Why GM Stock Is Still a Bad Idea

By RIchard Read

Proving once again that greed and idiocy often go hand in hand, federal regulators have revealed that investors are still plowing money into General Motors stock -- the only problem being that the General Motors in which they're investing is technically Motors Liquidation Company, aka "Bad GM". What we think of as "Good GM" is now General Motors Company, which is not publicly traded. (Yet.)

According to a report in Detroit News, 13.9 million shares of Motors Liquidation Company changed hands yesterday, even though the feds have clearly changed the ticker symbol from GMGMQ to MTLQQ.PK. Folks on the inside suggest that eager buyers fall into roughly two groups: (a) day traders moving large volumes of stock and hoping to make a quick buck on the stock's daily swings of up to 50 cents, and (b) individuals who think they're buying stock in "New GM" at a great price. Yesterday, the stock closed at 85 cents, down 4.1% for the day.

No one is likely to feel sympathy for day traders, and very little for the confused (like they say: caveat emptor), but there is one group that earns a soft spot in our hearts: Detroit residents looking to buy "Bad GM" stock because they want to see General Motors succeed. Says Ron Humenny, a Detroit-based investment advisor, "The thing about people in the Detroit area is we're homers.... We want to root for the home team. A lot of times people will do that, more with their heart than with their head."

We're not financial advisors (hello: understatement), but we're pretty sure things aren't going to end well for any GM stockholder, no matter how noble their intentions. Yes, Motors Liquidation Company is still a company, and as such, it has to have owners, so its stock will remain on the market. However, when the company's assets are zeroed out, there'll be no value to be had for anyone. Maybe you'd be better off buying a golf course instead.

Comments

[Kold:]

How can I dump my stock. I have some certificate shares as well as some purchased in a stock reinvestment program. Please publish the answer.

Aug 21 03:37 PM

[j-dub:]

GM public equity wasn't any good in the first hundred years of it's availablity.
So it would take a human being with an unpredcedented ego to claim otherwise for the next 100 years.

Aug 22 11:59 AM

[Gardener:]

contact your broker


On Aug 21 03:37 PM Kold wrote:

> How can I dump my stock. I have some certificate shares as well
> as some purchased in a stock reinvestment program. Please publish
> the answer.

Aug 22 01:49 PM

[User 158164:]

You don't say how many you have. At $0.80 this morning, 100 old certificate shares are worth $80, the fees involved will take a big chunk of what is left. Call a broker, ask what fees are involved and ask about donating the shares to charity. Many charities have brokers that do the work pro-bono and don't have all that cost. You get the deduction and rid of the headache. I had, as a result of an old stock deal with a company I had a few shares of, received certificates for a few shares that had dropped very low. The fees were more than the value of the stock, but a local charity was happy to get them.

If it is few enough shares, and small enough money, believe it of not, look on eBay for what old stock certificates are going for. In a few years that certificate for 10 shares might be worth $20 as a decoration.


On Aug 21 03:37 PM Kold wrote:

> How can I dump my stock. I have some certificate shares as well as
> some purchased in a stock reinvestment program. Please publish the
> answer.

Aug 24 09:31 AM

[GoochyPuppy:]

Too many blog and news articles on various websites (including Seeking Alpha), directly or indirectly refer to MTLQQ.PK in news articles that are about the "new General Motors". This is a good reason for many retail investors to be misled.

The author also doesn't investigate or mention the outstanding OPTIONS on this POS stock. There is a lot of money to be made by the institutional investors who wrote $1 PUTs which have been kept consistently worthless to their buyers by this artificially supported share price.

Aug 25 01:04 PM

[GoochyPuppy:]

Too many blog and news articles on various websites (including Seeking Alpha), directly or indirectly refer to MTLQQ.PK in news articles that are about the "new General Motors". This is a good reason for many retail investors to be misled.

The author also doesn't investigate or mention the outstanding OPTIONS on this POS stock. There is a lot of money to be made by the institutional investors who wrote $1 PUTs which have been kept consistently worthless to their buyers by this artificially supported share price.

Aug 25 01:05 PM