"thebigbossyboss" (thebigbossyboss)
09/12/2013 at 10:32 • Filed to: General Motors
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"thebigbossyboss" (thebigbossyboss)
09/12/2013 at 10:32 • Filed to: General Motors | 2
| 7 |
The government of Canada, has decided that the time has come to offload some GM stock that it got in exchange for helping with the bailout. In an unregistered block trade, (whatever that means) the government sold some 30,000,000 common shares leaving Canada with 110,084,746 common shares and 16,101,195 shares of GM series A preferred stock. No word yet if the taxpayers profited or lost out.
!!!error: Indecipherable SUB-paragraph formatting!!!
My opinion on the sale can be summed up as "Good".
Joe_Limon
> thebigbossyboss
09/12/2013 at 10:36 |
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Hmmm... to calculate whether it's good for the tax payers, they must subtract the purchase price from the selling price, if the remainder is negative, take that, and divide it by the amount of taxes GM annually pays the Canadian government to find out how long it will take to get back to the state where, if they didn't get the bailout and went under they wouldn't have paid any taxes.
eggowarehouseTOO
> thebigbossyboss
09/12/2013 at 10:37 |
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Block trades are "blocks" of the stock, not necessarily tranched, but divided in large quantities. Because selling 30MM shares would heavily dilute the market and destroy GM stock price, they divvy up those shares individually and privately sell off to prop traders at larger banks and hedge funds.
"Good" I would agree with entirely.
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thebigbossyboss
> eggowarehouseTOO
09/12/2013 at 10:44 |
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So bascially what they are saying is they just concluded, several if not many, smaller trades which in total involved 30M stock?
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eggowarehouseTOO
> thebigbossyboss
09/12/2013 at 10:59 |
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Yeah, it's a fairly common practice in order to not negatively impact the firm you are selling out of. If they released 30 million shares at one time, GM's total stock price would plummet catastrophically (it'd make some interesting graphs, at least).
You rarely see the converse, however, when someone BUYS a ton of shares of a stock. Buffet, in his $5BN buy of BAC a few years back brokered his own negotiation in stock price (I believe a little over $7, when market price was in the high $7's or low $8's). This drove Bank of America's stock up something like 30% the day after, when many people decided to jump on the train (Buffet, meanwhile, pocketed a little over $1 billion in the course of 16 hours).
Because the Canadian government has a civic duty not to let the price drop, they need to go through these outlets in order to sell. The buyers, however, have the benefit of getting discounts based on quantity under what the market rate is of the stock.
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eggowarehouseTOO
> Joe_Limon
09/12/2013 at 11:03 |
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At this point, I think it's safe for the government to call it a write-off. Sure, they got the shares below market rate, but I'm sure they're also selling privately below market rate in order to effectively broker all 30 million shares. Couple that with the fact that they've only leveraged < 1/4 of their position with GM, and there's still a lot of money left on the table.
But if I had some spare time today, it'd actually be fun to take a look at those numbers.
Victorious Secret
> thebigbossyboss
09/12/2013 at 11:11 |
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Its a write off.
Our write off.
A tax payer writeoff.
Waste of money? Yes.
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thebigbossyboss
> Victorious Secret
09/12/2013 at 19:09 |
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Oh I agree, I am just happy they are selling at least some of it. They should have none of it.