GM Common Stock Is Worth More than You Think 102 comments
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Let me start by saying that I have no GM (GM) position. I sold the last of my bonds today, but may buy some next week. I like the prospects for the "new GM."
The GM that is expected to file bankrupcy on Monday isn't worthless. First of all, it will get some very small piece of the "new GM."
Secondly, GM has lost about $69 per share in the last 3 years. That loss is very valuable. It may be a record for any American corporation. Someone will want that corporate shell when all the assets are stripped away. That someone will want it for the loss.
On a different scale, assume you could buy a $690,000 tax loss for $7500. Every 75 cents buys $69 of tax loss.
Would you be interested? I know I would.
Microsoft (MSFT) should buy the GM shell. Can you imagine the uproar? The GM tax loss for the last 4 years is almost $32 billion. I did the math based on Microsoft's recent earnings and taxes, and the GM tax loss would save MSFT around $9 billion in taxes. At today's close, GM has a total market value of less than $500 million.
Remember Penn Central? Lots of losses. It is currently owned by an Ohio insurance company, Carl Lindner's hedge fund. He is one of the richest people in the world.
So, maybe all those smart talking heads on TV (like Cramer) who think that only stupid retail investors are buying GM will be surprised at the ultimate outcome.
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This article has 102 comments:
MSFT stock would plummet to oh let's guess single digits and maybe one day go bankrupt itself since it probably could not sustain GM's ongoing losses, since GM would not be able to file with the courts.
So, yeah, good idea.
They will not keep a shell. The existing stock will continue to trade while GM is in Chapter 11. 5 days after the judge bangs the gavel to confirm the reorg plan the current stock will be cancelled.
Should be a good day for America when
GM starts anew. Wonder if a new name will be used.
On May 30 02:48 AM User 422355 wrote:
> i got GM stock how can I trade?? can i trade on Monday??
NOL's are greatly reduced once 5% shareholders sell their stock. Why dont you learn the tax laws!
However the pre-bk 'asset sale' may leave behind those tax losses. But any entity that buys the shell will only be able to receive a tax deduction equal to 4% of the purchase price per year for 20 years. Essentially, slightly better than a 20 year treasury. Its designed to nullify an value in an NOL.
*Nice article*, maybe you should do some research next time. BTW, the 'bad bank' GM will have a tally of leases, and product liability suits well ahead of the miniaturized NOL.
Personally I am short GM common, GM calls, GM debt....and everything else I could have shorted related to GM. It was one of the easier shorts out there. Forgetting the massive negative net worth they STILL can not make money on cars because their cost structure its too high. This is all about saving jobs, politics from Union votes, and making crappy green cars no one will buy. It is not about MAKING money!! The Administration is trying to screw stakeholders not empower them.
BTW Microsoft is not going to buy an old estate with all the legal liabilities still in it. And you can not BUY a tax loss. You can merge like businesses to retain the loss..but all car firms have plenty of tax losses.
As you'll also find out shortly, GM's stock is just about worthless - if it gets 10 cents a share through the bankruptcy, that would be miraculous. But for you, you should get a home equity loan for as much as you can and buy all the GM stock you can this week if you believe anything you're written.
It's really too bad that they let anyone with a pulse post articles for Seeking Alpha.
Shot the stock all the way up to a couple bucks.
Before it became totally worthless crap.
So go Gerry, recommend to people on the verge of losing everything, to pour what money they have left into a guaranteed loser.
This is just round one of the bankruptcy. Large corporate bankruptcies shove their losses and insustainability and bad business plans onto their suppliers, vendors and dealer network.
Those same injured (and never paid) companies, are GMs BEST customers.
Off shoring ran nearly 5 million customers into low paying jobs and insolvency.
Shoving the rest of their best customers into bankruptcy isn't going sustain anything.
New "good GM" that is rich. Just who do you experts think will be buying the cars? $9 an hour health care workers? WalMart employees?
sec.gov/Archives/edgar...
The only thing old GM shareholders stand to get as their re-org is currently envisioned are some very cheap warrants. As has been correctly pointed out by other readers, the NOL's will be effectively extinguished in the re-org.
Should be lean and mean for a couple years, at least until O gets his money back.
GM will be going FSA with O's money, Ford will have to do it the old fashioned way. Ven USA I'm not happy with it. To think we could of had Ron Paul but the likes of S Vanity wouldn't give him the time of day.
