Posted on 08/16/2012 7:28:35 AM PDT by SeekAndFind
President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.
Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.
It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero.
GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term.
(Excerpt) Read more at forbes.com ...
A quick glance at Yahoo Finance shows analysts rate GM Strong Buy (6), Buy (9) or Hold (4). EPS estimates for 2013 exceed 2012. Cash and marketable securities are up from year end. I haven’t delved in to the term structure of their LT debt, but at first glance levels appear reasonable. All the OEMs have gotten better at managing production and inventories, and that is contributing to improved pricing. As a result of the recession, they all have also significantly reduced cost structure. Lastly, there remains significant pent-up demand for autos that should boost industry sales levels next year. Lastly, basing a bk foercast on the sales of a car that has yet to show up in showrooms for a company of this size seems pretty weak. I’m guessing any GM bankruptcy is a long ways off.
At what level do you plan on buying stocks?
Series.
>>>At what level do you plan on buying stocks?
I don’t buy individual company stocks. I am invested in mutual funds. But keep in mind that the stock price is a refelection of expected future earnings, not necessarily credit events. While earnings expectations may have be lower than they were ealier in the year, they are still positive. Assuming there isn’t a large maturity due in the near future that GM will be unable to re-finance in what is a very issuer friendly environment, there is no reason to think that bankruptcy is imminent.
The problem here is not specific to General Motors although I OPPOSED all BAILOUTS because I never bought the elitist bull crap about too big to fail and I believe that Gubmint should not declare Lehman Bros. a loser and heavily Saudi invested Citibank a winner through the use of selective bailouts.
The problem with GM is very basic. The work force is SHRINKING and the population is growing both through rightful birth and wrongful illegal immigration.
Few business will prosper when the population is growing and the workforce is diminishing.
Of course that is a classic definition of socialism, increasing consumers and diminishing producers.
The little boy king don’t care, he’ll avoid GM like a birth certificate.
LOL!!
BUMP and thread BUMP!
I know two of obama’s biggest worshippers who BELIEVE GM paid the loan back. I don’t think they understand that GM took out another loan to pay off the first one. Neither of them has ever owned a home. Therefore they have no idea how a refinance works.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.