GM Bankruptcy Thread

Quote from bighog:

Gm will survive. They are just being downgraded by GS this last week because they need to retool and suffer through the lack of gunboat gas sucking SUV's and pickemup truck sales.

Roger Smith, GM CEO at the time (going back a few years ) once said: The auto business is a cash burning business when sales are down regardless of the reason, but when hitting on all cylinders in right conditions the auto business generates more cash than any business out there.

GM caused many of own problems by being SLOW on the gas pedel to see the changes and dependent on the overpriced gas hogs. Typical for American companies to put profits before brains.

GM can burn through a BILLION or more a month before they get it right. Plants, grunt workers, engineers, design staff, etc, etc.

Who besides me will be a buyer around 9.00 a share? This would not be a trade, it would be a hold. Should i/have i put in order at $9.25 to be a step ahead of the crowd?

Chrysler will be toast unless as banjo said either it or Ford gets bought out by a Chinese company. I would not bet a dime on Chrysler, Ford as a Chinese buyer can produce a Ford Cherry. :)
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why buy the common stock when they will have to raise cash and will probally dilute there stock? u can buy the bonds that trade on the NYSE par is $25 and u can buy the bonds for $12 and yield over 14%. the only way u loose money is bankruptcy and even then you will be first in line to get your money back. if they turn themselves around your gonna get the bonds going from $12 to $18 bucks and 14% yield.
 
Quote from gwac:

Merge the 3 automakers, only way to have a american automaker left. If all 3 remain separate they will all go down.
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Ouch. I'm going to feel for those who lose their jobs because of such a transition.
 
Quote from KeithOmalley:

why buy the common stock when they will have to raise cash and will probally dilute there stock? u can buy the bonds that trade on the NYSE par is $25 and u can buy the bonds for $12 and yield over 14%. the only way u loose money is bankruptcy and even then you will be first in line to get your money back. if they turn themselves around your gonna get the bonds going from $12 to $18 bucks and 14% yield.
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It's interesting how the bonds trade like that. If you were to gamble on GM, I don't understand why anyone would own the stock over the bonds.

If GM raises capital, it's good for the bonds, bad for the stock.
If GM cuts div., good for bonds, bad for stock.
When GM goes bankrupt, bonds paid first, stock paid last and will never see a dime.
If GM somehow gets billion dollar bailout and goes profitable, bonds are going to head back up to par. The rise should be quicker than any stock appreciation.

It's nearly a perfect arbitrage to short the stock, buy the bonds, and just leech on the interest until it's near death.

Please correct me if I've made a terrible mistake here.
 
why would you short GM down here? that doesn't seem like it would lessen risk in this situation. i would just look to buy the senior debt like barron's suggested.
 
Quote from KeithOmalley:

why buy the common stock when they will have to raise cash and will probally dilute there stock? u can buy the bonds that trade on the NYSE par is $25 and u can buy the bonds for $12 and yield over 14%. the only way u loose money is bankruptcy and even then you will be first in line to get your money back. if they turn themselves around your gonna get the bonds going from $12 to $18 bucks and 14% yield.
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do you know where you can find a list of all the gm senior debt stock symbols?
 
The 3 bloated companies that sell the same kind of cars and trucks need be trimmed to 1 strong car company that can compete.

Tough times need tough changes.

Quote from AWill:

Ouch. I'm going to feel for those who lose their jobs because of such a transition.
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Quote from Mr Pain:

Put German cars in there too. They are great to drive but have big problems after the warrantees goes. I would take a Mercedes from the 80s any day but wouldn’t touch a BMW, Mercedes, Audi or VW built in the last 7 years.
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Yes I have seen some pretty sad reliability reports on both Mercedes and BMW. VW's with the exception of very few are made in by Tijuana, Mexico for the last several years, no thanks. VW owns Audi, and Lamborghini too. FWIW, for the money Kia and Hyundai are quite good IMO, if you just want a basic car. They are the Toyota of 30 years ago.
 
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