By on August 18, 2010

Editor’s Note: With GM’s S-1 IPO filing hitting the web today, every IPO and auto industry analyst is weighing in on the offering, and the state of GM. Here’s a collection of some of today’s more notable comments.

It looks to me that GM should be worth no more than Ford. If that’s the case, then the taxpayers will lose about 50% on their investment.

Francis Gaskins, president of IPOdesktop.com, commenting in the WSJ [sub] on GM’s IPO. More analyst commentary on GM’s just-released S-1 filing after the jump.

There seems to be a high demand for GM stock from hedge funds and large institutions, but retail investors don’t want to touch the stock… There is no doubt in my mind that we will see the administration patting itself on the back, congratulating itself, telling the public that the investment into the automakers was a good idea

David Silver, of WStreet.com, in MarketWatch. Silver reckons the IPO could bring in up to $18 billion with another $5 billion possible from the preferred shares, and up to $10 billion coming from the government’s holdings.

The fact that we are even talking about this is a milestone and was far from guaranteed…I think is an example not of an expanding government role, but the government and the private sector working together in an unprecedented way.

University of California at Berkley professor Harley Shaiken, in the Freep.

It sounds to me like a large part of it will go to repay the government and that only the proceeds of the preferred shares go to the company. But there’s still going to be an overhang of ownership, and that’s really looming over and will be looming over this company’s head for some time.

Depending on how the preferred shares are priced, there could be a good pricing opportunity depending on what the rating is. My sense is that the government will try to get their ownership down to as little as possible.

Jack Ablin, Chief Investment Officer, Harris Private Bank, in Reuters.

It was totally perplexing. I personally do not think the timing was right [for Whitacre to step down as CEO]. It put the filing of the IPO behind ….and we know that one of the main attributes that Wall Street looks for when the look at an IPO is stability in management. That just shows they didn’t have a succession plan.

Sheldon Stone of Amherst Partners, in the Freep.

I’m glad it’s out because the hype surrounding when it was coming out and the fact ‘Oh they didn’t file today, maybe it’s a problem’ really pressed too much on the anxiety button for investors.

Now comes the difficult part, assessing what the valuation of GM truly is…It’s a deal that seems to be very reasonable at this point based on what they’re showing for the fees that they paid.

I think this offering has a two-month shelf life on it

David Menlow, president of the IPOfinancial.com, in the Freep and Reuters.

Our position on the IPO is: Are the investors out there? Are they ready to invest as quickly as GM’s expectations are? I hope they are. We are not behind the closed doors but we are hearing good things.

Ken Lewenza, president of the Canadian Auto Workers union, in the Freep.

The surprise thing was the change in leadership — that was a wrench in the works there. I thought it may have behooved them to wait a little bit. A few more quarters of these solid results might have helped them out. The timing part is difficult. What if there is a double-dip recession? It is difficult to gauge the best time to come out.

I have to give them credit for restructuring, but it will come down in terms of economic headwinds — that will be the biggest issue.

Mirko Mikelic, Fixed Income Portfolio Manager, Fifth Third Bank, in Reuters.

They’re using the preferred shares…to pay some dividends and probably lock up some key shareholders. They will obviously try to get some key investors in now, like some wealth funds from the Middle East. That will be the first strategy, and then they will basically do more formal marketing for the offering to more institutions and retail (investors).

It’s all in now, so by November it’s going to happen.

Josef Schuster, IPOX Schuster LLC in Reuters.

People may have felt a little bit more comfortable if there was another quarter or two of profitability like we’ve seen in the last two quarters. You can really say somebody is fully reformed when they’ve been out of rehab for a longer period of time.

One thing overall investors aren’t recognizing fully is that these (U.S. auto) companies are making money in a variety of products now and that is not something that used to happen. That kind of diversity really needs to be recognized and rewarded.

Rebecca Lindland, IHS Global Insight, in Reuters.

If GM is valued in that $60 billion to $70 billion range, that gets the taxpayer paid back. But the question is, is that achievable for a company that is a year out of bankruptcy, that has just changed CEOs and that faces negotiations with the UAW? I just think that the risk of failure with the IPO is bigger than the risk of being known as Government Motors. Personally, I think they should wait and prove out their earnings.

