• 30
According to The Wall Street Journal, members of the U.S. Treasury are worried about General Motors' upcoming IPO. They aren't concerned for the automaker's stock price, or how even how many investors may decide to buy into the company – they're concerned about what country the money is coming from.

The Journal suggests that government officials are considering whether to limit or select which non-U.S. investors would be invited to be so-called "cornerstone" investors in GM's IPO. Cornerstone investors are sought out to purchase and hold sizable stakes in a given company at a set share price. Said price is often lower than what the general investing public can secure, the theory being that the cornerstone investors' presence (and the stability it implies) serves to drive confidence in the company. The fear is that there could be considerable political fallout if, say, some of those cornerstone investors turned out to be from nations like China. Either way, GM will need to firm up its investment plan fairly quickly if it is to allow enough time to court the 'right' cornerstone buyers.

As GM readies its IPO pitch, another key element in the company's talking points will be its long-term stability – including a chief executive officer who plans to stick around a while. New GM CEO Dan Akerson has reportedly told the board that he'll stay at the helm for two to five years - or perhaps even longer. The manner in which his compensation agreement is structured will likely include incentives timed to take effect over a period of years as a way to show investors that he's serious about making a longer-term commitment to the automaker's recovery.

[Source: The Wall Street Journal – sub. req. | Image: AFP/Getty]


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 30 Comments
      • 4 Years Ago
      Got to love the free market.
        • 4 Years Ago
        @bakka

        So, if GM had gone under as a logical casualty of the "free market" (and I'm not saying it didn't deserve to), who do you think would have bought the liquidated assets? Hint: it would have been the country with the most free cash right now.

        If GM (and Chrysler, for that matter) had gone under, the Chinese would have wound up with most of the plants and production equipment. They would have owned 20% of the market in North America overnight.
        • 4 Years Ago
        ^^ not free. 30% tariff on Japanese auto imports.
      • 4 Years Ago
      Quote//bakka 5:50PM (9/05/2010)

      "If there was a free market, GM would be history. The bailout would never have happened."

      There is no such thing as a "Free Market" If there were Toyota, Nissan, and Honda would have vanished decades ago. There is no room for currency manipulation, protectionism, skewed regulatory practices, or giant Japanese subsidies in a "free market"
      • 4 Years Ago
      or Volkswagen, VAG is seeking for another brand, it prefers Alfa Romeo, but i'm sure VAG would think about it or just enough to have a controlling part.

      it has a pretty filled wallet and wants to spend it.
      • 4 Years Ago
      Everyone knows China should only be allowed to buy our federal debt. ;-)
        • 4 Years Ago
        Unfortunately Carlos, China already controls more than 10% of US GDP. Do you know how many products you buy every day are actually made in China? American companies make very little in America anymore. Any falling out will only benefit China, as they will inherit the technology and manufacturing capacity, and American businesses will have to scramble to find a new location to make their products and then invest accordingly.

        Yet another reason to keep GM and heavy industry here afloat. Preferably in North American hands...
        Carlos
        • 4 Years Ago
        Yeah what happens then when America and China have a falling out? When China owns 10% of America's GDP...
      • 4 Years Ago
      Makes sense.

      Here's an idea:
      How about if no one gets to buy shares at a lower price than everyone else does? No cornerstone investors.
        • 4 Years Ago
        RastaD:
        The unsecured creditors in Liquidation Motors (old GM) were given warrants to buy shares in new GM as part of the bankruptcy.

        http://www.wilmingtontrust.com/gmbondholders/
        • 4 Years Ago
        If they can't sell shares to the big companies at the going rate, then lower the going rate.
        • 4 Years Ago
        Then the problem is that GM might not be able to raise sufficient cash. Cornerstone investors are basically there to show that there's going to be someone with deep pockets backing the company. They get the lower price because with them on board other institutions and investors will be more willing to pay a higher price for GM shares.
        • 4 Years Ago
        I think the original investors that got boned when the government took their shares (and then gave up a large portion of that value to the union) during the bankrupcy should have a first dibs on heavily discounted shares, proportional to their original holdings.
      • 4 Years Ago
      I'm less concerned how long Mr. Akerson will be at the head of GM, but more interested in his qualifications and way-ahead for the company. I would have preferred to see Mark Reuss take the wheel. He is a passionate car guy himself, unlike Mr. Akerson.
      • 4 Years Ago
      I like the idea of buying a little piece of this. It's like "War Bonds", y'know? "We all gotta do our part!"

      I don't know about my fellow car enthusiasts but I'm down for a few shares, if only to show my moral support of a (potentially/hopefully) great American industrial resurgence.

      Wishful? Whatever. I'm a patriot.
        • 4 Years Ago
        why god ??why ??? why the chevrolet, ford dont failed !!!!!!! here in brazil they buy horrible cars with price of bmw ,,, www.chevrolet.com.br ...see the assault
        • 4 Years Ago
        dinnercoat:
        The list up top is by sales. It's a list of the top-selling cars that are built in the US and have 75% domestic content.

        At the link I posted, go down to the 2nd section, titled 'Which U.S.-Built Cars Have the Highest Domestic-Parts Content?'

        The info from NHTSA is in that section. I don't know why NHTSA doesn't publish it themselves.