On May 30 12:54 PM The-Stock-Market-Crash... wrote:
> All the criticism apart, Gerry does present a different angle of
> looking at the GM bankruptcy. But, even if the idea of getting a
> $69 loss per $.75 was practical and true, it's very unlikely that
> another corporation would try to take over GM, just because of the
> complications associated with it.
In all likelihood they will be delisted by the NYSE sometime shortly after they file Chapter 11 and trade on the pink sheets.
2.) While in Chapter 11, whether the bondholders buy into the new deal or not, GM will continue to operate, almost as normal, while it begins to implement the changes that the government and consultants have suggested are necessary to perhaps be successful in the future.
3.) The Chapter 11 will take anywhere from 3 months to 18 months to be completely resolved and when it is resolved the company will EMERGE and ALL OF THE CURRENT SHARES WILL BE CANCELLED.
4.) There will be nothing given in return for the cancelled shares.
5.) If someone is short the stock there will be no need for them to "cover" their short position, only file copies of the reorganization plan with their broker and any margin held against the position will be released (this is called a terminal short.)
6.) There will be tax due for the profits on the short position, even if never formally covered by a trade. The profit will be deemed to have occurred on the day the company emerges and the shares are cancelled.
7.) Between now and then the stock will continue to trade and may spike up and down for a variety of reasons such as:
a.) People who have held for a long time figuring, "how much more can I lose" and thus NOT selling. The obvious answer is, since the stock WILL be cancelled, that they can lose whatever their stock is worth when they decide to NOT sell it.
b.) People who DO cover their short positions and are willing to forego the remaining drop to zero, so that they can free up their collateral margin, which will create some buying.
c.) Naive people who do not understand that what is happening to the company has no bearing any more on the value of the stock in the future. So even if sales fo up 30% while the company is in Chapter 11, the stock is still cancelled when they emerge. The reason for this is that until and unless the company can make all claims against it 100% whole (bondholders, secured creditors, trade creditors, union health fund etc.) Bankruptcy law does not allow for anything to common shareholders. In rare instances there is either enough in the company to leave something over for common shareholders (usually if a company files to avoid litigation) or to shorten the process (as they are currently trying to do with the bondholders) the shareholders are thrown a "bone" so they do not add more legal fees or delay things. That "bone"....if the creditors are not made whole, may not be more than an "out of the money" warrant to buy stock in the "new" company at a price which would make the creditors whole if the stock ever reached it and the creditors have taken stock for all or part of their claims.
d.) Hypesters and day traders who attempt to take advantage of a, b and c above in order to create a quick profit, or escape from an ill-advised position they took before the filing.
e.) Momentum copycats who say "Gee, the stock is rising, something must be happening." The response to that is to not believe your neighbor can really fly if you see him jumping off the roof!!
I sincerely hope that no investors buy into GM stock based on your delusional and uninformed theories. Gerry, you may know a lot about something, but it isn't this. You are ignorant of the process of Chapter 11 and what would happen to the accumulated tax loss. Either hit the books and learn before you write more inane drivel like this or start covering little league and leave the stock market for those who understand.
A week ago when it was trading for $1.20 someone made a tender offer at $1.55. Seemed crazy to me, but it does start you wondering.
And now it's still trading for significant money when everyone involved is saying they aren't going to get anything out of this. Go figure.
I see GM management is already adjusting to its new masters. It has agreed to produce the Obamamobile even tho there is no market for it. And to please its other master, it has agreed to make it here in the US, now that profit is no longer the motive.
No one will buy the car, so they will have to give them away. Maybe they can sell them at half of cost. That will get their fleet average MPG up so they can build a few 20 MPG SUV's they can sell at a huge premium, making up for the loss.
Who will lend to the new GM now? No one in their right minds, now that we have seen contract law go out the window. But the point is moot as the US/taxpayers will provided all the $$ needed to cover the losses.
Welcome to the new world of business.
jumping into buying new shares.
The devil is in the small print details.
History does repeat itself, you know.
Now, before you call me crazy (which I wouldn't argue), there are a few reasons this could make some sense:
1. Send a message to Washington about government meddling;
2. Send a message to unions about relying on government meddling;
3. Send a message to foreign auto- and other- firms about the possibility of American competitiveness;
4. Own a car company without legacy costs weighing it down that could actually make money. GM was at an all time stock high only a couple years ago...
Who would this someone be? A consortia of PE firms? An ubber-wealthy with multiple bank partners?
