Government Looking to Exit GM Stake Quickly

[Stocks-to-Watch]

The U.S. government, which still owns 33% of General Motors (GM) following its assistance to the automaker during the recession, is hoping to exit the stake quickly, without waiting to maximize returns, The Detroit News is reporting.*

Austan Goolsbee, chairman of the Council of Economic Advisers, said “The writing is clearly on the wall that the government is getting out of the GM position,” during a press event this morning.* “The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we’re trying to get out of that.”

Goolsbee said that the government would not try to time the market in an attempt to recoup all funds. The government invested just under $50 billion in GM, beginning under President George Bush in 2008. Last year, the government reduced its stake from 61% to 33%, selling shares* when the company went public. It has recovered nearly half of its investment, but would need the stock to break over $50 before selling to break even. With the lockup period expiring in May, the government could sell the rest of its shares this year if it chooses.

Shares of GM were falling 6% in recent afternoon trading to their lowest level since the IPO. The company announced its first profitable year since 2004 before the market opened this morning.



Original Article Source by Barrons.com