Suckers found:

Suckers: GM found a lot of them, even though a) by its own admission, it lacks “effective internal controls” over its finances; b) it’s still saddled with the UAW, which is already pledging ‘no more concessions’ and even making some trouble; c) its Opel subsidiary is hemorhaging money at a rate of billions a year; d) a high Opel official declared the IPO “premature” while noting that “there is still too much red tape and inefficiency;” e) it has surrendered a majority stake in its promising Chinese joint venture to its Chinese partner f) its bailout plan assumes it will maintain a market share of 19 percent, but its share most recently fell to 18.3 percent, part of a decades-long decline; g) who knows what accounting gimmickry was used to dress up the books; h) the government has intervened in GM’s decisionmaking more than it’s let on; i) we don’t know if GM’s new products (like the Chevrolet Cruze) will have traditional GM reliability–the company better hope not; and j) the name “General Motors’ is now so tarnished that the company is removing it from auto show displays, hoping buyers will not associate “Buick” or “Chevrolet” with such a negative brand …. P.S.: GM stock purchasers won’t be suckers, of course, if their shares rise. So far, they’ve risen 3.6 percent, even though the NYT reported that “several of the people involved in the offering said they expect to see a potential 10 to 20 percent jump in the share price on Thursday, typical for an initial offering.”

Too bad the taxpayers weren’t given an option of whether to buy or not.

11 thoughts on “GM’s IPO”

  1. Oh, but the taxpayers were given the option. They bought at the wrong time in 2008, but they cut loses in 2010, and will work on regaining lose capitol in 2012.

  2. “I’ve gotta wonder about anybody buying stocks right now.”

    The time to load up on stocks would have been in the waning days of the Carter Administration. ’nuff sed.

  3. …in the waning days of the Carter Administration…

    In poker, that’s called a bad beat story. My uncle still tells everybody how when I was a teenager I told them all to buy Microsoft. Never could afford any myself.

  4. My story is AOL. I was a fairly early adopter, and a guy in the office suggested a group of us go together to buy some stock. One of them (the one with the most knowledge of the subject) did some research and recommended against because tech stocks were too volatile. This was in ~93.

  5. From the WSJ:

    “General Motors Co.’s (GM) stock declined nearly to its IPO price on its second day as a public company Friday before clawing its way toward a slight gain in the afternoon.

    The automotive company’s swings came after its initial public offering eked out a 3.6% gain on its debut Thursday. In early trading Friday, the shares drifted as low as $33.11, just a breath above its IPO price of $33; it recently rose as high as $34.31, above its first-day close of $34.19.”

    That’s pretty poor for an IPO…

  6. This makes the suckers moniker more likely. The interesting thing to me was the gov’t claiming sovereign immunity so anti-fraud laws don’t apply. Kind of ties in to that Socialist thing. Jim? Chris?

  7. Quite. It would have been nice for UK voters to have been given a choice in the acquisition of the Royal Bank of Scotland among others, too.

    If a company is haemorrghing money it should be allowed to go bankrupt. And being an officer of a company that goes bankrupt should disbar you from board membership of any company at all – forever.

    Doing this would lead to a large number of bankers and corporate execs without a job. This would be a feature, not a bug.

  8. Bill, thank you for your link. I’ve been through a few private placements in my career. It’s an interesting process.

    The SEC treats any stock offering as a criminal enterprise, and one has to provide “proof of innocence” in the form of offering documents which tell the investor that he is going to lose everything, that the risk is astronomical, that he’d be better off throwing his money in the street…

    With GM, we have an offering that is so weak on its face that no private company would ever get it past the SEC.

    The United States government has committed securities fraud, on a huge scale. This is embarrassing.

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