GM

GM's SEC Filing Tells Investors Not to Buy GM Shares, They're Going to Zero

07/03/2009 by Research Reloaded

Footnoted points out that GM says it straight in simple in a latest SEC filing: Don't buy GM shares, it is going to zero.

GM management has noticed the continuing high trading volume in GM’s common stock at prices in excess of $1. GM management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios. Stockholders of a company in chapter 11 generally receive value only if all claims of the company’s secured and unsecured creditors are fully satisfied. In this case, GM management strongly believes all such claims will not be fully satisfied, leading to its conclusion that GM common stock will have no value.

As Footnoted points out, it is nice to see honesty, but it's funny when you tell the shareholders you work for that their stake is worthless. I guess that's akin to saying "We don't work for you anymore". Which, fair enough, is true.

Would GM Bondholders Have Been Better Off Without Government "Help"?

06/02/2009 by Research Reloaded

Here's an easy to way to figure out whether GM unsecured bondholders have been fairly treated or not. Ask this simple question: Have GM unsecured bondholders been made better or worse as a result of government bail-outs and intervention? Keep in mind that without an earlier bailout, GM could have gone into bankruptcy earlier before wasting time bleeding more money, and that in such a scenario bondholders would have gone into real, normal bankrupcty procedings rather than the politically-driven "bankruptcy" circus we have recently experienced.

Please think about this question. If the answer is that GM bondholders have been made worse by the government bailing out and intervening, then you can conclude that they have been treated unfairly. If they have come out the same or better than if the government hadn't done anything, then perhaps they shouldn't be complaining. I'd love to hear a bankruptcy expert answer this question, it would cut through all the static.

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