(GM - Get Report), which raised at least $20.1 billion in an initial public offering, is to carmaker
(F - Get Report) what financial company Citigroup is to
(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."