After selling roughly $877 million worth of General Motors stock in July, the U.S. Treasury continued to wind down its stake in the company in August, selling around $811 million of common stock, according to The Detroit Free Press . It’s estimated that around 25 million shares were sold this time around, though the Treasury has yet to confirm the selling price. It’s estimated that the government still holds roughly 186 million shares.
This means that about Uncle Sam has recovered $35.4 billion of the $49.5 billion it put into the company, or at a loss of $14.1 billion.
Comments
Query: Is it really a “loss” just yet as they still hold 186M shares which has a value of about $6 billion ? If they sold that right now, then the “net loss” would ‘only’ be about $8.1 billion.
It is a tough phrasing because it isn’t technically a “debt” nor is it actually “owed”. Perhaps the word “balance” would be appropriate when describing the $14.1 billion at this time.
Perhaps, in the future, phrasing like this might be a tad clearer :
“This means that about Uncle Sam has recovered $35.4 billion of the $49.5 billion it put into the company leaving a balance of approximately $14.1 billion. Considering if the currently held shares were sold at a similar value of $32.44 per share, generating approximately $6 billion, the net loss would be approximately $8.1 billion.”
Also, i’ve wondered if anyone suggested the possibility that GM could still pay the that remaining $8.1 billion to get “Government Motors” monkey off their back ?
Thumper, I agree. The problem is how one interprets that loss. Right now that actual loss is not realized yet, just estimated. Who knows what the actual loss will be, but I don’t think it will be as high as $14.1 billion due to the fact of recent monthly (and likely) continued high sales. Shares have been slowly climbing since July of last year when it was roughly $18 a share and now it about $36 a share. It all depends on when the Government sells.
That is a lot of money to just throw away for PR. Now if they bought back the stock at a higher price thsn current markrt value they could see this as an investment and make the money back when the stock goes up. Perhaps put the stock in the pension fund.