This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

GM IPO: Fund Managers Stick With Ford

BOSTON ( TheStreet) -- General Motors (GM - Get Report), which raised at least $20.1 billion in an initial public offering, is to carmaker Ford (F - Get Report) what financial company Citigroup is to JPMorgan (JPM), some mutual-fund managers say.

GM, like Citigroup, needed a bailout by the government, which holds a stake in both companies. Ford was the sole U.S. carmaker to make it through the recession without government help, and JPMorgan, while being forced against its will to take bailout money, has emerged as the strongest U.S. bank because of its superior risk controls.

Many investors were hot on the GM IPO, which came at a time when consumers started getting ready to buy big-ticket items again. GM had raised the proposed deal size for its IPO to 478 million shares, an increase of 31% from the original proposal. Last night, GM said in a statement it priced the shares at $33.

Still, some fund managers are sticking with Ford shares, which have rallied a staggering 660% since January 2009. GM filed bankruptcy on June 1, 2009.


That's because of the overhang of government ownership. Frank Ingarra, co-portfolio manager at Hennessy Funds, says he finds better opportunities in other automotive stocks rather than trying to buy into something "where the government is only selling a small part of its position."

"Whenever the government is involved in something, I get uneasy," Ingarra says. "A lot of the money raised goes back to the government, to the unions, and to all of these other entities."

Ingarra says Hennessy Funds, which uses quantitative data to screen 10,000 companies, requires a full year of recent public data.

Hennessy Funds isn't alone. Tom Villalta with the Jones Villalta Fund says GM suffers from the same perception problem as Citigroup, a company in which government ownership remains a specter over the shares. JPMorgan's shares are little changed in the past two years, having made up all their losses from the stock-market crash, while Citigroup is down more than half.

"It's going to be years before Citigroup gets to the level that JPMorgan is at, just from a perception standpoint," Villalta says. "The government may be out by the middle of next year, but that perception is going to stick with them for a number of years. That's true for GM as well."

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ALV $117.77 0.33%
BWA $60.48 -1.01%
F $16.14 -0.12%
GM $37.50 -0.48%
TRW $104.85 -0.05%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs