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GM is finally returning to the S&P 500: the auto giant will replace Heinz (HNZ), which is...

GM is finally returning to the S&P 500: the auto giant will replace Heinz (HNZ), which is getting acquired by Berkshire Hathaway and 3G Capital. GM +4.7% AH.
Comments (6)
  • BAM! GM-WTB shooting up!
    3 Jun 2013, 05:40 PM Reply Like
  • And what of all those original bond holders and retirees who where wiped out the first time around? And the thousands of dealerships that were closed? And what of Ally finance, the "reinvented " GMAC, now facing yet another bankruptcy? And the tens of billions still owed the taxpayers?
    3 Jun 2013, 05:43 PM Reply Like
  • If the government had allowed GM to collapse, how exactly were those bondholders supposed to get paid back? Go take your political trolling somewhere else. GM's comeback is one of the great success stories of the last 5 years.
    3 Jun 2013, 07:15 PM Reply Like
  • Bonds -- even government bonds -- aren't risk free investments. The value of a bond is the perceived likelihood of the issuer being able to pay the interest until maturity and then redeem the bond. Bonds are rated accordingly -- and the risk is reflected in the interest rate and the value of the bond. GM bonds had been rated as junk for many years.

     

    However, the biggest misconception -- or deliberate omission -- is that bonds trade just like stocks too. You can buy bonds that were issued five or ten years ago.

     

    The bondholders at the time of GM's bankruptcy may not be the bondholders who originally purchased the bonds -- or even the ones who lost money.

     

    In a bankruptcy, bondholders exchange their old debt for new debt, equity, or both. This happened at GM too. Most bondholders readily took the new deal -- the liquidation value of GM was peanuts.

     

    There was a small group who lobbied for the government to redeem the bonds at face value -- regardless of the price that they were purchased at. At the darkest hours, there were still people buying GM stocks and bonds, pressuring the government to "make things right". They would have made a killing at taxpayer's expense. The government was smart enough not to do it, but it seems like a lot of posters have fallen for this hook, line and sinker.
    4 Jun 2013, 09:54 PM Reply Like
  • Say good-bye to condiments and hello to Cadillacs.

     

    (Do they still have those corporate jets when they visit Washington?)
    3 Jun 2013, 11:07 PM Reply Like
  • Ok, time to buy (GM). Fund managers will buy it.
    3 Jun 2013, 11:45 PM Reply Like
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