DETROIT — General Motors shareholders might not ask many hard questions as they gather today in Detroit for their annual meeting, but that won’t erase the nagging question that persists throughout this combative election year: How much might U.S. taxpayers lose on their investment in the nation’s largest automaker?
Despite some blockbuster earnings of late, the stock has been stuck at low levels compared with its issue price of $33 on Nov. 18, 2010.
The U.S. Treasury, GM’s largest shareholder with a 32 percent stake, won’t have a high-ranking representative at the meeting, according to a source familiar with the matter.
Despite posting a $7.6 billion profit in 2011 and another $1 billion in this year’s first quarter, GM stock is trading between $21 and $22. That’s about one-third below its initial public offering price, and less than half the approximate $53 price at which the government would break even on the $49.5 billion invested prior to GM’s 2009 bankruptcy restructuring.
Republican presidential candidate Mitt Romney said last week that he would sell the government’s remaining 500 million shares immediately if he is elected.
President Barack Obama’s campaign officials have said selling anytime soon would further depress the price and maximize taxpayers’ loss.
“For GM investors, the question is: Regardless of who wins the election, when will the government get out?” Morningstar analyst David Whiston said.
Meanwhile, GM is still formulating a plan to turn around its European business. It is considering closing one or two plants, but in Germany, where no automaker has closed an assembly plant since World War II, union contracts prohibit GM’s Opel unit from doing so before the end of 2014.
“In our view, the factor that’s kept investors out of the stock is Europe,” with investors concerned about “how bad it could get,” wrote Jefferies & Co. analyst Peter Nesvold in a research report.