Late last Friday, GM revealed in a regulatory filing with the Securities and Exchange Commission that its employee stock fund manager, State Street Bank and Trust Co., has unloaded all company shares. According to the Associated Press (AP), “The plan’s financial manager said it began selling off shares of the Detroit automaker in late March ‘due to the economic climate and the circumstances surrounding GM’s business.'” This may help to explain the dead cat bounce GM’s stock experienced today.
Now that hundreds of thousands of shares have been dumped on the market, downward pressure has eased—at the close of Monday’s trading, GM was up nearly 21% at $2.04.
State Street said the General Motors Savings Plan now consists entirely of short-term, cash-based investments. By the end of May, the GM Common Stock Fund will be eliminated as an option for company employees, the investment manager said.
At least GM’s employees haven’t been Enroned.
So, let me get this straight, even GM doesn’t want GM stock? SO why the hell did the stock shoot up 40 cents today? Why does it have any value at all? Chapter 11 is unavoidable, which will make the stock worthless. Why is it still trading?
The stock pop was caused by GM getting it’s earnings via taxpayer theft…Taxpayers are incredibly generous and don’t expect anything in return for their hard-earned money and ALWAYS pay on time…What better “customer” to have?
seanx37
THAT is a very good question. Why would anyone buy GM stock now? Maybe they THINK that they know something that we do not.
I don’t understand how the news of Pontiac’s death and the speeding up of Hummer’s, Saab’s and Saturn’s deaths didn’t cause a freefall of the stock (and resultant delisting of it).
And when your own employee stock fund is divesting…come ON.
There’s nothing left! Game Over! General Motors (as it’s been known for the past century) is dead, a victim of burying its own head in the sand for approximately 40 years. Maybe American Leyland can save the good products…where’s that Bob Marley picture again?
The fact that the fund manager for it’s employees is dumping the stock speaks volumes. At the very least they’re better than the Enron people. But I’d guess that there’s people in GM with insider knowledge that have been letting the fund manager know that the stock is not a long term player and “get my money out of there” is the instruction.
As for the bounce today – forget about it. The stock is the toy of daytraders. Jump in, watch it move a few percent and cash in. Hey, it’s like putting it all on red and spinning the wheel. Gives the cubicle dwellers something interesting to do in the day and maybe they’ll get lucky. Same thing with Ford stock I guess, just that there’s probably some more serious investors (players) involved.
State Street Bankers aren’t supposed to have any inside knowledge – they have the same knowledge as the rest of the market. They are the custodians of the employees retirement investments and are acting in their best judgement of the market for GM stock. My guess is that they would rather get something for the stock than zero (which is what you get when bankruptcy occurs).
tced2 – in theorey I guess you’re 100% correct, but if I were in GM I’d be getting out of the stock asap. If nothing else I’d have Enron in mind….. but then I’m a suspicious SoB and belive that everyone acts in their own best interest.
Not saying you’re wrong, maybe State Street DO just have the post C11 lawsuits in mind, in which case, all credit to them, they’re honourable people and we need more like them.
@Dave, @tced2:
From the filing:
“State Street is specifically authorized to sell shares of GM common stock held in the GM Common Stock Fund if it determines that (A) there is a serious question concerning General Motors Corporation’s (“GM” or the “Company”) short–term viability as a going concern without resorting to bankruptcy proceedings; OR (B) there is no possibility in the short-term of recouping any substantial proceeds from the sale of stock in bankruptcy proceedings. State Street made the determination that this standard had been met due to the economic climate and the circumstances surrounding GM’s business.” [Emphasis mine]
I think the sell-off was triggered by the accountants’ “going forward concern” memo.
@ seanx37:
“Chapter 11 is unavoidable, which will make the stock worthless. Why is it still trading?”
Easy, investors choose stocks the way a strung out gambler chooses his number on the roulette table at 3:50 am at an off strip Vegas hotel on any given Tuesday.
The fund manager is obviously a GM employee. He waited until the stock is almost worthless to dump it!! Look at the chart!! He couldn’t have gotten out at 10? 15???
“He couldn’t have gotten out at 10? 15???”
No, because the fund manager didn’t have discretion to do so. They only had permission to sell the stock once bankruptcy was deemed nearly inevitable. See Jeff’s post above.
Damn –
The fat lady has sold all her stock.
GM is absolutely reinventing the (stock) ownership experience.
Rats leaving the ship.
The band plays on.
Lights in the club come on.
Last call for alcohol.
Take your pick of the sayings.