A half-dozen executives at General Motors Corp. are selling shares in the company, even as speculators have been keeping the stock out of penny stock territory.
The six corporate insiders, including retiring Vice Chairman Bob Lutz, sold a total of more than 200,000 shares in recent days, according to a report on the business news blog of The Los Angeles Times.
Lutz sold $130,989 worth of GM stock at the closing price of $1.61 on Friday. That sale of the 81,360 shares cleared out all of Lutz's direct holdings of GM stock.
Other executives, including Thomas Stephens, GM North America President Troy Clarke, Chief Information Officer Ralph Szygenda, manufacturing chief Gary Cowger and head of European operations Carl-Peter Forster, sold all of their GM stock holdings, according to the paper's blog.
Most Wall Street analysts who still follow the company continue to advise selling the stock, even now.
GM's out-of-court restructuring proposal envisions initially issuing about 60 billion new shares to the government, the UAW and bondholders, then doing a 1-for-100 reverse stock split.
Efraim Levy, an analyst at Standard & Poor's, cut his recommendation on the stock to "strong sell" from "sell," to emphasize the point: Get out — fast.
"The shares seem to be levitating like a magic trick," Levy said. GM shares traded Wednesday at a little over $1. GM traded at nearly $89 a share in April 2000.
GM is headed either for bankruptcy protection or an out-of-court restructuring that the company believes would leave current shareholders with just 1 percent of the equity in the firm. The federal government, the United Auto Workers and bondholders would get the rest, according to the LAT.
Some investors have been betting that GM might avoid bankruptcy and that even leaving 1 percent of the equity for current shareholders would give the stock a value of at least a few dollars a share.
President Obama's redistribution of the wealth of GM is not the only restructuring that he's imposing on the auto industry — and stakeholders, not just shareholders, have reason for worry.
According to Autoblog.com, the Obama administration has forced Chrysler to cut its advertising spending by 50 percent and even enlisted a bankruptcy court judge to agree to the change.
Judge Arthur Gonzalez wasn't even sure 50 percent spending was necessary, saying "idle plants, why market?"
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