I'm pretty certain the existing shareholders are toast to zero. Other than a Black Swan buyout from another manufacturer, the most viable option is reorganization with a trading symbol like GMGMV.PK lurking just around the corner. If it's priced right-which it might not be-I'll buy that offering with both hands. I'm opining that GM is some shape or form will live forever. Let's face it, America has been jumping the shark since FDR but the all out disappearance of GM would really, really be the ultimate fuck you to the people of the United States. What symbolism: "as a nation you failed to deal with runaway Labor, health care distribution, corporate taxes, energy efficiency, cheap foreign competitors, lack of inginuity....." The demise of General Motors is the perfect American metaphor. For Obama the mission of saving GM-even a vastly restructured GM-should be job one. I'll also opine that GM's product line gives it better chance at perma-survival than F....
GM is a 100 Billion USD company - still, right now; this is not a guess, it's a known fact based on their books and relationships in place. No, I will not provide any more detail. As with any company the common is reflecting the worst-case scenario. Even when a BK was all but certain it was trading around $3. GM is not going anywhere anytime soon. This is just another ebb in the market cycle, though a more protracted one.
This is the one position I have where it feels like I've been perpetually swimming up stream. Rather than wait for it to hit the pinks - which I agree is a pretty likely scenario - I sold puts that would put me in the stock at ~$0.50/share if I get assigned. Even at that price, it's a huge huge gamble, but one I'm willing to take. Obama is a real wild card here - I don't get a strong sense from him or people he's put around him on what he wants to do beyond "create gazillions of jobs" (and even that seems to have recently morphed into "create or save", which is an entirely different beast). Everybody has been punting this problem into post-inauguration, but come that day, there's nowhere left to punt. SOMEBODY is going to have to make a tough decision...
Catch an expiration or two and at least you'll pay for the stock! Weirdly the shares trade like a call. OPEX on the common is BK...
Hey, have you taken a look at GM bond/equity hybrids like XGM, RGM, HGM, etc? As far as I can tell, XGM is reflecting a 15 cents on the dollar valuation for the debt. Based on the public discussions, this seems like a pretty decent price for a senior note. But I've never touched a stock/bond like this so I'd be interested in hearing any thoughts you or anyone more familiar with them might have.
Buying HGM, RGM and GMS here. "Learning" quantities. Details on GM hybrid tickers can be found here... http://www.gm.com/corporate/investor_information/fixed-inc-sec/ As far as I can tell, I'm paying ~$0.10 on the dollar for unsecured, subordinated GM debt. One the one hand, that seems like a bargain even given GM's current status. On the other hand, it always concerns me when I don't fully understand why someone would sell me something at a bargain price. Anyway, this is an experiment for me and I've sized with the assumption I'm going to have a 100% loss.
People said the same about DELPHI and they tanked. What are they trading at now?I think longer term F is solid. They started changing their act a few years ago. Personally, I think the unions have destroyed GM and now they'll finally get what they created, a destroyed bankrupt inefficient company. GM China's doing really well and is currently expanding operations. The difference? No unions.
More like slave labor. UAW is absurd but really they are acting just like corporate execs do. "Pay us absurd money, just because". GM management could have put their foot down a long time ago. But they did not, nor they won't. The problem is a little deeper than just UAW.
Excellent post... except for the last sentence. They have (imho) the worst product lineup of the big three. Chrysler is a very close 2nd last place. B
The cheap crappy interiors of ALL GM models hasn't helped them along the way... can you say "Thanks Delphi". I had a Cadillac CTS-V. It had the worst interior of all time... "Thanks Delphi." B