Comments on: Why GM Is Not Zero

By: Joe

Joe — Thu, 04 Jun 2009 20:26:53 +0000

How will the preferred stock – hgm( senior notes) be treated in
Bankruptcy? Does the normal laws of bankruptcy remain
with the governments intervention? What are the assets in
China worth? How can the union get new preferred stock that
pays 9% and the bondholders ($28Billion )get nothing?

By: Manshu

Manshu — Sat, 30 May 2009 22:56:44 +0000

@Matt,

I am not aware of a way that the equity can resurrect itself now. but someone is still buying Call options so may be there is something that the market knows that we don’t.

By: Matt SF

Matt SF — Sat, 30 May 2009 21:07:41 +0000

I think a lot of people have been asking this question, but this helps explain some of the confusion. I would imagine being dropped from the Dow Jones index funds/ETFs and the S&P 500 index funds/ETFs will be the final coffin nail. Plus, GM is likely in several other ETFs as well.

But I’m curious, is there any way the common equity GM stock can resurrect itself? I wrote up a post several months ago about GM’s Preferred stock (GPM) that has been popular lately considering the bankruptcy fallout.

By: Manshu

Manshu — Sat, 30 May 2009 20:43:25 +0000

Yeah Will, I found it curious too. I wonder if they should change the rules to allow them to sell the stock in such a situation. Because now the stock won’t be worth anythign when they try to sell. No one would want to buy it.

By: Will Luxing

Will Luxing — Sat, 30 May 2009 04:47:01 +0000

That is an extremely interesting find. I myself was wondering why the GM stock was still being valued at around 70-80 cents per share. That’s a good fact to know, seeing as some less wary, inexperienced investors might assume the company had not in fact gone bankrupt, and maybe (just maybe) they could have made the terrible mistake of trying to cash in on a so called “blue chip penny stock.”