Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
If you have "an asset" that is losing (big) money and has very weak prospects for making big money into the near-term and even distant future-----how can you say that "asset" is worth anything?

It takes more than luck in todays business world!

Sell. Watch and see if things get to the point that they look like survival and future prosperity is a real possibility for these companies. It's NEVER too late to make a good investment.

crpurdum
Print the post Back To Top
No. of Recommendations: 1
If you have "an asset" that is losing (big) money and has very weak prospects for making big money into the near-term and even distant future-----how can you say that "asset" is worth anything?

GM is indeed by any rational book measure nearly worthless.
But as I said, if people are willing to pay $30 a share for it, that is for the time being, its current actual measure of "value".

It is not just that GM is losing money, it is the fact that GM has little chance of paying back future obligations even IF they start making money. Jedi and Milligram believe that GM will start making money.

They could be right, for a while. Ford seems to have a much bigger problem in that regard. But even with these buyouts, future obligations are still high. I can not say how high until new annual reports come out. Then we can look again.

Worse for Ford is that Ford was forced to pledge something 40% of its assets just to raise cash for those buyouts, buyouts that will not totally eliminate the problems by any means. That for Ford was 100% pure desperation. There is no other way of looking at it IMO.

MIsh
Print the post Back To Top
No. of Recommendations: 0
GM is on far, far, FAR more solid footing than Ford is right now. GM has a plan, and it APPEARS so far to be working, 4Q numbers will be proof of yes or no on that. GMT900 platform is doing just what GM throught it would and a lot better than any of naysayers said. All of the fringe divisions are showing interesting turn arounds. The Buick Lucerne is outselling the Avalon. The G6 is outselling the Grand Am and light years better than the vehicle it replaced. Can't build the Solstice fast enough and the Torrent is single handedly outselling the SV6 and Aztek combined. Cadillac completed its turn around back in 2002 and Saturn is getting even some of the biggest skeptics to go, "whoa," with the VUE Greenline, the new 2007 VUE coming, the Sky, and the Aura - which is an absolutely outstanding vehicle and a screaming bargain at $27K loaded out with the Cadillac VVT 3.6L V-6 under the hood, the Pontiac G6 panorama sunroof, and a better 6 speed semi-automatic tranny than what you get in the Cadillac CTS! Despite $3 a gallon gas the Tahoe is outselling 2005 numbers, Sierra and Silverado sales are up with the arrival of the GMT900 platform.

Ford on the other hand appears to have no plan, has largely shanked almost every single product launch they have had over the last five years and has an uninspiring car line - which is a shame because the Ford Fusion trio is not a terrible car. Ford has put their factories up as collateral as part of their bailout plan!

GM sure isn't Toyota, and I wouldn't rate GM a "buy" right now, but I sure wouldn't say dump the stock either.
Print the post Back To Top
No. of Recommendations: 0
It is not just that GM is losing money, it is the fact that GM has little chance of paying back future obligations even IF they start making money. Jedi and Milligram believe that GM will start making money.

They could be right, for a while. Ford seems to have a much bigger problem in that regard. But even with these buyouts, future obligations are still high. I can not say how high until new annual reports come out. Then we can look again.

Worse for Ford is that Ford was forced to pledge something 40% of its assets just to raise cash for those buyouts, buyouts that will not totally eliminate the problems by any means. That for Ford was 100% pure desperation. There is no other way of looking at it IMO.


I largely agree with your post - and happy to see we both have a "wait and see" view on GM when the 4Q and annual numbers come out. It will be a telling story - the only difference is you see the situation as untenable, I see GM on the brink of rebirth - but the judge/jury are not out and I suspect the truth lies somewhere between.
Print the post Back To Top
No. of Recommendations: 0
Ford on the other hand appears to have no plan, has largely shanked almost every single product launch they have had over the last five years and has an uninspiring car line - which is a shame because the Ford Fusion trio is not a terrible car. Ford has put their factories up as collateral as part of their bailout plan!

Milligram ....
Can it possibly be that we are reaching consensus?
Good god I hope so because I really do want to bury the hatchet.

