GM? BUY!
"It is not hard to imagine a time in the not-too-distant future when General Motors Corp. will not exist. In fact, a lot of investors are imagining such a scenario… The GM-is-dying argument is certainly compelling, which is why the stock is down 75 per cent over the past eight years." Of course, the Globe and Mail's eye-opening lead is the prelude to an argument that GM's shares are undervalued. David Berman says GM could be a terrific buy IF the automaker returns to profitability. "A number of savvy institutional investors, not exactly prone to making silly guesses, are making big bets on a recovery." The "number" of investors adding to their GM shares seems to be one: "Legg Mason increased its holdings in GM by 5.4 million shares at the end of 2007, bringing its stake to 15 million shares." Yes, well, good luck with that. The more important point: the Mail's tacit admission that The General is in a fight for its life which it could well lose. This marks a fundamental shift in perception. If the [erstwhile] car-buying public picks-up this vibe (so to speak), it could further depress GM sales, which would push them further and faster towards Chapter 11. Send in the flacks, STAT!
More by Robert Farago
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Where is she going to get her 13" tires replaced? I've replaced mine for less than $200, labor included.
Speaking as a Toyota and GM dealer, start quizzing your friends that own Toyota's about tire wear (Camry, Rav4, and Sienna). 28000 miles is looking pretty long in the tooth for the models mentioned. No manufacterer is infallible.
"Legg Mason increased its holdings in GM by 5.4 million shares at the end of 2007..." Ironic -- I watched a 60 Minutes segment last night about Carl Icahn (sp?), the (in)famous "corporate raider" who uses the same strategy to gain leverage over the Boards of Directors of various companies. He (as a "major shareholder") encourages cost-cutting measures to raise the stock price, then (in many cases) he gits while the gittin's good. The stockholders love it, but it's essentially a way of bleeding a company dry, and Chapter 11 is a real possibility. Watch Legg-Mason to see what transpires.
Buy the shares of the automakers who have understood the oil equation. That's not GM. Oil just went past 107/barrel.