So, one last question- if someone were to go this route, is there any scenario where some of the equity would be preserved? I assume only if the bid price were above the liabilities, true? Because if the bid price were only marginally above the liabilities, the common could be preserved to rise again in the future.
So you'd need, what- $55Billion? This works out to about $90/shareholder. Then, you relever the company, say 60% (remember, no union contract anymore), pay a $50/share dividend, outsource whatever you want, hire whoever you want, and see how many Americans would want to stand behind free enterprise.
OK, maybe I'm smoking some of the same stuff Gerry got into, lol.
Although it was above 40 not too long ago.
I have followed a number of bankruptcy cases where the companies held a great deal of potential value for shareholders but in the end the common has been cancelled in about 80% of the bankruptcies that I have observed. Example from Airline Bankruptcies: When United Airlines came out of bankruptcy most recently they issued new shares(UAUA) to replace the cancelled shares (formerly UAL and UALAQ.OB) which became worthless, even though the underlying assets still held potential value. It appears this is something of the norm for the common shares these days, no matter what heights they might have climbed to in the past.
Are you willing to sell that "Sleigh" you have ?
I mean someone may want to make an offer to buy
your Sleigh. Thanks.
What does it mean by "trade on the pink sheets."? Does it mean it is traded but not through stock exchange? OTC?
Pls help explain to me.
thanks
There are many great low cost and low price stocks now. We who do not have much. Can make solid returns unlike anytime I have seen before. But, it is risky. And so only use what u do not mind losing.
Happy Trails
On May 30 02:48 AM User 422355 wrote:
> i got GM stock how can I trade?? can i trade on Monday??
I purposely ran the article after the market closed on Friday and stated that I had no position in any GM securities. I traded the GRM bonds twice and the BGM bonds twice and all 4 trades were profitable. I recommended purchase of those bonds for speculators and if you followed my advice you made money.
GM will continue to trade and I expect it will trade lower. I didn't suggest that anyone purchase the stock and I still don't suggest that anyone buy GM. I was merely pointing out that there might be some value that was being overlooked. If you check my previous posts you will see that I recommended that holders of GM common sell the stock and buy the cheapest bonds. As recently as last Tuesday you could sell 100 shares of GM common and buy more than 100 of the BGM $25 par bonds. BGM closed at $2.48, GM at 75 cents.
GM bonds will continue to trade and may trade higher. Once GM files bankruptcy the symbols may change. Someone mentioned that they were short the bonds. That might get untidy as this works its way through the court system. I continue to believe that the bonds will be worth more than their closing prices on Friday. There could easily be a short squeeze on the listed bonds.
I like the prospects for the "new GM" and think in time it will be a big winner.
Disclosure: no positions in GM
On May 31 12:24 AM User 422689 wrote:
> Hi there. I am new to this Chapter 11 process. One of the blogs says:
> "GM shares will continue to trade until the company EMERGES from
> Chapter 11.In all likelihood they will be delisted by the NYSE sometime
> shortly after they file Chapter 11 and trade on the pink sheets.
> "
>
> What does it mean by "trade on the pink sheets."? Does it mean it
> is traded but not through stock exchange? OTC?
>
> Pls help explain to me.
>
> thanks
Why don't you tell people to get out and invest in GLD or EEM. At least that would make some sense. Even Ford.
REALLY?!? You like the prospects of a new GM and think it will be a big time winner? REALLY? Well, I like the prospects of a future living destination - clean and green...Planet Mars.
On May 31 08:45 AM Gerry Sullivan wrote:
> Wow, there are some angry people on Seeking Alpha. If you don't
> like what I write you should at least be civil.
>
> I purposely ran the article after the market closed on Friday and
> stated that I had no position in any GM securities. I traded the
> GRM bonds twice and the BGM bonds twice and all 4 trades were profitable.
> I recommended purchase of those bonds for speculators and if you
> followed my advice you made money.
>
> GM will continue to trade and I expect it will trade lower. I didn't
> suggest that anyone purchase the stock and I still don't suggest
> that anyone buy GM. I was merely pointing out that there might be
> some value that was being overlooked. If you check my previous posts
> you will see that I recommended that holders of GM common sell the
> stock and buy the cheapest bonds. As recently as last Tuesday you
> could sell 100 shares of GM common and buy more than 100 of the BGM
> $25 par bonds. BGM closed at $2.48, GM at 75 cents.
