Don't Be Fooled by ObamaMotors IPO

ObamamMotors has filed paperwork to issue stock in an IPO. This is purely a political move by the Democrats to be able to claim that taking over the car industry was a good thing.

General Motors Co. filed Wednesday for a long-awaited public offering that will take its place among the biggest IPOs in history, and set the stage for the U.S. government to exit the car business.

The company did not specify the amount of shares or a price range, but did say the offering will include common and preferred stock. GM also said there will be 500 million shares outstanding following the offering.

The stock will be listed on the New York and Toronto stock exchanges and will be traded under the symbol "GM," the same one used before its bankruptcy.

GM said it won't be paying a dividend on the common shares. The company is reportedly looking to raise up to $16 billion, with the U.S. Treasury selling some of its holdings.

For taxpayers to fully get their money back, the public offering likely has to bring in about $70 billion.

The Treasury said following the filing that it has agreed to be named as a selling shareholder of the common stock.

The department also said it will retain the right, at all times, to decide whether and a what level to participate in the offering.

The Obama administration spent about $60 billion, in addition to the billions paid by the prior administration, to bail out GM and rival Chrysler last year as both were careening toward their demise. Ford Motor Co. avoided the lifeline.

The Treasury currently holds a 61% stake in GM as well as $2.1 billion of Series A preferred stock after having invested about $50 billion to keep it afloat. The Detroit giant repaid almost $7 billion in loans this year.

The proposed offering will not include the Treasury's preferred shares.

Notice the Treasury is reserving the right to decide at what level it
might participate in the offering. That means they might still buy the new stock and hold on to ownership shares. There is a good chance that nothing is changing except the illusion of private ownership, but prepare for nonstop pre-election spinning by the MSM that the nationalization of the car companies was a great idea. The unions certainly benefited and likely will again.

The IPO will need to generate about $70 billion of private investment in order for you the taxpayer to be repaid in this deal. Don't hold your breath anything like that will be realized. Early indications are that the only interested investors at this point are high risk hedge funds and the like. The average investor on the street is walking away from this deal like a roadkill skunk on a hot summer day.

I wouldn't own the stock if they gave it to me; I'd dump it immediately. I have seen nothing to convince me that GM has learned how to make a high-quality vehicle at a reasonable price. That means that they will continue to have problems selling their product going forward and thus will have enormous problems making a profit.