General Motors Soars on Wall Street Return

Posted by Ian Cooper - Thursday, November 18th, 2010

From The Associated Press:

"General Motors stock began trading on Wall Street again Thursday, signaling the rebirth of an American corporate icon that collapsed into bankruptcy and was rescued with a $50 billion infusion from taxpayers.

The stock rose sharply in its first minutes of buying and selling, going for nearly $36 per share — nearly $3 more than the price GM set for the initial public offering. The stock traded for less than a dollar when the company filed for bankruptcy last year.

On the floor of the New York Stock Exchange, a crowd eight deep jostled around the company's trading post, adorned with its familiar blue-square logo with an underlined "GM." CEO Dan Akerson rang the opening bell as raucous cheers went up and the sound of a Chevrolet Camaro's revving engine echoed through the room.

The government hopes that the stock offering will be the first step toward ultimately breaking even on the bailout. For that to happen, the government needs to sell its remaining GM holdings for an average of roughly $50 a share over the next several years.

In the initial offering, the government reduces its ownership stake from 61 percent to 33 percent. The federal Treasury is unloading more than 400 million shares of the resurrected GM, which is smaller — but cleansed of most of its debt. The company is making money.

"There's a lot of work to do..."

Here's more.

Despite the IPO momentum, though, GM isn't a buy... yet.  Here's why.

Stay away from the Government / General Motors IPO this week... at least until the government is out of the equation. As long as shareholders come second to political priorities, it's not worth the investment.

But before we share what we've found on the GM IPO, let's look at what else is hitting the IPO trail this week.

Caesars Entertainment (CZR), a casino entertainment provider, is offering a $980 million IPO with a market cap of $5.4 billion. It's looking to IPO this Friday with a mid-point price of $15. The balance sheet looks weak here with $20 billion of debt. Do not buy.

LPL Investments (LPLA), a brokerage and investment advisory service, is issuing a $450 million IPO with a $3 billion market cap. It's looking to price around $28.50 on Thursday.

Booz Allen & Hamilton (BAH), a US government consulting service, will start trading on Wednesday with a $252 million IPO and a market cap of $2.1 billion, around $18.

Aeroflex Holdings (ARX), a global provider of radio frequency, will start trading on Friday with a $254 million IPO and a $1.2 billion market cap around $14.50. According to reports, this company has a record of losing money.

Bitauto Holdings Limited (BITA), an Internet content and marking services provider for China's auto industry will IPO on Thursday with a $113 million IPO, and a market cap of $454 million around $11. According to a report, it “looks like a leader in China's fast growing Internet-based automobile advertising market sector. With a 64% gross margin, BITA’s bottom line could benefit significantly from (potential) rapid increases in top line revenue.”

Read more here.


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