>
> GM bonds will continue to trade and may trade higher. Once GM files
> bankruptcy the symbols may change. Someone mentioned that they were
> short the bonds. That might get untidy as this works its way through
> the court system. I continue to believe that the bonds will be worth
> more than their closing prices on Friday. There could easily be
> a short squeeze on the listed bonds.
>
> I like the prospects for the "new GM" and think in time it will be
> a big winner.
>
> Disclosure: no positions in GM
<<<The GM that is expected to file bankrupcy on Monday isn't worthless. First of all, it will get some very small piece of the "new GM.">>>
That was the older deal that had the shareholders getting 1% value and that deal was rejected. That deal is no longer on the table with the new deal having nothing in the coffer's for the current shareholders. The common is worthless. As far as the bonds are concerned as of now they will be left on the books of the old GM and all the "good assets go to the new". The old GM has no ability to salvage because its taking on all the "bad" debt. If you trade the bonds your trade should be based on the current deal and the warrant kicker that it comes with. Why play with fire? Bottom Line the current shares are worthless.
No one is angry with you but you need to understand there's a good deal on foolish investors that will read you headline and invest off of it. Which is leading, wrong and not cool to put out knowing how foolish people are.
On May 31 08:45 AM Gerry Sullivan wrote:
> Wow, there are some angry people on Seeking Alpha. If you don't like
> what I write you should at least be civil.
>
> I purposely ran the article after the market closed on Friday and
> stated that I had no position in any GM securities. I traded the
> GRM bonds twice and the BGM bonds twice and all 4 trades were profitable.
> I recommended purchase of those bonds for speculators and if you
> followed my advice you made money.
>
> GM will continue to trade and I expect it will trade lower. I didn't
> suggest that anyone purchase the stock and I still don't suggest
> that anyone buy GM. I was merely pointing out that there might be
> some value that was being overlooked. If you check my previous posts
> you will see that I recommended that holders of GM common sell the
> stock and buy the cheapest bonds. As recently as last Tuesday you
> could sell 100 shares of GM common and buy more than 100 of the BGM
> $25 par bonds. BGM closed at $2.48, GM at 75 cents.
>
> GM bonds will continue to trade and may trade higher. Once GM files
> bankruptcy the symbols may change. Someone mentioned that they were
> short the bonds. That might get untidy as this works its way through
> the court system. I continue to believe that the bonds will be worth
> more than their closing prices on Friday. There could easily be a
> short squeeze on the listed bonds.
>
> I like the prospects for the "new GM" and think in time it will be
> a big winner.
>
> Disclosure: no positions in GM
So misleading and so wrong. Would be nice if you just owed up to it. Get some credibility back on some level.
I think GM bonds which will convert to 10% of the equity + 15% warrants (in "good" GM) are worth something. You will have to hold them for several years though before seeing any upside and there is down side in the interim as they will be paying no interest.
On May 30 01:25 PM not so dumb blond wrote:
> Does anyone know if the UAW workers still receive 70-90% of their
> wages when they just sit home during a lay off or plant shutdown?
> Did the recent UAW revised labor agreement now cancel this GM crippling
> policy? Surely this is a big part of GM's value going forward.
The sort of "investors" stumbling into GM stock and bonds at this stage are probably the same guys still trying to flip Florida condos ....
On May 30 02:02 PM SeattleGoldMiner wrote:
> 1.) GM shares will continue to trade until the company EMERGES from
> Chapter 11.
> In all likelihood they will be delisted by the NYSE sometime shortly
> after they file Chapter 11 and trade on the pink sheets.
> 2.) While in Chapter 11, whether the bondholders buy into the new
> deal or not, GM will continue to operate, almost as normal, while
> it begins to implement the changes that the government and consultants
> have suggested are necessary to perhaps be successful in the future.
>
> 3.) The Chapter 11 will take anywhere from 3 months to 18 months
> to be completely resolved and when it is resolved the company will
> EMERGE and ALL OF THE CURRENT SHARES WILL BE CANCELLED.
> 4.) There will be nothing given in return for the cancelled shares.
>
> 5.) If someone is short the stock there will be no need for them
> to "cover" their short position, only file copies of the reorganization
> plan with their broker and any margin held against the position will
> be released (this is called a terminal short.)
> 6.) There will be tax due for the profits on the short position,
> even if never formally covered by a trade. The profit will be deemed
> to have occurred on the day the company emerges and the shares are
> cancelled.
