Gearson Investment Partners

Special situations
Gearson Investment Partners
Special situations
Contributor since: 2013
Yes, I would consider that no dilution, but that is not being proposed.
No shares are issued, hence no dilution. How does that not make sense?
For warrant holders, be mindful of the fact that the strike prices will be lowered due to the dividends. It is based on a formula highlighted in the prospectus. From my understanding of the calculation, the lower the stock price, the larger the strike price is reduced. In essence, this is a better time to have a lower stock price if you are a long term holder.
Think Twice,
Can you explain how the Hedge Funds who bought the $300m might plan to make money?
Also, if the company is able to pay down debt how is that paid? Are all debt holders paid in proportions every quarter?
One more question. If it takes 100% consent to make modifications to the bank facility does it also require 100% consent to seize assets?
Well, this is is a piece that contains my opinions. The rights offering has garnered much more attention. The idea of my article was to point out something I saw as not getting enough attention.
On August 6th BH issued a press release announcing the final terms of the Rights Offering initially announced on February 5th. On August 9th the 10-Q was released. In the middle of the report it disclosed the Biglari Capital transaction.
Although they were announced around the same time, the rights offering has received the bulk of the attention. It requires shareholder action which is why I believe it has received more attention.
Well, to a certain extent his compensation agreement requires him to purchase BH shares with a portion of his bonus. I don't know for sure, but I would suspect this is the reason for the recent purchase.
Not very good at all.
One more point to add to somebody's rebuttal concerning the pension liabilities. The company is doing a fine job trying to reduce the risk of future liabilities, but more importantly those liabilities are based on certain assumptions. The one that is hurting the most in this environment is the risk-free interest rate. I wonder what the pension liabilities would look like if the 10 year treasury was at 4%?
The U.S. Government has already started to sell their stock. Last month alone they sold $156 million worth of shares.
If the average of the closing prices of the common stock over the 40 consecutive trading day period ending on the third trading day immediately preceding December 1, 2013 is less than $33.00 then the conversion rate is 1.5152. It's a mouthful.
I think you are confusing the term dilution with trading volume. If the treasury sells their block the company does not issue any shares, hence no dilution.
The 30% shares you are referring to are already outstanding and will cause no dilution. In fact the company just bought back 200 million shares that reduced the amount outstanding.
The only two remnants of the bankruptcy that will cause dilution are the Class A & B warrants and the Series B convertible preferred stock. Neither of which are owned by the treasury.
Many people will never look to buy GM stock simply because they were restructured by the government. This is okay because it allows forward thinkers to buy at pretty good prices. GM has had a terrible past but things are improving. Sales are increasing, costs are lower, margins should improve and they are heavily investing in new products. This is a company more streamlined than ever. Europe is being handled much more aggressively and will eventually overcome it's problems.
Also, many people who casually disregard GM as "Government Motors" have not spent the time actually researching the financials of the company. The balance sheet has dramatically improved and an eventual retiring of preferred shares will add over $800M to pre-tax margins. I view that as a major catalyst on a $44 billion dollar market cap company.

I say let them trash GM. Slowly but surely people will come around to the fact that GM is not as bad as it seems.