        Note that the Taurus listed is the 2009 model. There is no info on domestic content of the new model, but it is likely to be a bit lower since it has more high-tech gizmos in it (like the MKS does in this list) and high-tech gizmos are not made in the US.
        • 4 Years Ago
        @spin cycle
        The domestic content of the Camry (and for that matter, most cars) vary from year to year. It tends to go after a refresh/new model is introduced as domestic production of parts ramps up though there's obviously going to be exceptions, especially in years where demand is high enough that they're importing a large number of Japan-built Camrys.

        Either way the data you linked is for the 2009, whereas the 2010 Camry has an 80% domestic parts content.
        http://money.cnn.com/galleries/2010/autos/1006/gallery.american_made/index.html

        And for what it's worth the domestic part content of the Camry is actually higher than that if you're buying one that's made in Kentucky. The numbers are lowered by the fact that they import Japan-built Camrys which get factored into the domestic content number. So if you're only buying the Kentucky built units the car in question would actually have higher than 80% domestic parts content. Conversely, if you buy an imported Japan-built Camry it'd have a lower domestic part content than 80% but they mix all the cars together to calculate that 80% number.
        • 4 Years Ago
        I am planing to buy some too . do my part to save a great American car company, General Motors all the way , or as known by the right wing nuts, Government motors! I am shocked that they don't call it Obama motors or Democrats motors , something crazy along that line. I guess george bush is lucky the nuts like him or we all would be calling our banks, Government bank !
        • 4 Years Ago
        But wouldn't it be even more patriotic to buy a Toyota Camry, which has a 90% USA made content.
        • 4 Years Ago
        I could care less where a vehicle is made as a frame of reference to this article posting. GM was run into the ground by idiots, need to be bought by the government in order to continue to exist, and quite a few investors (including patriotic ones) were left empty handed.

        Now the government wants to see an IPO, and supposed being Patriotic is the sole course of reasoning to buy a share? How about common sense based on proven management? The only right thing I have seen come out of GM in the past decade was to get that weasel Ed Whitacre out of the company.

        Still, GM's current management acts as if it is the King of the Auto Jungle. Sorry, GM, but right now you are dang near last place in my business book.
        • 4 Years Ago
        It is definitely not a "War Bond". This is a failed private enterprise being propped up by a political party in order to maintain its voting base.

        If US government would actually issue a War Bond, I would buy a couple.
        • 4 Years Ago
        spin

        Can you provide the NHTSA link also, the cars.com list you gave has the Camry ranked at No. 1.
        • 4 Years Ago
        All,

        Be weary of the price you pay for the IPO stock if you do. Remember the factors!


        Here's why!
        1. When GM offers the IPO they will have 8 Billion in debt. This is not a big deal but it certainly effects the price of the stock.
        2. They already stated they will be offering a limited amount of stocks so what that means to us as investors is that they will have plenty more stock to offer. I will explain why this is VERY important.

        3. Say you get the stock at $X and the Market Cap of the co is a little higher than Ford which would be the case because GM sells a handful more cars than Ford (not the brand, the entire company). Well depending on how many shares that they have NOT released, it can REALLY mess up your day.

        If they release 2 Billion shares and the market cap is a little higher than Ford, you WILL LOSE IN THE LONG RUN. Why? Because Ford has way more shares in circulation and when GM releases another batch of stock, the natural balance of things takes place and the stock value of the initial 2 Billion will drop to balance the existence of the next batch.

        Smart investors will know this and avoid the plunge. Yes you CAN make money short, but watch your arses on long positions.

        Key factors to consider (compare them to NYSE: F for a clear picture)
        Total Shares Available (shares outstanding PLUS what they have sitting on the back burner)
        Shares Outstanding (circulating) (initial ipo)
        Stock Price

        What you'll basically have to do is take the total shares available for both F and GM and divide them to find the difference. Then use that difference to find a common theoretical price for what GM SHOULD be WHEN the same amount of shares are in circulation. In other words, if GM's IPO offers 10% of the stock that F has in circulation but the price of the stock makes the Market Cap equal to Fords you are going to lose 90% of your money holding long once the equal amount of stock is available.

        This isn't a theory folks... It's common sense. I do not have an investing background, but I understand enough about stocks, have done very well in my investments over the past 2 years and I base all my decisions of basic math and news.

        Here's an example of the math based on F versus GM

        Ford Stock Price 12.08
        • 4 Years Ago
        Ford Stock Price 12.08
        • 4 Years Ago
        By 90%, you mean below 80% I guess?

        http://www.cars.com/go/advice/Story.jsp?section=top&subject=ami&story=amMade0709

        The NHTSA lists models down to 80% and the Camry doesn't show on the list. The Accord is there at 80% (next to the Malibu).

        Perhaps a Ford Taurus, Lincoln MKS or Buick Lucerne?
      • 4 Years Ago
      I think this is hype.
      Who in their right mind would want to buy GM stocks.
      It's the same company, run by the same idiots, and now the UAW has a huge stake in the company making it less desirable than it was before the USA tax payers were forced to bail them out.

      Again, this is just hype by the government to make it appear people are scrambling to buy GM. I highly doubt many people will be lining up to put money on GM's future.
      • 4 Years Ago
      Wow --- hahaha......this is actually a pretty noble PROTECTIVE gesture to foreign investors, don't you think?

      You know, making sure that only AMERICAN investors will have the opportunity to get screwed when the company goes bankrupt again?

      I had no idea we were so kind to our neighbors. :)

    • Load More Comments