> 7.) Between now and then the stock will continue to trade and may
> spike up and down for a variety of reasons such as:
> a.) People who have held for a long time figuring, "how much more
> can I lose" and thus NOT selling. The obvious answer is, since the
> stock WILL be cancelled, that they can lose whatever their stock
> is worth when they decide to NOT sell it.
> b.) People who DO cover their short positions and are willing to
> forego the remaining drop to zero, so that they can free up their
> collateral margin, which will create some buying.
> c.) Naive people who do not understand that what is happening to
> the company has no bearing any more on the value of the stock in
> the future. So even if sales fo up 30% while the company is in Chapter
> 11, the stock is still cancelled when they emerge. The reason for
> this is that until and unless the company can make all claims against
> it 100% whole (bondholders, secured creditors, trade creditors, union
> health fund etc.) Bankruptcy law does not allow for anything to common
> shareholders. In rare instances there is either enough in the company
> to leave something over for common shareholders (usually if a company
> files to avoid litigation) or to shorten the process (as they are
> currently trying to do with the bondholders) the shareholders are
> thrown a "bone" so they do not add more legal fees or delay things.
> That "bone"....if the creditors are not made whole, may not be more
> than an "out of the money" warrant to buy stock in the "new" company
> at a price which would make the creditors whole if the stock ever
> reached it and the creditors have taken stock for all or part of
> their claims.
> d.) Hypesters and day traders who attempt to take advantage of a,
> b and c above in order to create a quick profit, or escape from an
> ill-advised position they took before the filing.
> e.) Momentum copycats who say "Gee, the stock is rising, something
> must be happening." The response to that is to not believe your neighbor
> can really fly if you see him jumping off the roof!!
Sorry Gerry, you wrong in so many ways.
On May 30 03:49 AM SeattleGoldMiner wrote:
> This is totally WRONG. You clearly do not understand what takes
> place in Chapter 11 and you clearly do not understand the utilization
> of tax losses. What a misleading and ignorant piece of dung.
> They will not keep a shell. The existing stock will continue to
> trade while GM is in Chapter 11. 5 days after the judge bangs the
> gavel to confirm the reorg plan the current stock will be cancelled.
more stupid than this clown. (and that's saying something)
On May 31 09:54 AM Jared wrote:
> A company can't purchase another company for its accumulated tax
> losses unless they operate in similar industries. That's Finance
> 101. If it were possible, all the cash-rich Microsofts and Apples
> of the world would have long since become conglomerates.
Toyota and Honda are having a tough time without union or government nonsense. If the economy improves by mid 2010 it will only marginally help GM. There cost structures and gov. mandates will force them out unless they move the whole thing overseas. I can just see the unions and gov. goofs going for that.
'Nuff said.
On May 31 08:45 AM Gerry Sullivan wrote:
> Wow, there are some angry people on Seeking Alpha. If you don't like
> what I write you should at least be civil.
>
> I purposely ran the article after the market closed on Friday and
> stated that I had no position in any GM securities. I traded the
> GRM bonds twice and the BGM bonds twice and all 4 trades were profitable.
> I recommended purchase of those bonds for speculators and if you
> followed my advice you made money.
>
> GM will continue to trade and I expect it will trade lower. I didn't
> suggest that anyone purchase the stock and I still don't suggest
> that anyone buy GM. I was merely pointing out that there might be
> some value that was being overlooked. If you check my previous posts
> you will see that I recommended that holders of GM common sell the
> stock and buy the cheapest bonds. As recently as last Tuesday you
> could sell 100 shares of GM common and buy more than 100 of the BGM
> $25 par bonds. BGM closed at $2.48, GM at 75 cents.
>
> GM bonds will continue to trade and may trade higher. Once GM files
> bankruptcy the symbols may change. Someone mentioned that they were
> short the bonds. That might get untidy as this works its way through
> the court system. I continue to believe that the bonds will be worth
> more than their closing prices on Friday. There could easily be a
> short squeeze on the listed bonds.
>
> I like the prospects for the "new GM" and think in time it will be
> a big winner.
>
> Disclosure: no positions in GM
On May 30 11:49 AM notsuoh wrote:
> Comments are funny. One is saying buy and the other sell. I have
> a few shares and would like to know whether I should sell at markets
> open or wait a bit. I know this is terrible but I bought at .77
> so if it may possibly go up even just a little I can make some money
> but if it does not then I stand to lose a bit. What do I do, I am
> new to this.
On May 30 07:54 AM Boyplunger is Alive! wrote:
> After reading your profile it all makes sense! You were a stock broker!
