[Mr Twisty]

A blast from the past.....

The act gave a U.S. government guarantee to $1.5 billion in loans to Chrysler to help them stay open until they could bring some new vehicles to market. The loans carried an interest rate of about 10%, which was below market at that time and the U.S. government received warrants for 14.4 million shares of Chrysler stock. Lee Iacocca was brought in as CEO of Chrysler to manage the rebuilding.

With the loan money in hand, Chrysler came out with a new line of front wheel drive cars know as the K-cars. These models did well and were soon followed by what would become a home run product for Chrysler: minivans. Following a $1.2 billion loss in 1979, the company lost $1.7 billion in 1980. By 1982 the company was able to generate a small profit. In 1983 Chrysler paid off the bailout out loan 7 years early and bought back the warrants given to the U.S. Treasury.

For investors, the bailout and turn around were very profitable. Detailed stock price data from that era is very hard to find online but I was able to dig up some interesting figures. This data coincides with my memories of those days.

* During the worst times the stock of Chrysler fell to under $2.00 per share. I found one account that said it went as low as $1.50.
* By December of 1982 Chrysler stock was $15 per share.
* In 1983 Chrysler bought back the warrants issued to the Treasury at about $21.50 per share, a $300 million plus profit for the government.
* On August 11, 1983 the stock price closed at $26.75.
* In March of 1987 Chrysler declared at 3 for 2 stock split. At that time the stock was over $52 per share.

So the lucky or smart investor who bought Chrysler at $2.00 sometime in 1979 had a 2,500% gain on his holdings 8 years later.
As we look at current events we can ask ourselves: Can history repeat itself? Is the Chevy Volt the new K-minivan? Or probably most important, as my wife pointed out: Who is the modern Lee Iacocca?

http://www.istockanalyst.com/article...icleid/2940141