Professor Elam

Friday August 17, 2012

The GM CEO is following Alan Mullaly's lead at Ford trying to establish a Global Organization.

 Now from The Market Perspective.com

THis article on GM this afternoon  cannot figure out why the volume jumped to 12 million from a normal 7 million, no particular news. Well duh guys, GM has $20 bucks a share in cash so one is buying the entire company essentially for free. They have enough tax credits to avoid paying any federal taxes for years. GM trades for a paltry 6 times earnings, Toyota has a P/E three times that. If GM traded at the same P/E as Toyota, it would be a $59. stock. This is an election year, the US government owns millions of shares, Obama touts the bailout as a a great example of helping the average worker. We aren't conspiracy theorists here but gee, imagine how a huge rally in GM would be a centerpiece of Obama's compassionate government intervention at just exactly the right time in the campaign in contrast to Romney's let go bust and the creditors pick up the pieces theory. Don't count that scenario out, Wall Street would gladly bid up the price if everyone is in on this game to move the price sharply higher. I grant that is sheer speculation on my part, but not far fetched speculation. A return to $34-36, the price GM came public in 2011 would only require a 10x P/E. Again this is sheer speculation but something is up. Note the triple bottom formation, it seems reasonable that all the sellers are out of GM. GM dropped from 32 to 20 in three months last year, could it advance that fast. Okay we do not normally engage in such rampant specuation but we will know in 85 days if this theory has anything to it. I am long 700 shares.

GM