> All brokers love to BUY stocks and make people broker! And you're
> still doing it!!! Saying GM has value because of the NOL's when you
> don't even undertsand the bankruptcy code. Why would anyone let you
> have access to blogging?? Good thng you only have 10 followers. I'm
> sure one is your mom. Please dont listen to this guy, he's a typical
> dumb broker....
On May 31 08:45 AM Gerry Sullivan wrote:
> Wow, there are some angry people on Seeking Alpha. If you don't
> like what I write you should at least be civil.
>
> I purposely ran the article after the market closed on Friday and
> stated that I had no position in any GM securities. I traded the
> GRM bonds twice and the BGM bonds twice and all 4 trades were profitable.
> I recommended purchase of those bonds for speculators and if you
> followed my advice you made money.
>
> GM will continue to trade and I expect it will trade lower. I didn't
> suggest that anyone purchase the stock and I still don't suggest
> that anyone buy GM. I was merely pointing out that there might be
> some value that was being overlooked. If you check my previous posts
> you will see that I recommended that holders of GM common sell the
> stock and buy the cheapest bonds. As recently as last Tuesday you
> could sell 100 shares of GM common and buy more than 100 of the BGM
> $25 par bonds. BGM closed at $2.48, GM at 75 cents.
>
> GM bonds will continue to trade and may trade higher. Once GM files
> bankruptcy the symbols may change. Someone mentioned that they were
> short the bonds. That might get untidy as this works its way through
> the court system. I continue to believe that the bonds will be worth
> more than their closing prices on Friday. There could easily be
> a short squeeze on the listed bonds.
>
> I like the prospects for the "new GM" and think in time it will be
> a big winner.
>
> Disclosure: no positions in GM
On May 31 06:27 PM NicoJones wrote:
> So what happens is you are still holding GM stocks after they are
> canceled? Do they convert to the new GM, or do you lose your money?
>
On May 30 02:58 PM TBill wrote:
> I was wondering why GM was trading at anything at all...
>
On Jun 01 03:12 AM SeattleGoldMiner wrote:
> You get NOTHING...NADA, ZILCH, ZIPPO, the big GOOSE EGG. 5 days after
> the judge bangs his gavel to confirm GM's reorganization and they
> "emerge" the old common stock will be cancelled with nothing given
> in return.
And, there is nothing to say that the Govt doesnt come back and challenge your NOL purchase and strategy and stick you with a very big bill and headache according to Vic De Zen the former CEO of RGP.
All things considered, this should only be done if you have a Govt Tax Ruling/Opinion or Legal Opinion letter with enough Insurance from a liquid underwriter.
I am more concerned of the downside as opposed to the upside.
By Johnathan Vrozos
johnathanvrozos.com
johnathanvrozos.ca
The bankruptcy court will decide who owns what, not comment publishers on Seeking Alpha. There are the written rules of bankruptcy and there is what the courts decide. It doesn't always work out as expected. Ask the Chrysler secured lenders.
You started and finished with the common being worth more. It's worthless. Just owe up to being dead wrong. The new deal doesn't even have that lame 1% of nothing going. Dance, dance, dance.
The GM bonds are all up over 20% today.
I continue to recommend selling the common stock and buying the bonds.
This might be taking place already as I see that GM is moving higher on over 100 million shares traded.
I guess my Mom and 18 other followers are buying the stock.
If I was short, I would cover. Buy the bonds
.
You will not have to wait years, because after bankruptcy, the breakeven is 54 cents a share. With the warrents which might to come into play a year or so late, the breakeven is less than 30 cents a share. If GM stock goes to $1 a share you come close to doubling your money. At $5 per share you have a great investment.
So this is a very quick great investment. In a year or two it might turn into an amazing dream investment.
On May 31 12:44 PM E Nuff Sed wrote:
> I am sure someone will figure it out. The "good" GM will sail on
> with all the assets, without debt and much lower costs while the
> "bad" gm will retain the shell with all the tax losses .
> I think GM bonds which will convert to 10% of the equity + 15% warrants
> (in "good" GM) are worth something. You will have to hold them for
> several years though before seeing any upside and there is down side
> in the interim as they will be paying no interest.
Pretty good for a stock that will soon be close to worthless. I have to admit, that I don't understand the buying of GM common. I think that it will eventually be close to worthless.
