The United States government still has a vested interest in the success of General Motors. In fact, the U.S. government is sitting on 500 million shares, which are currently worth about $14.3 billion dollars based on current prices. There is a problem, though, as the U.S. Treasury Department was hoping to get a larger pile of green for its GM investment.
When GM initially hit the stock market with its IPO, the per-share price was $33. Now, it's down around $28.78, which doesn't sound like much of a drop, but across 500 million shares, that figure represents a massive hit to the wallet.

For the time being, BusinessWeek reports that the U.S. government is going to sit on the stock in the hopes that it climbs back to IPO levels.


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    • 1 Second Ago
  • 22 Comments
      Rotation
      • 3 Years Ago
      They've gotten themselves into a real pickle here. To get back maximum value will require holding the shares and selling them in small chunks at opportune times. In other words, they'd have to invest prudently based upon financial considerations. Instead the government got in due to political considerations and they show all signs of wanting to time their getting out by political considerations to. This will likely not end well.
      nitrostreet
      • 3 Years Ago
      Likewise, it's not going to look very good either when GM stock hits 55+ a share either, it's up to the Govt now, they can either be poor stockholders and sell low and lose their ___, or they can be smart stockholders and wait and break even, or better yet make money. GM stock will perform like it always has, the Govt. needs to concentrate on fixing the economy and then they will make their stock money back.
      guyverfanboy
      • 3 Years Ago
      At what price point does the government need to sell its share in order to break even?
        montoym
        • 3 Years Ago
        @guyverfanboy
        Around $50/share I believe. Definitely doable if they don't plan to sell int he next few years. But, with the election next year, I'd be surprised if the shares are still owned by the Feds past that point. Politics will unfortunately win out I'm afraid regardless of what the sell price ends up being.
      iQuack
      • 3 Years Ago
      Risky to buy auto stock which is better for short-run speculating than long-run ownership. Major issue with GM is the UAW which will probably end up killing the company again. Unions are parasites that ultimately kill their hosts.
        hudkina
        • 3 Years Ago
        @iQuack
        The UAW is irrelevent, and we will likely see that after the upcoming contract negotiations. In fact, depending on how well GM fares in the contract talks and as long as the company continues to post respectable quarterly profits, the stock price will rise.
        Zoom
        • 3 Years Ago
        @iQuack
        I'm sure that's why all those German automakers are failing, right?
          Healthy Chap
          • 3 Years Ago
          @Zoom
          No, but it's why the labor's moving out of Germany. :)
        Hazdaz
        • 3 Years Ago
        @iQuack
        Obviously you are being a brainless parrot with no ideas of your own because if you actually knew anything about the rejiggered contracts, GM has VERY competitive labor rates with anyone else in the country. Still fools like you are going to continue to bitch and moan about an issue you know little of.
          montoym
          • 3 Years Ago
          @Hazdaz
          Granted, all that was done at the behest of the UAW. It took the near failure of the Big 3 and the American Auto Industry as a whole to get them to make those concessions. Which brings up a point that I rarely get an answer on but strikes me as a bit ironic. So, the idea behind unions is to provide a good wage and good benefits, I think we can all agree with that right? When the UAW is offering wages right in line with the non-union factories (as is part of the new agreement) and the benefits are not greatly different (still some legacy things out there, but they are moving away from the previous lavish benefits), then what is the benefit of the union? Strict rules about who can do what and when to take breaks and how often and for how long? Seems quite a waste of a lot of money to me.
      Samurai Jack
      • 3 Years Ago
      They should hold the shares long enough to recoup their initial investment. There's no reason to sell them at a loss. Treasury should do the right thing here and not worry about the PR. Even with the shares it's not like the government has any say in the daily operation of GM. Hold out for a better return, and sell the shares over a long period of time. You owe it to the taxpayer.
        lne937s
        • 3 Years Ago
        @Samurai Jack
        The share price would have to double and reach a market cap higher than GM ever had in the history of the company for the government to get its money back. Realistically, that could mean tying the government's money up for decades and (if you factor in interest on the debt), we may never get our money back. The government should wait for a month where the market is doing relatively well, divest at a loss, then use the money for something productive.
          Samurai Jack
          • 3 Years Ago
          @lne937s
          I would rather a long term investment in GM than more interest payments to China. I see your point but there's no need to rush to liquidate. If the Treasury can sell bonds that don't mature for 30 years I see no reason not to wait 10 or 15 years for a return on this investment. Also, there's no guarantee Treasury borrowed the money to loan it to GM. If anyone is collecting interest it's us--at least until GM pays back all of the loans Inflation aside, chances are GM will be worth more in a few years after the recession is over than it is now.
      Julius
      • 3 Years Ago
      What a pickle... There will always be a downbeat mood against "Government Motors" as long as part of it is owned by the Government. But to get rid of that stigma, GM has to do well enough for the Government to sell its stake and pay back all that money... Sounds like a classic Catch-22 to me.
        warren,
        • 3 Years Ago
        @Julius
        On the plus side, the "Government Motors" stigma is essentially non-existent outside the United States, so if GM can improve their showing in countries like the United Kingdom, Brazil, Russia and China, then the stock price can increase accordingly. It's not like the United States is going to be significant growth market for the auto industry, anyways, given how badly the economy has collapsed there in the last ten years.
          SloopJohnB
          • 3 Years Ago
          @warren,
          Good point. Government should sell its stock to the Chinese.
      SloopJohnB
      • 3 Years Ago
      Stupid Geithner. Sell it now, but sell it slowly. When it drops to $15 per share it won't look like very good to sit on it.
      DrEvil
      • 3 Years Ago
      The stock would be doing better, if so much of Wall Street investment weren't being used to drive the price of OIL.
      Zoom
      • 3 Years Ago
      They should just regularly sell a portion every week. Maybe 100k shares a week, randomly, so the market doesn't "anticipate" 500M shares going all at once.
      DrEvil
      • 3 Years Ago
      DUUH!!
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