The government and the United Auto Workers union are the owner/operators of General Motors. That means whatever profits are realized will be shunted to these folks and the people who have invested their money into this corporation are left holding an empty seat belt.
So if you're a GM stockholder, what can you do? Jonathan Hoenig of the WSJ has a suggestion:
This is crazy, public funds are used to rejuvenate the operations and pension funds of a private corporation and then the future recipients of those pensions are treated to a bonus while the taxpayers are left hanging on the line.
Late last week I traded General Motors ( GM: 31.93, +0.51, +1.62% ) ' stock one penny off the lowest price in its history. But I wasn't buying hoping for a rebound. I was selling it short, looking for a collapse, and I'm holding that position today.
It might seem somewhat counterintuitive. Not only was the stock at an all-time low, but the company recently announced a $4.7 billion profit , its biggest in a decade. Some 45,000 union workers will receive profit-sharing payments averaging $4,300 – a record.
And on that very same day, shares of the company slid below their IPO price of $33 for the first time, a vitally important fact overlooked by most of the enthusiastic media reports. The New York Times didn't mention it in their story until paragraph 15.
[...]If there was ever a stock that makes people emotional , it's General Motors. Either the company is the backbone of the American working man or the poster child for bad business practices. In many ways it's like discussing abortion or gun control. Minds are made up, and opinions will not be swayed.
That emotion, of course, is only exacerbated by the fact that GM received a $50 billion bailout from the Federal Government, an intervention that left taxpayers the largest shareholders, still owning 26.5% of an extremely weak stock. For the government to break even, shares will have to hit an estimated $53 – up 64% from current prices.
General Motors - adios GTO, hola P.U.M.A.