Tags: gm | akerson | stock | auto

GM’s Akerson: Undervalued Company Stock Will Eventually Rebound

By    |   Wednesday, 02 May 2012 12:31 PM

General Motors Chairman Dan Akerson believes the auto maker's stock, which is down about 25 percent over the last year, is undervalued and will eventually rebound.

Akerson believes the stock market is looking at General Motors shares a little too harshly. General Motors stock is down 26.7 percent over the past year, underperforming the S&P 500, which is up 5.3 percent, according to Seeking Alpha research. Yet financial results look good, as the company has beaten earnings-per-share forecasts in three of the past four quarters.

He told Newsmax.TV in an exclusive interview that he thinks GM stock will rally as the company continues to “unwind from the difficulties we went through” and gets through “the post-bankruptcy recovery period, which I think General Motors is still in. It will take us a couple of years.”

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His thoughts on GM stock being undervalued?

"Well, you know every CEO thinks their stock is undervalued," he said. "When I hear that, all I know is how it's valued in the market and that's where it trades. The fundamentals of General Motors coming out of bankruptcy isn't what the stock price is," Akerson said.

The company will continue to focus on making cars demanded by customers and worry about stock prices down the road, knowing full well that emerging from a 2009 bankruptcy and regaining full health doesn't happen overnight.

"Quite candidly, it's how our products are received, and how well they sell in the marketplace and if we do that and if we provide a great customer experience, those are fundamentals that will serve us long beyond the post-bankruptcy recovery period, which I think General Motors is still in," Akerson says.

"It will take us a couple of years to kind of unwind the difficulties we went through, and I think fundamentals will prove out."

The Treasury Department still holds about a third of General Motors shares, which does concern other investors in the company.

"Many of our large shareholders are concerned about such a concentration of one holding," Akerson says.

"The fear is what is the government going to do. Could they articulate a disposition strategy? Could they say over the next eight quarters we’ll sell one-eighth of our holdings? What are they going to do?"

While such a roadmap isn't out there right now, company executives will keep an eye on the campaign trail looking for hints as to when the government will finally hand over the keys to the company back to the private sector.

"If you listen to one candidate, Governor Romney, he says if he wins he’ll just drop the shares. That would be, termed mildly, a market dislocation, [although] the stock would recover," Akerson says

"President Obama, if he were to win, I presume there would be a more measured response."

Turning to the Treasury Department's decision to freeze salaries for top GM executives, Akerson points out that while not optimal, it's not the end of the world.

"It makes it difficult but not impossible for us to run the company, because we have to compete in the marketplace for the most scarce resource and that is human talent," Akerson says.

“When I try to recruit someone I tell them this is not the typical company. We’re trying to save and restore an iconic American company that [otherwise] would have cost, by many different centers of thought, at least a million jobs."

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Wednesday, 02 May 2012 12:31 PM
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