Pretty good for a stock that will soon be close to worthless. I have to admit, that I don't understand the buying of GM common. I think that it will eventually be close to worthless.
Last Tuesday GM went higher because naked call sellers got called at the May expiration and couldn't borrow stock to stay short. It wouldn't surprise me to see the pro traders put the squeeze on to push the stock higher.
Ironically, as the GM long holdouts see that the company really did file chatper 11, they are selling their stock which may have been borrowed to enable others to be short. Those borrowers will be forced to cover.
With the Dow Jones Industrials up over 200 points and the GM bankruptcy, it is a fun day.
PLEASE, TELL ME I DIDNT READ THIS
oh my gosh, this is the level of the guys who posts here.
no.. i am not talking about a 18 years old kid, but some old dude,
no, no, no..
even a 18 teeeeeeeeen, wouldnt say that.
On a different note, I do wonder if people will try and buy Ford cars since they avoided gov't funds. I'm not interested in the Ford common stock, but I am interested to see if Ford can continue to gain share.
as someone pointed out, if this is a sale of assets from old gm to new gm, follow up a dissolution of the old gm, then all tax values of the old corp is lost.
also someone need to be seriously out of their mind to buy the old gm shell, since inheriting that shell means also inheriting any skeletons in the closet. gm is famous for its legacy costs, remember that.
The rules were modified for companies taking TARP funds. For those companies, they are allowed to keep the Tax Losses. So the losses will go with the new GM.
On Jun 01 04:56 PM dybydx wrote:
> the author of this article needs to take an intro course on corporate
> taxes....
>
> as someone pointed out, if this is a sale of assets from old gm to
> new gm, follow up a dissolution of the old gm, then all tax values
> of the old corp is lost.
>
> also someone need to be seriously out of their mind to buy the old
> gm shell, since inheriting that shell means also inheriting any skeletons
> in the closet. gm is famous for its legacy costs, remember that.
On May 30 02:02 PM SeattleGoldMiner wrote:
> 1.) GM shares will continue to trade until the company EMERGES from
> Chapter 11.
> In all likelihood they will be delisted by the NYSE sometime shortly
> after they file Chapter 11 and trade on the pink sheets.
> 2.) While in Chapter 11, whether the bondholders buy into the new
> deal or not, GM will continue to operate, almost as normal, while
> it begins to implement the changes that the government and consultants
> have suggested are necessary to perhaps be successful in the future.
>
> 3.) The Chapter 11 will take anywhere from 3 months to 18 months
> to be completely resolved and when it is resolved the company will
> EMERGE and ALL OF THE CURRENT SHARES WILL BE CANCELLED.
> 4.) There will be nothing given in return for the cancelled shares.
>
> 5.) If someone is short the stock there will be no need for them
> to "cover" their short position, only file copies of the reorganization
> plan with their broker and any margin held against the position will
> be released (this is called a terminal short.)
> 6.) There will be tax due for the profits on the short position,
> even if never formally covered by a trade. The profit will be deemed
> to have occurred on the day the company emerges and the shares are
> cancelled.
> 7.) Between now and then the stock will continue to trade and may
> spike up and down for a variety of reasons such as:
> a.) People who have held for a long time figuring, "how much more
> can I lose" and thus NOT selling. The obvious answer is, since the
> stock WILL be cancelled, that they can lose whatever their stock
> is worth when they decide to NOT sell it.
> b.) People who DO cover their short positions and are willing to
> forego the remaining drop to zero, so that they can free up their
> collateral margin, which will create some buying.
> c.) Naive people who do not understand that what is happening to
> the company has no bearing any more on the value of the stock in
> the future. So even if sales fo up 30% while the company is in Chapter
> 11, the stock is still cancelled when they emerge. The reason for
> this is that until and unless the company can make all claims against
> it 100% whole (bondholders, secured creditors, trade creditors, union
> health fund etc.) Bankruptcy law does not allow for anything to common
> shareholders. In rare instances there is either enough in the company
> to leave something over for common shareholders (usually if a company
> files to avoid litigation) or to shorten the process (as they are
> currently trying to do with the bondholders) the shareholders are
> thrown a "bone" so they do not add more legal fees or delay things.
> That "bone"....if the creditors are not made whole, may not be more
> than an "out of the money" warrant to buy stock in the "new" company
> at a price which would make the creditors whole if the stock ever
> reached it and the creditors have taken stock for all or part of
> their claims.
