GM Shareholders: The next bailout?

If you were one of the insiders who bought GM’s stock on the day of the IPO for $33 and change, and you’re still holding it, guess what?

You’re under water.

More realistically, if you’re one of the first day fat cats, you flipped the IPO stock … maybe for as much as $39 … you made some quick money.

But, those suckers who bought your flip?

Well, they’re way under water.

Last week, the stock was trading at its life time low … under $32. It’s still there.

Some traders are shorting the the stock, looking for a near-complete collapse.

Here’s an analysis from one of the shorts – Jonathon Hoenig of The Capitalist Pig and WSJ’s Smart Money …

GM recently announced a $4.7 billion profit , its biggest in a decade. Some 45,000 union workers will receive profit-sharing payments averaging $4,300 – a record.

And on that very same day, shares of the company slid below their IPO price of $33 for the first time, a vitally important fact overlooked by most of the enthusiastic media reports.

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If there was ever a stock that makes people emotional , it’s General Motors. Either the company is the backbone of the American working man or the poster child for bad business practices.

That emotion, of course, is only exacerbated by the fact that GM received a $50 billion bailout from the Federal Government, an intervention that left taxpayers the largest shareholders, still owning 26.5% of an extremely weak stock. For the government to break even, shares will have to hit an estimated $53 – up 64% from current prices.

And not all of GM’s headlines have been as rosy as its recent profit announcement. The company sold just 281 Chevy Volt hybrids in February.

Despite its recent rebirth, this is a quintessential ” old soldier ” stock, heavy with the overhang of public ownership and beset with wasteful political influence .

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