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US Government sells $489 million in GM stock in February

According to a report issued to Congress on Monday, the United States Treasury Department sold $489.9 million worth of General Motors stock in the month of February – raising the total dollar value on GM stock sold by the feds this year to $646.3 million.

The Treasury Department is not providing full details on the sale of General Motors stock each month, instead just announcing the dollar value of the GM stock sold during the past month. Among the details not included in these monthly statements is the exact number of shares but we can get a rough estimate based on the number of shares sold and the average price per share of GM stock during that selling period.

Through the month of February, the US Government sold $489.9 million worth of General Motors common stock with help from investing firms Citigroup Inc and JPMorgan Chase & Co. Based on the average price of GM stock in February, we can surmise that the two assisting firms sold between 17.2 million and 18.1 million shares of GM common stock from the pool of 300 million or so shares that the government is looking to sell off over the next 12-15 months. When you add in the $156.4 million worth of GM common stock sold in the short business month of January, the government has pulled in almost $650 million from selling the stock issued as repayment for the bailout loans of 2008/2009.

On top of the GM common stock sold with the help of Citibank and JPMorgan over the past two months, the US Government reported a sale of 200 million shares of GM stock to the automaker itself in December. That brought in some $5.5 billion dollars at the price of $27.50 per share. GM stock is currently trading in the range of $28.30 per share so the government (and the American taxpayer) is making more money on the slow, public sale of the GM stock than they did in selling that big chunk of stock back to the company late last year.

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The good news is that the US Government appears to be moving pretty quickly in ridding themselves of ownership of General Motors and that will make everyone happy – both those who supported the auto bailout loans and those who opposed that loans. The bad news is that all of these shares are being sold well below the issuance price of $33 per share so on every share that the feds sell right now, the American taxpayer is losing about five bucks. The government expects that the Treasury Department will take a loss of about $20 billion on the loan made to General but that figure includes all of the loans made to the various companies under the bailout loan program – not just the loss from General Motors. The feds can still technically break even on the GM loans but to do so, the price per share of GM common stock would have to climb into the range of $72. That isn’t very likely but the fact that GM stock price is slowly rising as the Federal Government sells off their ownership means that as more and more of the Treasury shares are sold, the price may continue to increase. The more the increase – the less we all lose on the bailout loans. However, we should all keep in mind the number of jobs preserved by the bailout loans along with the new jobs created as GM and Chrysler have grown since the Government handed out the huge chunk of cash…and you can’t put a real price on the value of economic recovery.

More specific details of the US Government’s effort to sell the remaining ownership in General Motors will be announced with the quarter report – expected to hit the press sometime in April.

Source: The Detroit News