Home » Behavioural Investing » General Motors Sucker Play or Escape from Socialism $GM $F

General Motors Sucker Play or Escape from Socialism $GM $F

General Motors (NYSE:GM) popped nicely because the US Government is reducing its stake. Good for US tax payers but the US Treasury will not really notice; it’s that bad in DC.

But we all knew this was going to happen so why the excitement? Underlying fundamentals have not changed in the car business. The jail break from socialism was planned for some time. So what’s the fuss about?

Share buy backs are a favourite financial engineering tactic to manipulate EPS manufacturing perceptions of earnings growth. GM can really ramp it up now.

Dividends are anemic make that non-existent. By declaring dividends GM will create a class of buy and hold investors which will help stiffen the price.

The short sale position is about 8% of float. That’s getting rather bullish and it was time to sting them. Corporate managements as you know love short sellers.

Share price represents the future value of earnings. Nothing new has transpired; especially on a fundamental basis. The furniture has been re-arranged in a more modern motif.

George Gutowski writes from a Caveat Emptor Perspective.

 

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