Obama Supporters Should Snap Up GM Stock

November/07/2010 16:43PM
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All you folks out there who aren’t suffering buyer’s remorse over Obama, here’s a big opportunity. GM will go public with their IPO. You folks, who still get a tingle down your leg when you hear Obama speak, it’s a chance of a lifetime. Obama can make you rich. Jump in and buy that GM stock. With Obama running the company, how can it fail?

Here’s the upside. GM says it will return another $2.1 billion of the $50 billion in bailout funds from your tax dollars. GM will buy back 83.9 million preferred shares owned by the U.S. Treasury. It will pay $2.8 billion to reduce the amount it owes to a trust fund for health care for retired workers. After the IPO it plans to contribute $4 billion in cash and $2 billion in stock to employee pension funds. There goes $10.9 billion, but GM will be left with $24 billion in liquidity.

After a new lower cost union contract, some strong-selling models and more demand, GM reported a $2.2 billion profits for this year’s first quarter. Sales are up 6.8% for the first nine months of the year. How can you go wrong? Obama makes Iaccoca look like a piker when it comes to turning around a sick car company.

There is some downside, however. A little matter of $27 billion in outstanding pension obligations. Opel isn’t doing well in Europe. But, here’s the kicker. Sales are up 6.8% for nine months of 2010. It’s because of sales to rental car companies and fleet sales. Sales to individuals are down 2%.

Here’s the real kicker. Obama doesn’t feel making cars that consumers want to buy is a big deal. GM has big holes in the line up. No new generation of full-size pickups and SUVs. But, they have the Volt, the car Obama knows will save the company.

Since most of you Obama supporters are avowed supporters of electric cars, a fundamentally bad idea, here’s your chance. Buy that GM stock.

For the rest of us who believe Americans will continue to buy trucks and SUVs, don’t buy a share. There are only so many outdated cars and trucks you can sell to car rental companies and fleets at deep discounts. If you don’t have the right products, you won’t survive.

Let’s see how this plays out.

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