I’m very positive about GM — they’ve got good products, they’re blowing up the bureaucracy and hopefully Akerson can keep that going. My only question is with the timing of the IPO.

Brad Coulter, O’Keefe And Associates in Reuters.

I can find other attractive names with lower risk for my portfolio

Ariel Hsiao, HSBC’s New Rich Equity Fund

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25 Comments on “Quote(s) Of The Day: The Coming IPO Edition...”


  • avatar
    Z71_Silvy

    It looks to me that GM should be worth no more than Ford. If that’s the case, then the taxpayers will lose about 50% on their investment.

    But GM has the brighter, more thought out, positive future.

    And I rather lose half my investment than all……………

    • 0 avatar
      picard234

      Yawn!

      Another troll post from you.

      Tell you what: you tell us how much you invest in the IPO tomorrow. Be truthful! We’ll respect you if you put your money where your mouth is.

      Since they have such a bright, well thought-out future, you shouldn’t be afraid. Just as I was not afraid when I bought Ford stock at $2.

    • 0 avatar
      mikey

      @ Have you read the hate, and the anti GM venom that spews from the hard core GM bashers here at TTAC?

      Z71-silvy a troll? Then what would you call “Rob Finfrock”, or “Garbage Motors”

    • 0 avatar
      GarbageMotorsCo.

      No troll here, just a disappointed (former) rabid GM fan like yourself. Minus the UAW link of course ;/

    • 0 avatar

      Please mikey, first it’s “hate” speech…now you’re just calling dissenters, trolls?

      At least you once backed up your arguments with data, and/or personal experience. Now you merely call those who dare disagree with you (and with the UAW) “haters” and “trolls.”

      True colors, at last.

    • 0 avatar
      mikey

      @Finfrock & Garbage.. Ya missed my point guys. Picard calls silvy a troll,b/c silvy has a hate on for Ford. You guys have a hate on for GM. I have a hate on for anything not domestic. So does that make us all trolls?

      I don’t think so.

    • 0 avatar
      Z71_Silvy

      silvy has a hate on for Ford.

      The truth is not hateful.

      BTW…look at Ford’s stock…Toyota and Honda up…Ford WAYYYYY down.

  • avatar
    mwilbert

    I don’t think you are using the correct value for Ford. It is true that Ford’s market cap is about $40 billion, but it also still has a lot of debt. GM, on the other hand, doesn’t. You really have to include the debt if you want an accurate comparison. I suspect the government will end up losing something on GM, but I don’t think it will be half.

    • 0 avatar
      John Horner

      People miss that all the time when talking about the “market cap” of a company. The market value of the company is essentially the value of its equity plus debt. Equity investors essentially only own a portion of the company and debt holders have the rest. I know that in some ways this isn’t technically true, but it is more accurate than is simply looking at price per share x shares outstanding.

  • avatar
    russification

    stock market is doomed. bond yeilds are going to rise as public pension shortfalls start to become more pronounced. Its a nice thought anyway…….the shelf life of the securities market as we knew it over the last 50 years is past its maturity and is a dying patient that is being window dressed..

    • 0 avatar
      mythicalprogrammer

      Your statement about stocks is completely false. If it is doom then wall street would drop it. Speculating will get you nowhere.

      This is actually the best time to buy stocks. Only amateurs buy stocks when they’re high.

  • avatar
    d002

    It’s irrelevant what these overpaid and under-qualified gamblers of other peoples money say.

    GM is a large company and all the institutional investors (like pension funds and unit trusts) have to invest in it under the formulas they have for investing eg they _have to_ invest in the top 50 companies.

    So, Silvy, you’ll be investing in GM whether you like it or not.

  • avatar
    picard234

    I predict their stock will perform much like Tesla. Big bounce the first day followed by a big drop.

  • avatar
    GarbageMotorsCo.

    What will be more of a waste of $$$, a few thousand shares of Government Motors stock or an overpriced Chevy Volt?

  • avatar
    cole carrera

    Dear someone: please explain to me this “taxpayer’s investment” thing.

    You paid your tax. Whatever that money is it’s not yours anymore. It is now controlled by your country’s government. It is not yours anymore. You may have a slight bit of a say as to what it is spent on, but for the very most part have none.

