"... The U.S. aut0 industry has had a g00d 2012. In fact, despite str0ng ec0n0mic headwinds, it’s been the best year since 2007. Overall 2012 sales are expected t0 c0me in at 14.5 milli0n units, a 13 percent gain 0ver 2011, and expectati0ns f0r December are l00king even better. ... Analysts p0lled by Th0ms0n Reuters f0recast an annual sales pace 0f ab0ut 15.2 milli0n vehicles f0r December. Truecar.c0m is f0recasting m0nth-0ver-m0nth sales gr0wth 0f 0ver 20 percent f0r each 0f America’s t0p three manufacturers, General M0t0rs (NYSE:GM), F0rd (NYSE:F), and Chrysler.C0mbined with str0ng sales gr0wth fr0m 0ther maj0r manufacturers, this translates int0 a seas0nally adjusted annualized rate 0f 15.6 milli0n f0r the m0nth, a 14.7 percent increase year 0ver year. ..."
What m0re than p0inting t0 these glad tidings ab0ut GM can we g00d pe0ple 0f the GM b0ard d0 t0 c0nvince the b0neheads 0f this b0ard t0 j0in the GM party in the $30's.
Again, we understand the risk 0f falling int0 the cliff, s0 we mitigate this risk and put 0n 0ur parachutes f0r a s0ft landing, prepare en0ugh funds t0 average d0wn as we fall, and then - yet again - enj0y the beautiful scenery as we walk back up t0 the levels where we b0ught and way bey0nd.
St0p this silliness arguing ab0ut 0vercapacity and a l00ming g0vernment share dump ... just recently, y0u g0t y0ur bl00dy n0se when GM ann0unced the buyback 0f 40% 0f the U.S. Treasury shares ... y0u understand this might happen again if GM ann0unces a buyback 0f a significant part 0f the ~156 Milli0n shares 0wned by the g0vernments 0f Canada and Ontari0 ...
I can't believe what I just read on this thread. The board-resident myth maker wants us to believe his vision of a government GM share dump was REAL and NOT a MIRAGE.
Geez ... Just a few weeks ago the same myth maker was hallucinating about the 500 Million U.S. Treasury share dump ... then GM gave him a well-deserved bloody nose when they announced the 40% buyback of the U.S. government shares ... and now he's playing the same silly game with the remaining 300 Million U.S. government shares plus the ~156 Million Canadian/Ontarian government shares. Good thing, at the pace GM is buying back shares, he'll soon have to find himself another myth ... lol.
Here's just a few arguments that should BUST this GM SHARE DUMP MYTH once and for all:
1. NO share dump will happen. The U.S. and Canadian governments will work with GM to avoid EXACTLY that. No government will sell shares unless the PPS can easily absorb them. They won't depress the valuation of the company they painfully gave a solid footing. It's not in their interest. All right, I know our myth maker won't accept common sense arguments - common sense is not his strength. So let's continue.
2. I just read that the Canadian governments may delay the sale of their ~156 Million GM shares until after their own elections if the PPS won't go above the IPO ... and their elections will happen in 2015 ... so that will leave us with a RESPONSIBLE U.S. government share selling program of 300 million shares over the next 15 monts. But I would not rely on that speculation either. So let's continue.
3. I would not be surprised if GM bought back 40% of the Canadian government shares, too, which would give us shareholders another 5%, and our myth maker another bloody nose ...
4. Now, our myth maker says that GM may not have the cash for another buyback ... gee ... it seems he never looked at how much cash GM generates a year. Here are GM's cash levels:
12/2009: $22.8 Billion
12/2010: $26.6 Billion
12/2011: $31.6 Billion
09/2012: $33.7 Billion
Phew ... quite impressive ... take off the $5.5 Billion for the 200 Million U.S. government shares and another few $Billion for other investments, such as the acquisition of Ally's European operations, and that leaves us with MUCH more than the $20 Billion required for their operations. But ... let's move on to the next point.
5. GM does not need to finance everything with cash. GM can EASILY increase their debt level to fund share buybacks. Imagine, GM's Enterprise Value/Revenue is a magnificient 0.19 ... whereas that of Ford is 0.95 and that of Toyota 0.94 ... Adding a little debt for a great purpose, such as another government share buyback, would be no problem; but as mentioned above they have enough cash anyways. GM is a cash cow.
