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GM’s IPO - You Knew I’d Have A Comment

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GM is going public.  Sort of.  It’s already public, in as much as we the taxpayers own 61% of it.  Which brings up an interesting point.  GM owns nothing of itself.  It is not diluting existing ownership.  Instead, it is basically jumping through hoops (and paying millions in fees) so that ownership can be transferred from the US govt, the Canadian govt, and unions, to private shareholders.  While in most IPOs insiders do sell shares, there is usually a benefit to the company itself in terms of raising funds to expand their business or whatever.  Of course GM doesn’t need money, we took care of that one.

So what will happen?  The stock will go up. It’s hard to imagine a situation where the US government would allow this stock to fall, even in the very disjointed equity market we have right now.  What a black eye that would be not only to the govt, but to the rest of the US govt’s shares!  My forecast is that the shares will move higher, the stock will of course be added to the S&P 500, and will eventually be added back to the DJIA, all of which creates artificial demand.  Long term I have a very dim view of the company’s prospects, but for now, it’s probably the best “bet” out there.

Last weekend I had an advisor in Michigan ask me about the stock, as so many of his clients are retired GM.  They are interested in perhaps purchasing some of the shares.  It worked out so well for them last time, I guess they are itching to do it again.

Read more at H. S. Dent


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