Market Talk

It took about three months (which is a little longer than we initially expected) but GM shares finally reached another milestone: they breached below their November $33 IPO price.

As you recall, it was one of the most highly anticipated and hyped-up IPOs in years, and got off to a bit of a shaky start as shares flirted with breaking the IPO price throughout its first week of trading. Of course, the underwriters weren’t about to let this thing flop right away, and the stock eventually gained a little momement, carried along by a buoyant mood in the stock market overall.

It hit a high of $39.48 in early January, but it’s been mostly downhill since then, even as the broader market continued higher. The sell-side analysts have (naturally) been unabashedly bullish, with more than 70% calling the stock a buy, or some equivalent rating.

GM made $510 million in its fourth-quarter, and full-year profit of $4.7 billion. Investors don’t appear to be impressed, with the stock currently down 4% at $33.20; earlier as low as $32.05.

All that hype, and the best GM shares could muster was a 3.6% pop above the IPO price – and that was with a whip-flailing closing flourish like you’d see at Belmont racetrack.

As we noted earlier this week, the build-up to this event reminded us of the Blackstone IPO in June 2007, with the suggestion being that like BX, GM’s IPO session may produce a high-water mark for the stock, at least for the foreseeable future. The 3.6% premium to the $33 IPO price at the close seems meager. BX, at least, gained 13% in its opening day. It eventually slumped below its $31/share IPO price two sessions later.

Will it take that long for GM?

Stock trades (or we should say churns) more than 452 million shares, roughly 10% of the total NYSE composite volume for the session.

At its best, GM shares rose more than 9% to $35.99 early on, and at their worst were only up 2.7% at $33.89 during the final half-hour of trading.

One day soon after Sept. 11, 2001, I was in an empty warehouse in Jersey City, N.J., helping unload supplies for the rescue crews over at Ground Zero. Big 18-wheelers were coming from all over the nation, crammed with stuff. Some was being loaded onto tugboats and hauled across the Hudson, and some was being stored in that warehouse.

Dozens of people were there. A young marine. A father with his even younger son. Men, women, I can’t remember them all. We made a  human conveyor belt and and passed boxes and crates and palates from the trucks into and through the warehouse.

I was never more proud of this country than that day. From the people who donated the supplies on those trucks to the rescue crews in the burning pit of Ground Zero, Americans came to the aid of their nation. Everybody wanted to do something, absolutely anything, to help. E pluribus unum. Out of many, one.

When I compare the response to Sept. 11 in those first chaotic days to the response to the financial crisis, I’m dismayed to the point of anger. If there’s been one selfless act since this whole sordid drama started unwinding two years ago, I’ve missed it. Instead, it’s been one long series of self-serving, back-room handshake deals to save a precious few at the great expense of the vast many. The good faith and credit of the United States has been put on the line to save a handful of private actors.

President Obama says he gets the message sent by the voters of Massachusetts? With all due respect, he has no idea what the message is. The administration thinks that if it just creates a bunch of jobs (or saves them, or saves and creates them, or whatever it’s calling it,) then its job will be done. Yes, the economy is a major issue. But that isn’t what’s got people in a lather.

It’s the fairness, stupid.

Bailing out private companies like AIG was not fair. Bailing out the auto makers, and the banks, and  paying AIG’s counterparties 100 cents on the dollar for their terrible bets was not fair. It was not fair for the Fed to buy all those soured loans off the banks’ hands, and relieve them of the burden, placing it on the citizenry’s shoulders. Bankruptcy is fair. The FDIC seizing failed banks and selling them off is fair. But fairness went out the window two years ago.

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