General Motors $26.8 Billion Cash Stockpile May Reportedly Attract The Wrong Kind Of Investors18
General Motors will be a susceptible target for activist investors if the automaker does not return money to shareholders from its “fortress balance sheet”, according to a report from BusinessWeek. For those not immediately versed in investment lingo, an activist investor is an individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change in the company.
The U.S. Treasury Department has plans to sell its remaining shares in GM and the automaker also plans to convert its Series B preferred stock into common stock before the end of the year. The former could possibly drive activist investors to push GM into paying shareholders with its $26.8 billion cash pile through a dividend or stock buyback.
“Any company that isn’t efficient about capital allocation is a target for activists,” said Harry J. Wilson, a member of the U.S. auto task force that helped restructure GM amid its bankruptcy in 2009, to Autoweek. “GM has a huge cash hoard and they are generating lots more cash each year, so they need to be thoughtful about that.”
A push from investors to hand out some of its cash to shareholders could put a damper on CEO Dan Akerson’s plan of continuing to invest in future product and buying up desired shares left from the bankruptcy.
GM spokesman David Romas told BW in an emailed statement that the company is planning to pay the shareholders back without activist investor interference, while also maintaining its fortress balance sheet (its cash stockpile) and investing in the future.
“We expect to continue to reinvest in the business, maintain our fortress balance sheet and return cash to shareholders.” Said Romas.
According to BW, GM may make an announcement on its plans regarding some kind of a shareholder dividend in the beginning of 2014, though activist investors could step in if a decision is not made soon enough.
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Let them buy away cuz then my GM stock just keeps going up and up!
GM could have reduced the prices of it’s cars and not have this problem. 😎
Love the sarcasm. Smaller profits = less cash in the bank. How would investors like them apples? 🙂
Another dumb idea! So GM is suppose to give the money that’s in reserve, for future bad time, to investors. That’s the kind of mentality with people who gets in trouble with charge cards have. Get real!!
What does the sale price of a car have to do with this?
Having extra money is a good thing
Perhaps they could top up the GM Canada, Salaried Employee pension fund, just saying.
That would be a “moral” thing to do. Oh, wait. GM morals? LOL
The people in Canada should just be happy they have cars to build! Making a profit and making the best cars and trucks possible!
Pensioners in any country with no pension income don’t buy cars period. BTW, why do you have such caustic attitude? Just curious.
Probably his comment was in answer to your morals content. Those of us who work there, or did work there, probably do not like someone saying we have no morals. Companies are run by people. People make the decisions.
And we all know that GM needs to make money to fund all our pensions. And as far as I know, even thru bankruptcy, not one GM pensioner had missed their pension check.
“Activist investors”… interesting.
Just yesterday, they were “vulture capitalist”.
If GM doesn’t build a high enough firewall… Tomorrow, they will be, what they really are… “legalized thieves.”
How about Ford whose gone for a free ride? They got free money….money they did not have to return. They also got a loan which they have not paid back a penny of it.
From what I see Ford is the one that’s robbing the people, and being very hypocritical about it.
FYI: I worked there also, and contributed to my pension. At present the Canadian Salaried Pensioners Fund is underfunded, unlike the USA version. If you worked there and always dealt with high moral personnel you were fortunate. In my
career it seemed there were always a few with tainted or low morals. The unclassified personnel who have decided to let the pension fund become underfunded have no morals because they always get their piece of the pie. I have a letter from GM advising me of this shortfall.
I just feel this extra cash would certainly show good faith for all the salaried pensioners
who’s pensions were part of their earned wages.
Ask yourself this q’s if I was not putting cars together for GM what would I be doing in Canada?
Yea not much! When you think of Canada industry doesn’t come to mind!
Be thankful GM allows you to work for them, those cars could be built in the us or Mexico!
Smart move to hoard the cash. This fantasy economy, stock market bubble and national debt ponzi will all be revealed for what they really are at some point in the near future. For the first time in recent memory GM’s economists are actually NOT asleep at the wheel.
Ford took money but people don’t want to talk about this
The money should be returned to The U.S. Taxpayers!