General Motors returns to the New York Stock Exchange for the first time since filing for bankruptcy 18 months ago. Today marks the start of a turnaround for the 102-year-old automaker. The return of General Motors shares were met with cheers and smiles on the floor, but not everyone is celebrating. Ed Butowsky, of Chapwood Capital Investment Management, joined Varney & Co. this morning to pour some cold water on the GM optimism party.
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“They should keep some of that confetti for when all of the taxpayers are paid back,” said Butowsky. “When we get all the money back from the government, and I think it’s between $13 and $15 billion, when that happens, then we can release all the confetti. But until then, let’s not be so excited.”
Since being rescued last year with a $50 billion infusion from the taxpayers, investors are showing signs of support. In response to high demand, GM raised its initial public offering from $29 to $33, and increased the number of common shares offered from 365 million to 478 million.
The IPO boost is good news for taxpayers, but even with the increase, GM’s value is below what the government needs to recover the whole bailout. “We have to get to around $53 per share for you and I and all the other taxpayers who bailed this company out to get paid back,” said Butowsky.
General Motors has a long road ahead, but the automaker is taking steps in the right direction. The return of GM to the NYSE signaled the rebirth of an American Corporate icon. “Right now this is nice. We now have a mechanism to get the money back to the shareholders,” said Butowsky.