G.M. Prices Its Shares at $33 in Return to Stock Market

[Mr Twisty]

Originally Posted by syr74

I love this argument. If you don't think major firms make incredibly stupid decisions on a surprisingly regular basis I have some ocean-front property for sale in Wyoming. The fact that what was once the largest corporation in the world could actually go broke within the course of a few decades is proof enough of that. Or, do you think first class decision making led to that?

Which Corp. are you referring to?

.....back on track.....

The congressional debate will resurrect all the arguments for and against giving federal aid to any company. There is a strong case that such help rewards failure and penalizes success, puts a dull edge on competition, is unfair to an ailing company's competitors and their shareholders, and inexorably leads the Government deeper into private business. Why should a huge company be bailed out, say critics, while thousands of smaller firms suffer bankruptcy every year? Where should the Government draw the line? GM Chairman [...] has attacked federal help [...] as "a basic challenge to the philosophy of America." ...

Supporters of aid argue with passion that the U.S. cannot afford the failure of a company that is the nation's tenth largest manufacturer, its biggest builder of military [specified armament] and one of only three major domestic competitors in its supremely important automotive industry

... Would you say smart investing, or emotions have dictated your decision to avoid GM stock?.... or ARE you avoiding it?

[Mr. Wyndham]

Originally Posted by syr74

So now two respected websites supposedly have the incredibly high tax debt reported on the 1Q documents wrong? Here's a third. I have a fourth if you need it. http://www.christonium.com/automotiv...ancial-results

So now we have three guys wanting to spew exactly the same opinion across the internet to make money on it? Like I said, you may not like what he has to say but that reported tax debt exists and is enormously high. Ignore it all you want, it wont go away.

I don't see how this link relates at all to what the previous one had to say. They seem to be expressing completely different views on the situation. And I saw no mention of "high tax debt"...

This most recent link is substantially more professional in format and delivery of information, though. I'm glad to see it.

[Kyle2k]

Originally Posted by syr74

So now two respected websites supposedly have the incredibly high tax debt reported on the 1Q documents wrong? Here's a third. I have a fourth if you need it. http://www.christonium.com/automotiv...ancial-results

So now we have three guys wanting to spew exactly the same opinion across the internet to make money on it? Like I said, you may not like what he has to say but that reported tax debt exists and is enormously high. Ignore it all you want, it wont go away.

That link talks about how both companies are heading for success but still have similar issues to address. Optimistic tones like that are supportive of investment I would think.

[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

[Mr Twisty]

Originally Posted by syr74

The only news source I know of that has openly picked up on what I have is actually one of the better IPO sites on the Web.

http://www.gaskinsco.com/linkto-gm3.shtml

Your beloved Mr. Gaskins is in this article as well.....

Should you invest in GM?
By Chris Isidore, senior writer November 17, 2010: 11:01 AM ET


NEW YORK (CNNMoney.com) -- Will General Motors, the hottest IPO on Wall Street, be a good long-term bet?

The company's initial public offering Thursday is set to be the largest IPO in history, selling about $20 billion in common and preferred shares.

Strong investor demand led the company to increase both the number and price of shares being offered, boosting the overall IPO size from about $13 billion in the last two days.

But the question for investors is whether the century-old behemoth, just 16 months from a federal bailout and bankruptcy reorganization, can achieve the kind of growth that rival Ford has recently.

Ford Motor's stock (F, Fortune 500) has returned 65% since the start of the year -- more than ten times the value of its low point in early 2009.

Ford has been praised for being the only U.S. automaker to avoid a bailout or bankruptcy. It has been gaining U.S. market share with attractive and critically-acclaimed new models.

"Ford has done everything right. They've had the Midas touch the last couple of years," said Peter Bible, head of the public companies division of the accounting firm EisnerAmper, and a former chief accounting officer at GM.

But some experts believe that GM, Ford's larger and better-positioned rival, has the potential to do even better.
Leaner, meaner GM

One thing likely to help both GM and Ford are forecasts for a rebound in U.S. auto sales next year of between 10% and 12%, and continued gains going forward.

But GM is in a better position to take advantage of that growth because its reorganization and new labor contract left it with a leaner cost structure and balance sheet.

Because Ford avoided bankruptcy, it has roughly four times as much debt as GM.

In the third quarter GM posted its biggest profit in 11 years -- nearly $2 billion -- despite weak U.S. car sales that remain well below pre-recession levels.

Its profit even topped that of Ford in the quarter, although the company cautioned it would report significantly thinner margins in the fourth quarter.

But if domestic auto sales start to come back, GM is positioned to reap the benefits.

"The structural cost reduction has been truly amazing," said David Cole, the chairman of the Center for Automotive Research, a Michigan think tank. "You're going to see profits we have not seen before."

Institutional investors have been bullish enough on the stock to lead GM to raise its price target for the offering, to between $32 to $33 a share from its original estimate of $26 to $29.

Kirk Ludtke of CRT Capital, one of the few to give an estimate for GM stock, sees it hitting $45 a share within six months, which would work out to about a 72% annual return from even the upper end of the IPO price range.
International appeal

GM has another edge over its U.S. rivals -- strong overseas demand, especially in China, which is now the world's largest market for auto sales.

That could translate into both better sales and stronger stock prices as overseas investors eye GM shares. GM's Chinese partner SAIC Motor, is weighing whether to buy a minority equity stake in GM.

