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Shorting GM stock?
Old 04-17-2006, 10:13 AM   #1
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Shorting GM stock?

I've been watching GM blunder farther down the BK trail than I ever thought they could get.

It looks like selling part of GMAC left GM in a pretty precarious position and that the next couple of months will add even more drama to this big-business version of a Korean soap opera.

After a year of watching, six months ago I was ready to buy GM as a "deep value" stock. After watching management a while longer I decided that I didn't want to touch it even with TH's legendary 11-foot pole. Now I'm beginning to wonder if it's worth shorting.

Jim Jubak on GM

Looks like I need to take a look at the short ratio... I hate having to make payments in lieu of dividends but this one seems pretty tempting.
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Re: Shorting GM stock?
Old 04-17-2006, 11:10 AM   #2
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Re: Shorting GM stock?

The fate of GM stock resides not just with their cars and how many they sell.

Their fate resides with the UAW and their response to crushing global competition. Their fate also resides with their quasi-independant supplier Delphi.

The GM union model for cars in my opinion is just not competitive and will to one degree or another go away. Stay tuned...

You might just make money on GM stock and you might just lose it all. It doesn't really seem like investing so much as it seems like speculating.
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Re: Shorting GM stock?
Old 04-17-2006, 11:24 AM   #3
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Re: Shorting GM stock?

The loss on selling GM/GMAC bonds last year (and that's before they seriously tanked) zeroed out about half the dividend income from taxable accounts--ouch* Saved a bit on taxes, though. Think I'll steer clear of individual corporate bonds for a while--once burned, twice shy.
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Re: Shorting GM stock?
Old 04-17-2006, 01:32 PM   #4
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Re: Shorting GM stock?

Quit talking about my pole.

Last I heard, GM hadnt divested all of GMAC, just a portion and it was under so many qualifiers that they might get the whole thing handed back to them at any failure of those qualifiers. And its all supposed to "come back" to them if they meet certain restructuring goals. The whole intent was to temporarily raise capital for restructuring costs and boost the credit rating for GMAC so they could get better credit terms...separate from the main GM "wreck".

After seeing their car guys (and ford) insisting that americans still want bigger SUV's and hybrids that are more focused on horsepower than gas mileage...either these guys are idiots or their customers are. Couple with the apparently inept management and it doesnt look that hot.

On the other hand, chrysler looked pretty awful 25 years ago...
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Re: Shorting GM stock?
Old 04-17-2006, 01:37 PM   #5
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Re: Shorting GM stock?

Quote:
Originally Posted by Nords
Now I'm beginning to wonder if it's worth shorting.*

Jim Jubak on GM

Looks like I need to take a look at the short ratio... I hate having to make payments in lieu of dividends but this one seems pretty tempting.
Lots of risk in them thar hills.

Ha
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Re: Shorting GM stock?
Old 04-17-2006, 02:56 PM   #6
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Re: Shorting GM stock?

I am a GMAC Demand Notes holder and received a letter from GMAC today. I opened my account about 10 years ago, knowing it was not FDIC insured. It has always paid more than regular Money Market accounts (currently paying 6%).

Since the GM problem have been widely reported lately, I only have a small amount of money lef in my account. While I miss getting the good interest payments, I'm not willing to lose much if their problems do not correct.

I got a nice letter from GMAC yesterday, explaining about their 'difinitive agreement' to sell 51% of GMAC to generate approx $14 Billion in cash over 3 years. Apparently they are concerned about their Deman Notes accounts, though they show their 'excitement about the future changes'.

Definite propaganda letter. It certainly didn't make me feel any better about having any money in my Demand Note account... They must be more worried than I realized.
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