Making Money Job

Posted by adgag adgadgvadgv on Saturday, November 27, 2010


OK, so there’s this Democratic president who’s really good on spending. Meaning, he does it a lot. Among the most ever, in fact.


For more than 18 months he spent like there was no midterm.


He authorized the government takeover of a car company. When in doubt — or not — get the government involved. Something about saving jobs, union jobs.


But now the government’s getting out by selling stock. And it looks to be making money. Which is an unknown thing in government but in private business usually involves getting back more money than was put it. It’s called a profit. He couldn’t bring himself to say the word. But that’s what it is, a profit for taxpayers.


So do you think that profit will be returned to taxpaying shareholders whose money saved the day?


Here’s how that president put it:


THE PRESIDENT:  Hello, everybody. Good afternoon. Today, one of the toughest tales of the recession took another big step towards becoming a success story.


General Motors relaunched itself as a public company, cutting the government’s stake in the company by nearly half. What’s more, American taxpayers are now positioned to recover more than my administration invested in GM.


And that’s a very good thing. Last year, we told GM’s management and workers that if they made the tough decisions necessary to make themselves more competitive in the 21st century — decisions requiring real leadership, fresh thinking and also some shared sacrifice –- then we would stand by them.


And because they did, the American auto industry -– an industry that’s been the proud symbol of America’s manufacturing might for a century; an industry that helped to build our middle class -– is once again on the rise.


Our automakers are in the midst of their strongest period of job growth in more than a decade. Since GM and Chrysler emerged from bankruptcy, the industry has created more than 75,000 new jobs. For the first time in six years, Ford, GM and Chrysler are all operating at a profit.


In fact, last week, GM announced its best quarter in over 11 years. And most importantly, American workers are back at the assembly line manufacturing the high-quality, fuel-efficient, American-made cars of tomorrow, capable of going toe to toe with any other manufacturer in the world.


Just two years ago, this seemed impossible. In fact, there were plenty of doubters and naysayers who said it couldn’t be done, who were prepared to throw in the towel and read the American auto industry last rites.


Independent estimates suggested, however, that had we taken that step, had we given up, we would have lost more than 1 million jobs across all 50 states. It would have also resulted in economic chaos, devastating communities across the country and costing governments tens of billions of dollars in additional social safety net benefits and lost revenue. 


That wasn’t an acceptable option –- to throw up our hands and to quit. That’s not what we do. This is a country of optimistic and determined people who don’t give up when times are tough. We do what’s necessary to move forward.


So these last two years haven’t been easy on anybody. They haven’t been without pain or sacrifice, as the tough restructuring of GM reminds us.


And obviously we’ve still got a long road ahead and a lot of work to do -– to rebuild this economy, to put people back to work, to make America more competitive for the future and to secure the American Dream for our children and our grandchildren.


But we are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off. And I’m absolutely confident that we’re going to keep on making progress. I believe we’re going to get through this tougher and stronger than we were before.  Because just as I had faith in the ability of our autoworkers to persevere and succeed, I have faith in the American people’s ability to persevere and succeed. And I have faith that America’s best days and America’s — and American manufacturing’s best days are still ahead of us.


Finally, I just want to embarrass a couple of people. Ron Bloom and Brian Deese are key members of the team that helped to engineer this rescue of GM and Chrysler. So it had not been for these two gentlemen, a whole lot of people might be out of work right now. We are very proud of them and I figured that I’d go ahead — you can see they’re all looking sheepish — point them out to you. So thank you very much, everybody.


(Malcolm is the Top of the Ticket blogger at latimes.com/ticket )


Update (AP): Here’s the clip. The good news? We’ve only lost $4.5 billion on share sales thus far.