That said....
It is "let's wait and see" for GM
but Ford is looking more and more hopeless all the time.

Arb players can (in equal $ amounts) buy GM and short F as a hedge assuming F is in worse shape. I am NOT recommending that trade I am pointing it out. It COULD be a stunning success.

Still, I firmly believe that GM will have its hands full (and then some) in the recession that WILL hit in 2007. IMO I think GDP is overstated an we are really there right now. Yes, I still thing GM is in deep serious trouble but I want a chance to review the annual numbers first.

I also wish Jedi the best of luck during the downturn when this all happens.

Mish
Print the post Back To Top
No. of Recommendations: 0
Thanks for the in-depth analysis, guys. Good stuff. Just curious, where do you find your info? Is it just here-n-there culling from news releases, investigative articles, insider info, etc., or do you have a one-stop shop for your data? This question would apply both to GM specifically and other companies in general. Thanks.

-Darth
Print the post Back To Top
No. of Recommendations: 1
Hey Darth, I research, read trade articles, look at GM's SEC filings, and I was doing a monthly analysis of their sales - haven't had the time to dive into the numbers the last few months.

When Ford released the new F-150 a few years ago there was a lot in the press about Ford betting the farm on the release of their top selling vehicle. The launch wasn't trouble free, although it was a vast improvement, especially in safety and comfort over the model it replaced, but they missed the boat on a few things and it hurt Ford, A LOT, and they didn't get the sales bump they were looking for.

GM on the other hand focused on the key issues when they rolled out GMT900:

a) Don't fix what isn't broken. Yes they tweaked the Vortec engines and added DoD, but they didn't do a huge rollout. GM drive trains and 4-wheel drive systems are truly world class and yes the 4-speed automatic in the Chevrolet line and some of the GMC trucks is old school, but it is bullet proof.

b) Seriously address what you have wrong. Fit and finish, interior material quality and give buyers the options they want. Seriously, go down to your Chevrolet dealer, sit in a 2006 Avalanche and a 2007 Avalanche (or Silverado, or Tahoe, or Suburban) it is NIGHT and DAY in comparision. The quality bar on fit, finish, and material quality is honestly on par with the Japanese guys, and the price points went down from the models they replaced (while true profits on each unit went up).

c) Address one of the core issues, but don't sell yourself out. Mileage on GMT900 2-wheel drive models went from 14/18 to 18/22. OK, not a HUGE improvement, but around 25% and that was done with more horsepower and no sacrifice in capability. The GMT900 hybrid Tahoe/Silverado is projected to get around 20/28 MPG - you're talking minivan mileage with stump pulling power - that is going to be cool (and about 12 months away). Also, as capacity ramps up the more efficient 6-speed automatics will make their way through the line, and should boost the mileage from 18/22 to 19/23 or so.

d) Price things realistically - instead of playing funny money rebate games. Yes, rebates are back but largely competitive to address what everyone else is doing, yes, even the Japanese guys - who have some pretty deep rebates on their trucks.

The end results SO FAR. Only the Tahoe was sold from January of 2006 so if you look at year-over-year data, Tahoe sales are up almost 6% for the year. In the land of $3 a gallon gas - that's a major accomplishment. All other vehicles are trending upward, but not enough month-over-month data to say, yup, it worked. One other HUGE thing to point out. No recalls, no major quality issues, no large scale complaints and some models due to options are manufacturing constrained (tough to get the loaded out LTZ models).

GM probably bet the farm on GMT900 - and SO FAR, it appears to be working.
Print the post Back To Top
No. of Recommendations: 0
Milligram,

I appreciate the time you've taken to put this info together. Sounds like a full-time job to me! ;-) I'll definitely stay tuned for more. Thanks again.

-Darth
Print the post Back To Top
No. of Recommendations: 0
Amazing, now Mish says "it's possible" that GM will make money in Q4. he tempers that with 'it won't last forever' but geez, I can predict snow and tell you that is temporary too.

Glad to see Mish is open to the possibility of profits for GM now.

BTW...someone here has been making noises, and posting about dreams he had of a multi-billion dollar profit in Q4....

Jingle Bells, we hope.

jedi
Print the post Back To Top