"They're in position to attract that investment because of their position overseas," said Rebecca Lindland, director of strategic review of IHS Automotive.

And Ford's success of the last year has meant that its stock has become awfully pricey, especially compared to GM's IPO target price. Ford closed Tuesday at $16.51, close to the consensus 12-month target price of $18 according to analysts surveyed by Thomson-Reuters.

A lower price-to-earnings ratio for GM shares, about 11.5 based on the annualized earnings so far this year, compared to 20 at Ford and 18 at Toyota, could make it very attractive to investors, said Francis Gaskins of IPOdesktop.com.

But Gaskins cautions investors against jumping into GM stock too early. GM won't be able to pay a dividend until it gets rid of its government ownership stake, which could take years, Gaskins warned.

And he said many institutional investors still aren't convinced that GM has changed the corporate culture that got it into trouble in the first place, despite improvements in its cost structure.

"There are a lot of people on Wall Street who won't touch it. It's a question of whether the leopard has changed its spots -- is it the same old company that went downhill for years?"

So... here's Mr. Gaskins, from your link, saying, loosely translated, Hmmmm, GM MIGHT be a pretty good deal long term, but it depends on how it's run.

[Mr. Wyndham]

It seems (from that article at least) that, the single biggest worry is nothing financial at all. It's whether they can keep the momentum from a "culture change".

Only someone prone to skepticism and not paying real close attention (not a fault, just an observation) could hold that as a real concern. They've changed, for sure.

[Mr Twisty]

Originally Posted by syr74

So now two respected websites supposedly have the incredibly high tax debt reported on the 1Q documents wrong? Here's a third. I have a fourth if you need it. http://www.christonium.com/automotiv...ancial-results

So now we have three guys wanting to spew exactly the same opinion across the internet to make money on it? Like I said, you may not like what he has to say but that reported tax debt exists and is enormously high. Ignore it all you want, it wont go away.

This... from your above link...

As far as New GM goes, all the restructuring of the old company in the years leading to bankruptcy appears to have super charged the company. Again, assuming there are no significant shocks to the economic recovery in the US and the company continues to execute product consumer want, the future is looking very bright.

[Mr Twisty]

syr, you're searching for and quoting information to support your doomsday theory... your coin has 2 tails.

Stop back by in a few years, we'll see who was the least wrong... C'ya

[a_Username]

Originally Posted by MisterCamaro69

syr, you're searching for and quoting information to support your doomsday theory... your coin has 2 tails.

Stop back by in a few years, we'll see who was the least wrong... C'ya

[8cd03gro]

Originally Posted by MisterCamaro69

How did you come to this conclusion?

What do you mean how did I come to that conclusion? I explained it in my post. DILUTION DILUTION DILUTION.

[DGthe3]

Originally Posted by 8cd03gro

What do you mean how did I come to that conclusion? I explained it in my post. DILUTION DILUTION DILUTION.

Doesn't stock dilution occur because of the creation of more stock, not the sale of existing stock? When they make their next offering, no more stock is created, its simply being released from the US, Canadian, and Ontario governments as well as the UAW VEBA fund.

[LOWDOWN]

Re: "Dilution" and such:

http://www.gminsidenews.com/forums/f...-shares-97639/

Consider the fact the US Treasury still holds a sizable stake, and Canada only sold 20% of theirs, and the UAW still has much of theirs. As many shares as were sold, last week, there are still as many or more "available" for future sale.

Now, if GM decides they'd like to issue even more for their own purposes (to generate fund$ for future product initiatives that are no doubt required) in the event that future operating profits and cashflow alone won't suffice, then even more dilution will occur.

Keep in mind there are already over a BILLION shares held by various entities...and the millions of shares sold last week are only a small portion thereof...less than half.

The US Government has stated they intend to divest themselves by late 2012, but can't sell any more shares for at least 6 months.

Fact is, the number of shares currently held by US/Cdn/UAW sources are greater than those sold, last week, and eventually (for the Gov'ts) MUST be sold.

The curious thing, to me, is that at $26-29/share (initial estimated price), for 300,000,000-or-so shares, there wasn't exactly "fighting in the streets" for those shares. But suddenly, at $31-33 for manymany more, with an "interim" 3rd Quarter report of $2+ billion 1/4ly profit, which was NOT unexpected, the "scramble" was on...

"Emotion"...Wall St.'s favorite ally...

[8cd03gro]

Originally Posted by DGthe3

Doesn't stock dilution occur because of the creation of more stock, not the sale of existing stock? When they make their next offering, no more stock is created, its simply being released from the US, Canadian, and Ontario governments as well as the UAW VEBA fund.

It is also conversion of warrants, verts and preferreds into common. Debt-equity conversions as well. SMO is also dilution assuming it's a follow-on. The # of common shares available is going to increase massively either way, and that's dilution.

That's not to say the current offering isn't a good long-term investment. However, to expect to see $5x.xx share prices within the next few years alone is ludicrous.

[DGthe3]

Originally Posted by 8cd03gro

It is also conversion of warrants, verts and preferreds into common. SMO is also dilution assuming it's a follow-on. The # of common shares available is going to increase massively either way, and that's dilution.

No matter what, there are some 1.5 billion shares of GM out there and that number isn't going to increase any time soon. If that number doesn't increase, how can the value of shares get diluted?

It would be one thing if the IPO was of shares issued by GM (similar to what Tesla did a few months ago) in order to generate cash, and then the next batch is also newly issued from GM for the same purpose. But thats not the case.