GM Stock - Is it a Good Investment?

[rhellie]

http://online.wsj.com/article/SB1000..._MoreHeadlines

I don't know enough to advise anyone, but James B. Stewart writing in the Wall Street Journal today seems to think so. At least, if it sells within its predicted price range. The most interesting fact I found in this article is that GM's price / earnings ratio is significantly lower than other major auto corporations. Here is a quote from the article "If we assume the most recent quarter is representative of those to come, GM trades at 5.1 times earnings, compared with 8.5 for Ford, 26.8 for Toyota and 10.2 for Honda. In other words, GM still looks cheap."

[Jason M. Hendler]

If you look at what's been happening lately with Tesla Motors stock price:

Link

I believe GM's IPO will do the same, because GM is also well positioned in the nascent but growing alternative fuel / propulsion vehicle market.

[rhellie]

http://www.nytimes.com/2010/11/15/bu...1&ref=business

According to this NY Times article 500,000 retired GM employees, 90,000 current employees, and 3,000 dealers will be given the opportunity to purchase GM shares in the upcoming GM IPO. The question is, after many retirees lost huge in their past GM investments, are they willing to try again? GM thinks they might and has set aside 5% of the 365 million shares being offered for retirees and employees. Access to the offering means retirees and employees can purchase at more favorable prices than an average investor.

Nevertheless, the article quotes many employees as being unwilling to risk an investment after having been burned by the old GM stock. Many GM employees, now retired, had planned to live off the dividends of their sizeable GM stock investments built up over a career. Those dividends and the stocks they were based on evaporated in the catastrophic GM bankruptcy.

[Jason M. Hendler]

It may be worth their money, especially those who plan to keep working to make GM #1 in the world again. Right now, GM is #1 in China, the world's single largest auto market, so that's a helluva start.

[Koz]

It may be worth their money, especially those who plan to keep working to make GM #1 in the world again. Right now, GM is #1 in China, the world's single largest auto market, so that's a helluva start.

Don't forget their still #1 in sales in the NAM too.

[rhellie]

http://dealbook.nytimes.com/2010/11/.../?ref=business

Lots of interesting GM stories in the news with the imminent IPO. This NY Times Dealbook Column by Andrew Ross Sorkin has an interesting take on the GM turnaround. He quotes Malcom Gladwell, author of "Outliers " and "Blink", who recently reviewed Steven Rattner's book "Overhaul" as saying that most of the credit for the GM turnaround should go to fired CEO Rick Wagoner who led the company into bankruptcy. He also says the Team Auto private equity wizards brought in by the government to do financial engineering were also essential, “The mythology of the business is that the specialists who swoop in from Wall Street are not economic opportunists, buying, stripping and selling companies in order to extract millions in fees, but architects of rebirth.”

For those who have followed the saga of the Volt through the wrenching bankruptcy and now the soon to be unveiled GM IPO this article offers some interesting and contradictory insights.

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Ok. I should have done this before I posted anything on this article. I wondered why I found the article confusing and contradictory so I went back and looked at the Malcom Gladwell review and did a little research on Andrew Ross Sorkin. Now I feel like I understand this intresting column a little better. First, the Gladwell review of Steve Rattner's "Overhaul" is worth reading here is a link.

http://www.newyorker.com/arts/critic...?currentPage=1

Reading it shed's some light, as would be expected, on Sorkin's comments about the review. Gladwell does indeed take the author of the book he is reviewing, Stever Rattner, to task for dismissing what Gladwell views as Wagoners heroic and unaknowledged leadership in turning GM around only to be felled by the recent recession. Sorkin, I discovered, had already been on Wagoner's case and in a Nov 2008 column called for Wagoner to be fired, an act that got him in trouble with the NY Times public editor. So in this column Sorkin is basically reviewing Gladwell's review and taking him on for his praise of Wagoner and for slighting finacial engineering of private equity and restructuring experts.

What does this have to do with whether GM is a good investment? Probably not enough for it to have been added to this thread, but it is still pretty interesting if you are trying to understand how GM failed and whether they can avoid that in the future. That of course does have some bearing on GM as an investment.

The other thing I got out of all this is that I need to read Rattner's book "Overhaul". Sorry for the long ramble.