Thursday, November 18, 2010

The "New" General Motors

Today is GM's long-awaited Initial Public Offering (IPO) - and I fear the worst.  Point 1: 82% of respondents to a CNBC poll (that received "heavier than usual" response) said that they would not purchase GM stock, for whatever reason.  Point 2: although the American taxpayer is the one who bailed out GM, only 20% of the IPO will be available to "the street".  The other 80% of the shares will be available only to selected brokers' and their selected (read "institutional or high net worth individual") clients.  If the price per share of the IPO is set properly it should "pop" 5% - 10% or so in the first few days, thereby guaranteeing those institutions and high net worth individuals a quick profit - and their brokers some hefty commissions.  Wall Street at its "take care of our own" best (again)!  Point 3: the "street" is pissed off that GM took bailout funds (some of which have already been permanently written off by the U.S. government) while Ford bit the bullet and survived, even thrived, on its own.  Chrysler, of course, is the poor cousin in all of this and may still not survive.  Point 4: why would anyone want shares in GM when their pension and health care obligations to their 530,000 or so retirees are so onerous?  My conclusion: I wouldn't buy 'em even if I could get 'em.