"UAW President Ron Gettelfinger, who also said he would like to sell the union's stake in GM as soon as possible to have money available in the trust fund, downplayed expectations about the company's value going forward. Although he said Friday that the union believes "the stock should be worth a lot more a lot quicker," he added that "right now, we realize the value is zero." http://money.cnn.com/2009/05/29/news/companies/gm_worth/index.htm?postversion=2009052919
An car builder co-owned, and therefore co-run, by a large union and the federal gov't. This is an auto-short after the reverse-split...
An explanation of the 2% - it's for bondholders. The article suggests that the bondholders and not the shareholders are the "Old GM". That's consistent with the terminology of the SEC filing as well. I.e. there don't seem to be any plans at all to transfer old GM shares into new ones - i.e. the stock is worth zero... Old GM definition? http://www.cnbc.com/id/31014489 SEC filing: http://biz.yahoo.com/e/090528/gm8-k.html
Thanks for the clarification. As I understand, current equity holders of GM will not receiving any part of the New GM. I'm short June 1 Calls and happy so far. I've entered my buy to close order with a limit of 1 cent. Now, just sit back and watch the train wreck happen.
"In a Chapter 11 bankruptcy reorganization, the shares would become virtually worthless. " http://news.yahoo.com/s/ap/20090531/ap_on_bi_ge/us_automakers
Don't know if many funds or traders are doing this. But you really should short shares (buy puts) and long bonds. There is a huge discrepancy-- people primarily speculate on GM's fate with equity, but not bonds. Well, it is not yet too late, you can enter some position Monday morning before the CEO sits out and gives out the plan. Look forward to the payday!
It's official. This will be an interesting learning experience for my puts... "But it is likely that GM's stock will not be publicly traded for at least 6 to 18 months. Current GM stockholders will see their holdings in the company completely wiped out by the bankruptcy filing. " http://money.cnn.com/2009/05/31/news/companies/gm_bankruptcy_looms/index.htm I should've sold the calls but didn't want the upside risk.
Only the bulls, OCC guarantees bears get paid http://www.optiontradingpedia.com/what_happens_to_options_during_bankruptcy.htm