Visit msnbc.com for breaking news, world news, and news about the economy








by James Bianco

Bianco Research

November 18, 2010


>


The Wall Street Journal – GM Stock Sale in High Gear

General Motors Co. is on pace to sell $18.1 billion in shares in what likely will be the second-largest U.S. initial public offering ever, capping a remarkable two-year turnaround in which the car maker went from begging for a government bailout to posting its first steady profits in more than six years. GM sold about 478 million shares Wednesday at $33 each, a price higher than the company and its bankers thought was possible just days ago. An additional 71.7 million shares are expected to be sold by GM’s bankers as part of an “overallotment” allowed when sales are stronger than expected. And it sold $4.35 billion in preferred shares…The proceeds will help pay back the U.S. government for the $49.5 billion it spent on its controversial rescue of GM, which has gone from losing billions of dollars a year to making $4.07 billion so far in 2010…The U.S. Treasury will cut its ownership stake in GM to about 26% from 61% through the stock sale, including the overallotments. That could ease the “Government Motors” taint that had turned off some car shoppers as well as potential GM investors…Investors and analysts watch for the size of the first-day “pop” of an IPO. If the shares rise more than the usual 10% to 20%, some observers may say GM and the U.S. charged too little and left money on the table. If the shares falter, it will mean some investors still question GM’s future.


Comment:


The job of the seller in an IPO is to receive as high a price as possible. The job of the buyer is to receive as low a price as possible. Who does a better job?


See the table below. It shows the Conrail IPO (then a record size) and the 10 largest deals done since then. Many of the largest IPOs were done right before a market peak and just as the market was coming under stress (rushed out?). The average return of the S&P 500 over the 6 months following these blockbuster IPOs is -2.41.


The table below suggests that the sellers of the largest IPOs are often excellent market timers. The majority of the time the S&P 500 is lower 6 months later.


<Click on table for larger image>



Similarly, as the monthly chart of IPO flows shows below, when IPO volume peaks, the market often struggles over the next 6 months. Again, if you’re the seller and doing your job correctly, this is what you want.


<Click on table for larger image>



Academic studies of M&A deals show that the seller often gets the better deal even though the buyer gets all the positive press and accolades. The same appears to be true of IPOs.


How well did Tim Geithner do his job? If he received as good a price as possible, then the market should be near or at a peak. If the bull market is still intact GM has further upside, then he did not do as good a job.


Trading started yesterday morning.



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OK, so there’s this Democratic president who’s really good on spending. Meaning, he does it a lot. Among the most ever, in fact.


For more than 18 months he spent like there was no midterm.


He authorized the government takeover of a car company. When in doubt — or not — get the government involved. Something about saving jobs, union jobs.


But now the government’s getting out by selling stock. And it looks to be making money. Which is an unknown thing in government but in private business usually involves getting back more money than was put it. It’s called a profit. He couldn’t bring himself to say the word. But that’s what it is, a profit for taxpayers.


So do you think that profit will be returned to taxpaying shareholders whose money saved the day?


Here’s how that president put it:


THE PRESIDENT:  Hello, everybody. Good afternoon. Today, one of the toughest tales of the recession took another big step towards becoming a success story.


General Motors relaunched itself as a public company, cutting the government’s stake in the company by nearly half. What’s more, American taxpayers are now positioned to recover more than my administration invested in GM.


And that’s a very good thing. Last year, we told GM’s management and workers that if they made the tough decisions necessary to make themselves more competitive in the 21st century — decisions requiring real leadership, fresh thinking and also some shared sacrifice –- then we would stand by them.


And because they did, the American auto industry -– an industry that’s been the proud symbol of America’s manufacturing might for a century; an industry that helped to build our middle class -– is once again on the rise.


Our automakers are in the midst of their strongest period of job growth in more than a decade. Since GM and Chrysler emerged from bankruptcy, the industry has created more than 75,000 new jobs. For the first time in six years, Ford, GM and Chrysler are all operating at a profit.


In fact, last week, GM announced its best quarter in over 11 years. And most importantly, American workers are back at the assembly line manufacturing the high-quality, fuel-efficient, American-made cars of tomorrow, capable of going toe to toe with any other manufacturer in the world.


Just two years ago, this seemed impossible. In fact, there were plenty of doubters and naysayers who said it couldn’t be done, who were prepared to throw in the towel and read the American auto industry last rites.


