Treasury To Unload Remaining GM Stake

Derek Kreindler
by Derek Kreindler
treasury to unload remaining gm stake

The U.S. Treasury has begun a sale of its remaining stake in General Motors, with a goal of selling its remaining shares by March 2014. Currently, the government owns more than 300 million shares in the auto maker, equivalent to a 19 percent stake.

A statement released by the Treasury says that the U.S. government

“intends to sell its shares into the market in an orderly fashion and fully exit its remaining GM investment within the next 12-15 months, subject to market conditions.”

According to the Detroit News, the government has managed to recoup $29 billion from its $49.5 billion bailout. To break even, GM would have to get $72 per share, an unlikely scenario. Currently, GM is trading at $26.35 a share, which would result in a $12 billion dollar loss for the government. GM’s last stock sale occurred when prices were around $33 per share. J.P. Morgan and Citigroup will be handling the sale for the Treasury and are expected to make about $3 million in commissions. And of course, once the government is out of GM’s hair, matters relating to executive compensation will be a matter for the company, rather than legislators.

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13 of 21 comments
  • Asdf Asdf on Feb 26, 2013

    So, which Chinese government-owned company will buy this stake?

    • Lorenzo Lorenzo on Feb 26, 2013

      Treasury isn't going to auction the stake in one or more large blocks, but sell in drips and drabs over time. There are lots of transient downward pressures on GM's stock price, the biggest being Treasury's sales. Once that sale is completed and other pressures dissipate, the stock price will go up. There are so many short positions on the stock that at some point the short sellers will have to buy the stock to complete the transactions and create their own stock price bounce. There are others probably waiting to buy the stock once it bottoms out who will help amplify the bounce. Then the stock price will do what the overall market has always done: fluctuate.

  • SCE to AUX SCE to AUX on Feb 26, 2013

    Just get it over with. I remain no fan of the bailout, but it happened. If the loss is 'only' $12 billion vs $50 billion, I suppose that's better. It might amount to a year's salary for all the jobs saved. Bailout haters won't want this deal to break even (don't worry, it can't). Bailout lovers will say it was worth doing. But for perspective, we provide farm subsidies EVERY YEAR to the tune of $20 billion. Do any blogs whine about that? They should.

    • See 3 previous
    • Highdesertcat Highdesertcat on Feb 27, 2013

      Mike978, please re-read.... "if they want one. I’m not so sure that there are many who would want one, even if given to them for free. Just remember Oprah’s give-away of free Pontiacs and how much those free cars cost the recipients when the IRS got through with them." There aren't $20B worth of people who will want a GM car. If there were, GM would be selling a lot more cars than they do now. And CRs recent publishing of the best cars did not include one single Ford, GM or Chrysler vehicle. They still don't measure up to the foreigners, it would appear. I'll admit to trepidation when my wife wanted a 2012 Grand Cherokee to replace her well-worn 2008 Highlander. But so far, in over 30K miles since I bought it in Nov 2011, we have had no problems. We should not shortchange Sergio and the Italians. They did a marvelous job of turning Chrysler around in the market place, considering what they got was a carcass. Granted, Daimler gets all the credit for the R&D and designing the 300, the Grand Cherokee and the RAM, but Fiat gets the benefit of all that effort. Sorry about the delayed reply. I was in El Paso, TX, all day today, on business.

  • Mypoint02 Mypoint02 on Feb 26, 2013

    I'm sure we'll all be hearing soon about how the takeover was a success. Only in the demented view of the Federal government is losing over $12 billion in taxpayer money a "success".

    • See 2 previous
    • Vaujot Vaujot on Feb 27, 2013

      Have you got any idea what cost to society a liquidation of GM would have caused?

  • Segfault Segfault on Feb 26, 2013

    Better get out before GM declares bankruptcy again! Yeah, it will probably be several years, but still...

    • Highdesertcat Highdesertcat on Feb 27, 2013

      But when GM goes bust again, the government will bail GM out again. Here's another prime example of what happens when the national policy is to "invest and raise revenue", formerly known as spend and tax. With Solyndra, A123 et al still fresh in our minds, the national policy now is to divest itself of worthless stock and incur a $20B loss. Hey, don't worry, be happy! The taxpayers just have to suck it up.