why buy the common stock when they will have to raise cash and will probally dilute there stock? u can buy the bonds that trade on the NYSE par is $25 and u can buy the bonds for $12 and yield over 14%. the only way u loose money is bankruptcy and even then you will be first in line to get your money back. if they turn themselves around your gonna get the bonds going from $12 to $18 bucks and 14% yield.
It's interesting how the bonds trade like that. If you were to gamble on GM, I don't understand why anyone would own the stock over the bonds. If GM raises capital, it's good for the bonds, bad for the stock. If GM cuts div., good for bonds, bad for stock. When GM goes bankrupt, bonds paid first, stock paid last and will never see a dime. If GM somehow gets billion dollar bailout and goes profitable, bonds are going to head back up to par. The rise should be quicker than any stock appreciation. It's nearly a perfect arbitrage to short the stock, buy the bonds, and just leech on the interest until it's near death. Please correct me if I've made a terrible mistake here.
why would you short GM down here? that doesn't seem like it would lessen risk in this situation. i would just look to buy the senior debt like barron's suggested.
The 3 bloated companies that sell the same kind of cars and trucks need be trimmed to 1 strong car company that can compete. Tough times need tough changes.
Yes I have seen some pretty sad reliability reports on both Mercedes and BMW. VW's with the exception of very few are made in by Tijuana, Mexico for the last several years, no thanks. VW owns Audi, and Lamborghini too. FWIW, for the money Kia and Hyundai are quite good IMO, if you just want a basic car. They are the Toyota of 30 years ago.