> d.) Hypesters and day traders who attempt to take advantage of a,
> b and c above in order to create a quick profit, or escape from an
> ill-advised position they took before the filing.
> e.) Momentum copycats who say "Gee, the stock is rising, something
> must be happening." The response to that is to not believe your neighbor
> can really fly if you see him jumping off the roof!!
-That's how the author should feel after writing the worst SA article I've ever written, and then not admitting how wrong he is. Maybe he's trying to pump and dump on the pink sheets.
On Jun 01 10:33 AM Gerry Sullivan wrote:
> GM isn't worthless, it's worth 70 cents per share. It has traded
> 87 million shares as of 10:30 AM today. There is a bid, you can sell
> it if you think it is worthless. If I owned GM, I would sell it.
> I have always recommended that.
>
> The GM bonds are all up over 20% today.
>
> I continue to recommend selling the common stock and buying the bonds.
So the original premise of my article is WRONG!
I continue to recommend selling GM common stock and buying the bonds.
On May 31 08:45 AM Gerry Sullivan wrote:
> Wow, there are some angry people on Seeking Alpha. If you don't
> like what I write you should at least be civil.
>
> I purposely ran the article after the market closed on Friday and
> stated that I had no position in any GM securities. I traded the
> GRM bonds twice and the BGM bonds twice and all 4 trades were profitable.
> I recommended purchase of those bonds for speculators and if you
> followed my advice you made money.
>
> GM will continue to trade and I expect it will trade lower. I didn't
> suggest that anyone purchase the stock and I still don't suggest
> that anyone buy GM. I was merely pointing out that there might be
> some value that was being overlooked. If you check my previous posts
> you will see that I recommended that holders of GM common sell the
> stock and buy the cheapest bonds. As recently as last Tuesday you
> could sell 100 shares of GM common and buy more than 100 of the BGM
> $25 par bonds. BGM closed at $2.48, GM at 75 cents.
>
> GM bonds will continue to trade and may trade higher. Once GM files
> bankruptcy the symbols may change. Someone mentioned that they were
> short the bonds. That might get untidy as this works its way through
> the court system. I continue to believe that the bonds will be worth
> more than their closing prices on Friday. There could easily be
> a short squeeze on the listed bonds.
>
> I like the prospects for the "new GM" and think in time it will be
> a big winner.
>
> Disclosure: no positions in GM
Assuming GM gets out bankruptcy by Dec, will the calls be canceled?
Well done those who have commented so far. The "oxygen thief" who wrote this capola should retire his pen and PC, and go learn about how things really work.
On May 30 04:58 AM PeteK wrote:
> Can't wait to buy the new GM shares.
> Should be a good day for America when
> GM starts anew. Wonder if a new name will be used.
At the end of the day, this was the plan.
The new GM, with the full backing of the US taxpayer, can sell the kind of cars that Americans don't want but Euro-loving politicians want us to have for a steep discount. If they make them cheap enough people will buy them even if they would rather not. (Side Note: I've been to Europe, it's beautiful - I don't wanna live there)
Want my honest opinion? (sorry you don't have a choice :-) ) ...
The auto industry is just a pawn in the bigger match against the current American energy industry.
On May 30 02:58 PM TBill wrote:
> I see GM management is already adjusting to its new masters. It has
> agreed to produce the Obamamobile even tho there is no market for
> it. And to please its other master, it has agreed to make it here
> in the US, now that profit is no longer the motive.
>
> No one will buy the car, so they will have to give them away. Maybe
> they can sell them at half of cost. That will get their fleet average
> MPG up so they can build a few 20 MPG SUV's they can sell at a huge
> premium, making up for the loss.
>
> Who will lend to the new GM now? No one in their right minds, now
> that we have seen contract law go out the window. But the point is
> moot as the US/taxpayers will provided all the $$ needed to cover
> the losses.
>
> Welcome to the new world of business.
People do not want vehicles that are poor quality and put together in a half-assed manner with things falling off and leaving you stranded somewhere when they won't start.
You cannot polish a turd.
They will continue to struggle unless Obama forces us to buy them. I won't rule that out.
On Jun 01 10:33 AM Gerry Sullivan wrote:
> GM isn't worthless, it's worth 70 cents per share. It has traded
> 87 million shares as of 10:30 AM today. There is a bid, you can sell
> it if you think it is worthless. If I owned GM, I would sell it.
> I have always recommended that.
>
> The GM bonds are all up over 20% today.
>
> I continue to recommend selling the common stock and buying the bonds.