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

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.

In other thoughts, I'm guessing GM shares essentially can't me shorted these days due to lack of borrow. (Or is there a ban remaining?) You know, one could pass the remaining share value as a few last perhaps lazy or psychologically-unwilling-to-take-the-loss-yet hold-outs if GM was at an all-time low but what's very interesting is that the shares at $0.82 are actually well above their 52-week low of $0.27. So there has actually been an improvement in the chances for some sliver of value for shareholders. Maybe some are thinking debt gets converted to equity, massive dilution, and current shareholders hold a tiny diluted sliver that's worth $0.82? Probably not. It's more likely simply greater fool theory. Play the final, violent death throws of GM stock. It worked at $0.27. Not that this is ever my style.

Would be interesting to know what kind of investor base, with what kind of ideas, remain... so we took a jaunt to the Yahoo message boards. Unfortunately almost all the remaining posts are simply arguments against the UAW/Obama/US judges. Except for one, which might provide insight to what kind of person still hangs on...

DOWN 8% TODAY SO FAR

That's good enough for one day. 

I don't like to see it plunge and then have a V-bottom recovery. I just like a nice drop, and then languish awhile until the next one. I don't know what I'm gonna do once this goes to zero. Write my book, I guess. LOL.

This guy falls into the clearly "Given Up" category. Essentially he's likely lost so much already that selling now to recover 2% of his initial investment would destroy more pride than it would salvage in cash. By the way, you know it's pretty bad when even the message boards can't proffer some kind of wild upside story for the shares.

Disclosure: The author does not own any GM shares.