GM IPO as Climax for the Reflation Trade

This week, probably Thursday, should see the debut of the General Motors IPO.  There are lots of angles to this story, from the exclusion of the retail “taxpayers” from IPO shares to the fact that demand is way stronger than expected and so pricing will be raised (above $30 per share).

One take I found interesting today was about what the deal may mean for equities in a broader sense.  GM’s resurgence is, after all, the epitome of the bail-out-and-reflation trade – perhaps more so than any of the banks are.

John Shipman at Dow Jones Market Talk blog sees echos of the Blackstone IPO hype at the market’s peak in 2007…

GM stock is on track to return to public trading Thursday, and the hype is ramping up, which reminds us of another highly anticipated and sought-after IPO: Blackstone Group.

Remember that one? Everybody wanted a piece of Blackstone when it first offered shares to the public in late June 2007, just a few months before US stock markets hit an all-time peak. “Shares are so oversubscribed that some Wall Street analysts fear that irrational exuberance will send investors tripping over themselves to get the first publicly traded piece of the private-equity boom,” the Washington Post wrote on the day of BX’s IPO. Some headlines wondered: “Is Blackstone the Next Google?”

And what happened? BX gained in its first day of trading, then proceeded to tank and hasn’t been close to its $31 a share IPO price ever since. In fact, from its IPO price to when markets peaked on October 9, 2007, BX fell 8%, while the S&P 500 rose 4%.

There are some severe differences that keep this analogy from fitting like a glove, notably the fact that neither GM nor the US auto industry are anywhere near some kind of peak or golden age as private equity was back then.

Where I agree with Shipman is that the hype is getting louder and the public offering itself could certainly end up as a kind of climax for the rest of the market.

Worth considering.

Source:

GM’s IPO Hype Brings Back Some Memories (Market Talk)


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. l'amico ritrovato personaggi commented on Sep 06

    l’amico ritrovato personaggi

    […]please take a look at the websites we adhere to, including this 1, because it represents our picks in the web[…]

  2. خرید vpn commented on Sep 06

    vpn ایفون

    My developer is trying to persuade me to move to .web from PHP. I have often disliked the concept because of the fees. But he’s tryiong none the less. I’ve been employing Movable-type on a number of web sites for about a year and am nervous about switc…

  3. خرید وی پی ان commented on Sep 07

    vpn ایفون

    I do not know if it is just me or if maybe everyone else encountering problems with your website. It appears as if some of the created text inside of your posts are operating off the screen. Can someone else make sure you remark and enable me know if t…

  4. خرید فیلتر شکن commented on Sep 10

    vpn ایفون

    What is up it’s me, I am also checking out this web site on a standard foundation, this website is truly nice and the viewers are really sharing great thoughts.

  5. farming simulator 2019 mods commented on Sep 12

    farming simulator 2019 mods

    […]always a major fan of linking to bloggers that I love but do not get a great deal of link adore from[…]

  6. FS19 mods commented on Sep 12

    FS19 mods

    […]the time to study or pay a visit to the subject material or web pages we have linked to below the[…]

  7. erotic podcast commented on Sep 13

    erotic podcast

    […]below you’ll locate the link to some internet sites that we consider you ought to visit[…]

  8. Stepfamily Porn Online commented on Sep 14

    Stepfamily Porn Online

    […]one of our visitors recently recommended the following website[…]

  9. پروکسی Mtproto commented on Sep 14

    vpn ایفون

    below are some hyperlinks to web pages that we link to for the reason that we believe they may possibly be really worth browsing

  10. Stepfamily Porn Online commented on Sep 14

    Stepfamily Porn Online

    […]always a significant fan of linking to bloggers that I really like but don’t get a great deal of link like from[…]

  11. houses for sale in san pedro ca commented on Sep 16

    houses for sale in san pedro ca

    […]although sites we backlink to beneath are considerably not associated to ours, we really feel they’re basically worth a go by means of, so possess a look[…]

  12. سكس مترجم commented on Sep 16

    سكس مترجم

    […]Here are several of the web sites we suggest for our visitors[…]

  13. Dolce and Gabbana commented on Sep 16

    Dolce and Gabbana

    […]The data talked about inside the write-up are a number of the top readily available […]