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Buffett, Soros Sell GM Shares – But JPMorgan Bank Calls Maker’s Stock “Very Inexpensive”

by on May.16, 2014

GM's stock price has bouced a bit but largely been stuck in neutral over the past three months as the maker copes with its recall crisis.

Investors generally don’t like turmoil or uncertainty – something in abundant supply at General Motors these days, which may explain why the makers share price has been performing so poorly.

Yet even after expressing high hopes for the maker’s new CEO Mary Barra, mega-investor Warren Buffett has sold off a quarter of the GM shares held by his investment firm, Berkshire Hathaway. And he’s not alone. Other major investors, including George Soros’ Soros Fund Management, and David Einhorn’s Greenlight Capital, have abandoned the maker in recent months, selling part or all of their holdings.

Insight!

Yet even while cautioning that GM will be taking an earnings hit for its latest series of recalls – six separate service actions covering nearly 3 million vehicles announced this week alone – influential JPMorgan’s auto analyst may have sent the sort of positive signal other investors are looking for.

“We note the recalls are very proactive in nature,” Brinkman wrote in a report to investors. “We see GM stock as very inexpensive.”

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U.S. Treasury Continues Sale of GM Stock in October

Government still tracking to lose nearly $10 billion.

by on Nov.13, 2013

The U.S. government now holds about a 4% stake in General Motors after selling off more stock in October.

The U.S. government’s steady sale of its remaining shares of General Motors stock continued last month, according to the Treasury Department, as it sold $1.2 billion of its holdings.

The government is still on track to lose about $9.7 billion on the shares, which it acquired in 2009 as part of the automaker’s bankruptcy restructuring. The final number won’t be known until all of the shares are sold, but the Detroit-based maker’s stock price would have to jump to more than $175 per share now for the government to break even.

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The Treasury has said it plans to divest the rest of its holdings by next spring and has been selling the stock in bits and pieces since this summer. (more…)

Government Motors No More! Almost

Treasury Department sells off most its remaining shares of General Motors.

by on Oct.29, 2013

The government is in the final phase of getting the Government out of Government Motors.

Government Motors is basically no more, and the final price tag for taxpayers to bailout the automaker is about $9.7 billion.

The U.S. Department of Treasury now owns just 7.3% of the General Motors’ common stock after its most recent stock sell off.

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Taxpayers originally held 60.8% of GM in exchange for the bailout loans. Treasury has been selling down that stake, but ramped up its efforts this year. (more…)

Treasury Could Recover GM Investment – Sort Of.

Obama investment likely to be reclaimed; Bush bailout lost.

by on Nov.04, 2010

The White House couldn't get the "Obama number," a proposed $30 IPO price, but still hopes to cut its losses with GM's stock sale.

Just how much money will the U.S. Treasury lose when General Motors holds its long-awaited IPO later this month?  That depends on who you ask and how you count, it seems.

By one accounting, taxpayers could get all their cash back – or at least all the cash committed to save GM by the Obama Administration.  Money previously invested by former Pres. George W. Bush, however, is gone for good, apparently.

On Wednesday, the restructured GM provided key details of the upcoming initial public offering, most importantly noting it will be priced between $26 and $29 per share.  Missing in the GM announced was the precise timing of the IPO, which most sources indicate will be staged on November 18th.

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Senior GM managers have already begun fanning out around the world to pitch the merits of the stock sale, which will notably take the government’s stake down from 60.1% to around 40%.  That would make the Treasury a minority shareholder – but still give it the single biggest block of GM stock.

Even now, however, it appears that having a majority stake didn’t ensure the White House got everything it wanted.

Bloomberg News, for example, is reporting that representatives of the government pressed for the “Obama number,” a price of $30 a share.  That figure would have ensured that the Treasury wouldn’t post a lost for the $36.1 billion the current administration came up with, post-Chapter 11.

Even that figure would fall share of recovering the full $49.5 billion GM bailout, leaving for a loss the billions initially invested during the final days of the Bush Administration.  To recover that money, as well, would require a $44 share price – and that after a 3-for-1 split of the government’s stock.

Underwriters, including Citigroup and JPMorgan Chase, had wanted an even lower number, perhaps $20 a share, which would make GM look even more appealing based on earnings; the maker yesterday projected it would show a profit of as much as $2.1 billion for the third quarter, its third quarterly profit in a row, following its emergence from bankruptcy last July.

Ultimately, all sides agreed on the current range – the bottom number apparently set while watching the performance of Ford Motor Co. stock, which has staged a more than tenfold run-up since early 2009.

Depending on what the final price settles in at during the IPO, the government could lose as much as $5.4 billion.  But the hope is apparently that by delaying the sale of the remaining 40% held by the Treasury, GM shares will zoom even higher, reducing future losses.

As things stand, the projected losses for all auto-related bailouts, including Chrysler and what is now known as Ally Financial, could come in at $17 billion – but that’s still down from earlier estimates of $28 billion.

A spokesman for the White House, Robert Gibbs, called “encouraging” initial indications of support for the upcoming IPO.  He also denied that the administration had approved the use of private planes to make it easier for senior GM officials to conduct their “road show” with potential investors.

Less confident was Senator Charles Grassley, an Iowa Republican and critic of the bailout.

“Short of a miracle, the initial public offering won’t repay the taxpayers. The onus is on the Treasury Department to come up with a plan to make sure taxpayers get their money in full,” Grassley told the Detroit News.

GM Reducing Leverage By $11 Billion

Actions should save $500 mil in annual interest – and enhance appeal of IPO.

by on Oct.28, 2010

The General continues prepping for its IPO.

In a series of actions clearly designed to improve the maker’s balance sheet in advance of its planned IPO, General Motors has announced it will reduce debt and improve its pension funding position by a total of $11 billion — reducing annual costs by $500 million, in the process.

While GM has yet to provide details of its planned stock offering, company insiders make no secret of the need to present as positive a picture as possible if investors are to come up with the billions needed to begin paying back the federal bailout that pulled the maker out of bankruptcy last year.

Among the most significant steps GM announced today, it will repay $2.8 billion to the retiree medical trust run by the United Auto Workers Union, a move that will result in a $200 million non-cash gain in the fourth quarter of this year.

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It will complete a $5 billion “revolver,” or revolving credit line with a syndicate of banks.  Though the maker claims it does not plan to tap the line, it provides a back-up source of liquidity, something potentially quite useful considering the uncertain economy.

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Sorting Out GM Stock – Old versus New

As the maker prepares for an IPO beware of the old stock.

by on Jun.23, 2010

General Motors Company holds all of the productive assets.

As General Motors prepares to register with the U.S. Securities and Exchange Commission for sale of stock in the new Company, confusion exists about the old stock of the bankrupt Corporation. It’s worthless.

General Motors Company is the “new GM,” which emerged from bankruptcy last summer. All of GM’s continuing operations and assets are completely out of bankruptcy and are now operating as an independent and separate company called “General Motors Company.” It holds virtually all of the productive assets of the old Corporation. These include the Cadillac, Chevrolet, Buick, and GMC brands, and the plants and other hard assets that those brands need to continue operations. GM Company also owns all of its overseas operations.

General Motors Company posted a first-quarter profit of $865 million, but it wasn’t a strong performance since the profit came from relief from the interest payments on debt that was wiped out in the bankruptcy. The company has repaid $6.7 billion in outstanding U.S. government loans and $1.4 billion to Canadian governments, with money taxpayers advanced to it.

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Clarity!

There are currently no shares of General Motors Company for sale to the public and there won’t be until it is given legal approval to do so. It’s also unknown how many shares will be offered for public sale or by whom, or at what price.

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