Independent estimates suggested, however, that had we taken that step, had we given up, we would have lost more than 1 million jobs across all 50 states. It would have also resulted in economic chaos, devastating communities across the country and costing governments tens of billions of dollars in additional social safety net benefits and lost revenue. 


That wasn’t an acceptable option –- to throw up our hands and to quit. That’s not what we do. This is a country of optimistic and determined people who don’t give up when times are tough. We do what’s necessary to move forward.


So these last two years haven’t been easy on anybody. They haven’t been without pain or sacrifice, as the tough restructuring of GM reminds us.


And obviously we’ve still got a long road ahead and a lot of work to do -– to rebuild this economy, to put people back to work, to make America more competitive for the future and to secure the American Dream for our children and our grandchildren.


But we are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off. And I’m absolutely confident that we’re going to keep on making progress. I believe we’re going to get through this tougher and stronger than we were before.  Because just as I had faith in the ability of our autoworkers to persevere and succeed, I have faith in the American people’s ability to persevere and succeed. And I have faith that America’s best days and America’s — and American manufacturing’s best days are still ahead of us.


Finally, I just want to embarrass a couple of people. Ron Bloom and Brian Deese are key members of the team that helped to engineer this rescue of GM and Chrysler. So it had not been for these two gentlemen, a whole lot of people might be out of work right now. We are very proud of them and I figured that I’d go ahead — you can see they’re all looking sheepish — point them out to you. So thank you very much, everybody.


(Malcolm is the Top of the Ticket blogger at latimes.com/ticket )


Update (AP): Here’s the clip. The good news? We’ve only lost $4.5 billion on share sales thus far.


Visit msnbc.com for breaking news, world news, and news about the economy








by James Bianco

Bianco Research

November 18, 2010


>


The Wall Street Journal – GM Stock Sale in High Gear

General Motors Co. is on pace to sell $18.1 billion in shares in what likely will be the second-largest U.S. initial public offering ever, capping a remarkable two-year turnaround in which the car maker went from begging for a government bailout to posting its first steady profits in more than six years. GM sold about 478 million shares Wednesday at $33 each, a price higher than the company and its bankers thought was possible just days ago. An additional 71.7 million shares are expected to be sold by GM’s bankers as part of an “overallotment” allowed when sales are stronger than expected. And it sold $4.35 billion in preferred shares…The proceeds will help pay back the U.S. government for the $49.5 billion it spent on its controversial rescue of GM, which has gone from losing billions of dollars a year to making $4.07 billion so far in 2010…The U.S. Treasury will cut its ownership stake in GM to about 26% from 61% through the stock sale, including the overallotments. That could ease the “Government Motors” taint that had turned off some car shoppers as well as potential GM investors…Investors and analysts watch for the size of the first-day “pop” of an IPO. If the shares rise more than the usual 10% to 20%, some observers may say GM and the U.S. charged too little and left money on the table. If the shares falter, it will mean some investors still question GM’s future.


Comment:


The job of the seller in an IPO is to receive as high a price as possible. The job of the buyer is to receive as low a price as possible. Who does a better job?


See the table below. It shows the Conrail IPO (then a record size) and the 10 largest deals done since then. Many of the largest IPOs were done right before a market peak and just as the market was coming under stress (rushed out?). The average return of the S&P 500 over the 6 months following these blockbuster IPOs is -2.41.


The table below suggests that the sellers of the largest IPOs are often excellent market timers. The majority of the time the S&P 500 is lower 6 months later.


<Click on table for larger image>



Similarly, as the monthly chart of IPO flows shows below, when IPO volume peaks, the market often struggles over the next 6 months. Again, if you’re the seller and doing your job correctly, this is what you want.


<Click on table for larger image>



Academic studies of M&A deals show that the seller often gets the better deal even though the buyer gets all the positive press and accolades. The same appears to be true of IPOs.


How well did Tim Geithner do his job? If he received as good a price as possible, then the market should be near or at a peak. If the bull market is still intact GM has further upside, then he did not do as good a job.


Trading started yesterday morning.



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