Let me start by saying that I have no GM (NYSE: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 (NASDAQ: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.