Friday, April 4, 2014
Treasury Selling GM Stock Last December -- A Wee Bit Of Insider Trading?
Back in December, the Treasury Department announced that they would sell off the last remaining shares of GM stock that it owned since the bailout, and since becoming publicly-traded once again in 2010. It also sold a block of shares in November. This was somewhat surprising since GM's stock price was largely on a tear due to good sales activity ; moving from just under $20 a share in mid-2012 to a record of more than $40 a share last December; and, as such, it was looking like the chances that the taxpayers would be left holding the bag with billions of dollars of losses were being diminished by the prospect that the stock price would continue to rise. But, rather than hold out for that prospect, Treasury's sell left the American tax payer a $10.5 billion loss.
Now, as it turns out, Treasury's selling when they did was near perfectly timed because, from that point forward, the stock leveled off and, then, began falling throughout this year. In fact, the stock price is off about 15% from its December highs. It was almost as if Treasury knew, somehow, that GM, because of their 10-year avoidance of an ignition switch problem, would result in having to recall and repair millions of automobiles and potentially suffer millions of dollars in lawsuits and fines, all of which could send the stock price into free fall.
While I applaud the fact that Treasury was able to "cap" taxpayer losses by selling when they did, the whole thing smells a bit like "a little bird told me" that the government was about to lower the hammer on GM's ignition problem. Now, I can understand that previous liquidations were done while the stock price was falling, and those actions would be naturally done to minimize further losses. But, to sell when they did, while the stock price was rising, makes no trading sense unless it was known that the stock was at a peak.
Treasury sells rest of GM stock, ends bailout with $10.5-billion loss: http://www.latimes.com/business/money/la-fi-mo-general-motors-bailout-treasury-stock-20131209,0,4629861.story#axzz2xkoFDjLm