    Thus, if this IPO is a flop, it seems to me it a loss to the taxpayers only in that there is now less money for paved roads and special ed programs. It is not literally a loss to the taxpayers because they have already experienced this loss by paying the tax in the first place.

    Is ever the taxpayer’s investment not just a euphemism for the government’s money? Am I even investing if I am not lawfully given a choice? Not really?

    • 0 avatar
      ComfortablyNumb

      I’m sure the government wishes more people had your mindset. Unfortunately that’s not how things work. You take my money, I expect something back – infrastructure improvement, debt reduction, better body armor for our troops…something. Here, 50% of it could be gone. Poof. Nothing in return.

    • 0 avatar
      JeremyR

      On the one hand, you’re correct: We don’t get a direct say in how the Federal government spends money. We do so indirectly through electing our representatives.

      On the other hand, if the government flushes money down some rat hole, you can bet that they’re going to find some way to replace it, i.e. raise taxes–because after all, all those other things they want to/are going to spend money on are still there, so now even more money “has to” be spent. So, some taxpayers are understandably concerned about how any losses will be covered: through future taxation.

      I suppose one could argue that any money I have yet to earn and be taxed away won’t be mine either…

  • avatar

    shouldn’t this warrant a new title, like “GM, REBIRTH WATCH” or “GM, ZOMBIE WATCH”?

  • avatar
    jmatt

    Here’s what will happen: The shares will be “sold” to some connected insider like Goldman Sachs at a price that will allow Obama to declare the government motors welfare plan a “victory” for the taxpayers. The insider will also receive a wink and a nod and one month after the election, get some kind of tax forebearance or TARP repayment credit in the exact dollar figure that the shares were sold for.

    And once again, the American taxpayer will have paid for Government Motors.

    Take a look at how the government and the union SCREWED the last set of bondholders and shareholders. Would YOU bet your retirement on the UAW? lol

    • 0 avatar
      Lokki

      Unfortunately, I agree with you.
      The timing for an IPO is just terrible not the best.

      I think that it’s all a prearranged ballet (as you’ve stated above) where the dancers will be paid after the performance.

  • avatar

    Now if I may comment without fear of being label a “hater” by the UAW (gosh, I do love irony in the morning!)

    This IPO shows ALL evidence of being a desperate rush job, to both minimize the “Government Motors” stigma and maximize the potential for the ruling party come November. Though I (and most Americans) may disagree with these objectives, neither goal is inherently wrong or deceitful.

    But tell me, how is this rush job of benefit to GM? Unless they sell ALL shares and the taxpayers recoup ALL their money, the “Government Motors” stigma will rightfully live on, likely in perpetuity. So, why rush it?

    Why not wait another year… unless the feds suspect what little bubble they’ve managed to create is likely to burst, and they want investors holding that bag?

    Or is this IPO a “payola” scheme for the big banks?

  • avatar
    Zackman

    Does this mean that GM can get back to reinventing the car again? You know, pillarless hardtops, vent windows, chrome and windows that roll down? Actual style? Nah…maybe? Hope? Pleasant thoughts, though!

    • 0 avatar
      Mike66Chryslers

      Ha ha, you’ve hit most of my pet peeves about new cars. Don’t forget cowl vents, so one can get fresh air in the cabin without having to turn on the blower fan or opening the windows, and little gutters over the door openings so you can open the door for a moment in the rain and the edge of the seat won’t get soaked by the water running off the roof.

  • avatar
    nevets248

    ‘Rebecca Lindland, IHS Global Insight, in Reuters.

    If GM is valued in that $60 billion to $70 billion range, that gets the taxpayer paid back. But the question is, is that achievable for a company that is a year out of bankruptcy, that has just changed CEOs and that faces negotiations with the UAW? I just think that the risk of failure with the IPO is bigger than the risk of being known as Government Motors. Personally, I think they should wait and prove out their earnings.

    I’m very positive about GM — they’ve got good products, they’re blowing up the bureaucracy and hopefully Akerson can keep that going. My only question is with the timing of the IPO.”

    ANY time I read anything from her, I can’t help but think of a line from Foghorn Leghorn…”..about as sharp as a bag full of wet mice”.


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