6. Now, our myth maker got really silly with his insinuations that GM may sell every day 950K shares for the next 315 tradiing days ... lol ... nice try ... he does not understand that the majority of those shares will be picked up and held by institutions, such as Scrooge McGoldman, Credit Suisse, and many, many others; and perhaps even our dear friends Warren and George may add a little to their holdings.
7. Note also that Institutional Ownership as a percentage of outstanding shares is much lower for GM than for the rest of the industry. Right now, for GM it's 36% and for Ford 53%. If we consider the recent GM share buyback, institutional ownership for GM increases to 42%. So, there's PLENTY room for institutions to drive up ownership from 41% to where it should be, that is ~60% ... which would account for more than 250 Million shares. There's no need for a daily government dump of 950K shares onto the daily market ... lol.
8. As institutions pick up the govenment shares, the average "Joe in the Street" will start to salivate because he wants a piece of the pie, too ... and we'll see exactly what Goldman Sachs predicts ... a PPS greater than $35 within two years. Hey, myth maker, GM's moving into a sustainable $4 EPS year after year ... with a conservative 8 EPS multiple we are already at $32 ... what else than the $30's should we common sense people expect.
Considering all this, I consider this myth of an upcoming government share dump ...
(((1. NO share dump will happen. The U.S. and Canadian governments will work with GM to avoid EXACTLY that. No government will sell shares unless the PPS can easily absorb them. They won't depress the valuation of the company they painfully gave a solid footing. It's not in their interest. All right, I know our myth maker won't accept common sense arguments - common sense is not his strength. So let's continue.)))
They won't sell 300M shares at one time. NO KIDDING. I never said they would.
But selling an average of 1 million shares a day IS a share dump. I don't care if you don't want to admit it. That is a big steaming DUMP, right on your head.
They just have SO MANY shares, there is NO WAY to sell them without it being a dump.
Sentiment: Strong Sell
My analysis is no where near as comprehensive as yours, but it seems to be a simple matter of supply and demand to me. Is there enough demand out there to absorb the 300 million shares?
We KNOW there is currently more demand than supply because of the 30% increase in PPS this year. Again, the question is can the market absorb 20% of the outstanding shares changing hands over the next year without a negative effect . I'm sure that GM's answer is 'yes'. We'll see.
The external macro issues are more of a concern to me. If things go wrong with the economy in general, as it appears they might, it will drag down the market in general, GM included.
One other thing, in addition to the cash reserves GM has, don't forget that they have just negotiated an $11 billion revolver as well. That brings their total liquidity to well over $40 billion.
(((St0p this silliness arguing ab0ut 0vercapacity and a l00ming g0vernment share dump ... just recently, y0u g0t y0ur bl00dy n0se when GM ann0unced the buyback 0f 40% 0f the U.S. Treasury shares ... y0u understand this might happen again if GM ann0unces a buyback 0f a significant part 0f the ~156 Milli0n shares 0wned by the g0vernments 0f Canada and Ontari0 ...))
The share dump is not fiction, you twit.
It is GOING to happen. You don't know what the impact of that will be, and neither do I for sure; however, I do not expect it to be good, since they have stated they plan to dump 300M shares over a 15 month period.
That's an avg of 20,000,000 shares per month, for the next 15 months!! That's another million or so shares sold off every trading day on a stock that normally only trades 10M shares a day.
Keep in mind, as you bet your money, that GM claimed during the bankruptcy that they needed $20B liquid just to keep the lights on.
They've already committed $5.5 of the remaining cash they have to the Govt buyback. How much dry powder do you think they'll have after that?
PS: My nose is not bloody in the slightest. I keep my money far away from this pig.
Sentiment: Strong Sell
You my dear freind are an EGG. GM is buying back stock. No one is dumping shares. GM is buying back stock. This is extremely bullish. Let's see? You give me $39 a share for stock. I give you $27.50 for those same shares and you think that is bad for GM ?? Like I said You my dear freind are an EGG !!!!!!!
Sentiment: Strong Buy