• Apr 21, 2011
The Federal Reserve is eying a move to dump a large portion of its remaining General Motors stock this summer, a move that could see taxpayers lose nearly $11 billion on the deal. According to The Wall Street Journal, GM stock hasn't done nearly as well as banks and Fed officials predicted it would, falling to $29.97 a share on Monday, down from its $33-per-share IPO in November.
According to the Journal, the Fed would need to sell the stock at $53 a share to break even on its initial $50 billion GM bailout. High fuel prices have hurt sales of trucks, which provide lots of profit for GM, while bailing managers and shaky supply lines made investors nervous; none of which has helped stock prices any.

Despite the potential to lose lots of money on the GM bailout, it's thought that the Fed would like to be shut of all its GM stock before the end of the year to avoid possible controversy in an election year. No matter what happens, the Fed will have to wait to sell any of its stock until May 22, when the IPO lockout, which prevents the government from selling its stock, ends. Even with another month to go before the sale, GM stocks aren't likely to be in much better straits by the time the Fed is ready to sell.

[Source: The Wall Street Journal]


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  • 26 Comments
      johnb
      • 3 Years Ago
      they're dumping it for political reasons. there's no other explaination.
        GCass
        • 3 Years Ago
        @johnb
        I wonder if they're trying to dump it before the union negotiations so that can't be used against the unions for what ever reason, especially when it comes to Ford. If the government still "owns" part of GM and GM gets a nice contract from the unions and Ford doesn't, that may not sit to well with people. Just speculation because otherwise, what's the rush to dump GM stock at such a loss.
      avinash Machado
      • 3 Years Ago
      Bye bye Government Motors.
      lne937s
      • 3 Years Ago
      My one thought on GM from an investment standpoint is that now the largest share of the cars GM claim in their sales totals are in China, the majority of their sales growth is in China, and the largest share of their production is in Chinese partnerships.... but GM isn't the majority stakeholder in those partnerships. It wouldn't surprise me if GM ended up like Gateway, IBM Thinkpad or recently Philips TV, where the Chinese/Taiwanese partner producers buy out the partnership and the brands or the entire operation. That kind of buyout might raise the share price.
      ojfltx
      • 3 Years Ago
      Oh happy days...
      Hazdaz
      • 3 Years Ago
      This is where ONCE AGAIN these short-sighted dip-sh!ts are hurting the company and the country in general. The ONLY reason to dump GM shares is because these right-wingers want to wipe their hands clean of GM stock, but the better, long-term thinking would be to simply hold onto the stop until it was economically advantageous to sell it. The German state of Saxony has owned a part of VW for decades now, but we have to rush to drop our part of GM - and at a loss - simply to appease the clueless conservatives out there? F them!
      Blake
      • 3 Years Ago
      Don't they realize that the Republicans are going to come after them no matter what they do? They keep the stock until they can sell it at a profit, or at least break even, and you'll have idiots yammering about the horrors of socialism and "Government Motors," just like they've been doing. If they sell NOW, they'll get hammered for losing 11 billion tax dollars needlessly. If you ask me, that's a much more viable talking point.
      patelc0916
      • 3 Years Ago
      I think the reason why the GM stocks are not doing well, is anyone educated enough to understand the markets saw this coming a mile away. They know that the feds will flood the market with their shares with the way the current budget talks have been going.
      Jeffrey Smith
      • 3 Years Ago
      Imagine that, the Fed's predictions on the economy was wrong.
      • 3 Years Ago
      [blocked]
        Hazdaz
        • 3 Years Ago
        I don't see where you are coming from at all. Dealerships are independent. If you don't like that fact - and I wouldn't disagree with you - then look to the extremely strong state laws that have been put up over the decades that are specifically written to protect them. There's a very good reason why local dealerships tend to have very strong tries to governors and local legislators - the dealerships are out to protect their turf. Blaming GM for that is completely unfair on almost every level. Concerning the product, well I have no idea what you have been doing for the past couple of years, but GM's lineup is as strong as it has ever been in recent history. It has cars that can directly be compared with the best of the best in many classes and that only looks to be improving with cars like the just announced next-gen Malibu. I don't know how you can complain about that. About the employee discounts... well again, I just don't see that as being some huge issue. If you work for Company X, chances are you probably get a discount when purchasing their products... I really don't see the problem there. I am not keen on overly-compensated executives or other lavish expenses and such, but giving employees discounts to buy the very products they build, design and engineer not only helps sales, increases moral and helps with turn-over. What's the problem with that?
          • 3 Years Ago
          @Hazdaz
          [blocked]
      Fulorian
      • 3 Years Ago
      GM isn't a long-term viable company, and wiping out all the debt and equity holders isn't enough to fix a fundamentally broken company.
      sykerocker
      • 3 Years Ago
      Normal investors ride out the stock, waiting for the price to pick back up and make a small profit. The feds?
        lne937s
        • 3 Years Ago
        @sykerocker
        you only do that if you think the price will pick back up...
        SamW
        • 3 Years Ago
        @sykerocker
        The gov't knows the Fed will raise interest rates soon, that will kill financing, which in turn kills sales, then stock price, so they have to get out now before they are forced to take a bigger loss when the Fed raises the rates.
        LUSTSTANG S-197
        • 3 Years Ago
        @sykerocker
        I agree, but going into this, we knew two things. This was a temporary arrangement and that the Feds are generally clueless when it comes to running a business. 11 billion is a drop in the bucket to them. If anything, this should be yet another wakeup call for the US auto industry. Will we be there to bail them out should they decide to mismanage themselves into bankruptcy again?
      ManOnFire
      • 3 Years Ago
      I thought GM was too big to fail? Wouldn't dumping their stock hurt the company?
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