GM Dealers Buy $1m of Stock The Day Before CEO's Press Conference
Automotive News reports that members of GM's national dealer council purchased more than 107k GM shares on July 14. The store owners claim the million dollar move was a symbolic gesture to "show support and confidence in GM's future." No really. "We firmly believe in GM and that we have the best products to sell," proclaimed Duane Paddock, co-chair of GM's national dealer council and owner of Paddock Chevrolet in Kenmore, N.Y. "Our fuel economy is the best story in the industry and the best way to do it [the show support thing] was to buy an investment stock." Paddock says he added $100k worth of GM shares to his $200k position. [Reporter Jamie Lareau neglected to ask if that 200 large represented his original investment or a recent valuation.] The dealers made the purchase the day before Rick Wagoner's cost-cutting announcement. The day after Wagoner's chin wag, GM stock rose 16.6 percent, closing at $11.48. Today, GM stock surged another 11.9 percent, closing at $12.85 a share. It has to be asked– if not by the SEC then by us– was this really an It's a Wonderful Life-style gesture or was it insider dealing dressed-up for the media?
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Wow, these guys are nuts - talking about fuel economy of GM's products as a good story - shouldn't they really be trying to get a good quality fuel efficient car to market before they are completely under? And dear god, how long does it take to get the Camaro out to the masses? They've been beating that dead horse for a few years now and still nothing in the show rooms. I had to chuckle the other day when I saw a press release for Transformers 2 that stated the Volt was going to be in it. The movie comes out next year - it's been over a year since the first one came out featuring the Camaro and you still can't buy it. I'm curious to see if TF2 makes it out before the Camaro does at this point.
Normally this would be called insider trading, but I think the SEC has pity for anyone taking large positions in GM right now.
I'm sure that when a group of good old boys get together to buy GM stock, it's all aboveboard. After all, they are all good old boys, they'd never do anything, well, illegal, right? GM Dealers buying stock moments before a restructuring announcement should be used as an example of insider trading in the dictionary under: insider trading.
What a coincidence -- the Toyota Dealer's Council bought a million dollars of GM put options!