed to aggressively probe into why it took the carmaker to do anything although some were already aware of the defects as early as 2001.
Scott Schermerhorn, chief investment officer of Granite Investment Advisors Inc. that oversees $600 million and owned 464,469 GM shares as of Dec. 31, 2013, remarked it seems that people at GM are doing the best job they can, given the circumstances, adding that Barra is being very candid.
The US Congress and the Justice Department are probing what occurred before GM recalled 2.59 million compacts in February and March. Matthew Moran, a fund manager at River Road Asset Management LLC that manages around $11 billion and owned 183,158 GM shares as of Dec. 31, remarked while the fallout might briefly affect sales, GM’s stock drop is excessive. GM shares have fallen 7.6 percent since March 7.
“It’s a little silly that it’s traded off to the extent that it has,” Moran said of GM. He said that Barra is doing a fine job, and he is optimistic on her abilities to lead the carmaker. Moran and Schermerhorn took note of what occurred at Toyota Motor Corp. after it recalled over 10 million vehicles over sudden, unintended acceleration issues.