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Obama Haters Shun GM: Reader Mailbag

DETROIT TheStreet) -- We've heard from our readers, and some of them express their dislike for President Obama by avoiding GM (GM - Get Report) products, both cars and shares.

"I avoid the stock because it is a dangerous investment that has been hyped by those with a vested interest," wrote Mark, a Philadelphia resident who asked that his last name not be used, in an e-mail. "I believe the balance sheet to be weaker than proclaimed to be and I don't trust GM." He avoids its vehicles as well.

"I would not vote for Obama based on his failing policies and divisive approach," Mark said. "The blatant favoritism towards the unions and the abuse of contract law when he screwed creditors of GM sealed his loss of my vote and many like me."

Jeff, another reader, said in an e-mail that he, too, eschews GM cars and stock. "In addition to boycotting GM, my family is doing the same thing for GE (GE) and Johnson & Johnson (JNJ)," he wrote. "Those companies supported Obama care and Cap & Trade and I will purposely try not to support any kind of economic activity which would lead to a perception of success for Barack Obama."

The e-mails were sent following the Sept. 2 publication of our story, "Do Obama Haters Also Hate GM?" We suggested that some investors may be put off by the close association between GM and the Obama administration and its labor supporters.

At the time, GM shares were trading around $23 a share, a price many analysts consider to be low. "The stock shouldn't be trading at $23," said Standard & Poor's analyst Efraim Levy, after reiterating a strong buy. In early afternoon trading on Friday, shares were down 95 cents to $21.53

In a posted comment, one reader noted that "maybe the reluctance to own GM has less to do with Obama and more to do with the way they stiffed their old shareholders and bondholders for billions under the bankruptcy laws." Indeed, the GM bankruptcy was an odd one, in which the government was both the principal creditor and the principal owner of the new, post-bankruptcy company.

Jeremy Anwyl, CEO of Edmunds.com, said Obama haters may shun GM stock, but most are less likely to shun GM cars. "People don't connect the corporate parent with the actual car brand unless they are the same, as with Chrysler" or perhaps GMC, which accounted for just 15% of GM sales through August, he said.

GM's principal product, Chevrolet, accounted for 71% of GM sales. Anwyl said many people don't realize that Chevrolet is part of GM. Studies during the Chrysler and GM bankruptcies prove the point, he said; Chrysler consideration and sales increased because "people thought ' In bankruptcy, there has to be a super deal on those cars.'" But "at GM, you didn't see much of a ripple, because a lot of people didn't know" that GM and Chevrolet are related.

He said TheStreet readers who refuse to buy GM cars probably have more awareness of the connection than average consumers.

In any case, GM spokesman James Cain said the automaker is not being hurt by negative perceptions. "People who value our new products are more than offsetting any people who avoid GM vehicles because of the government's investment and ownership stake," he said. "The proof is in the fact that we have gained U.S. market share in seven of the last eight months in 2011."

Additionally, Cain said, "negative sentiment about the company has declined steadily" since the bankruptcy and IPO. As far as avoidance by Obama opponents, "we don't see a correlation between the president's popularity and GM's," he said.

On the stock-buying side, the connection may be greater, Anwyl said. "GM stock is not Google (GOOG) stock," he said. "It's not a hot stock, so if people want to make a protest by not buying, it's easy to do."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to http://twitter.com/tedreednc.

>To submit a news tip, send an email to: tips@thestreet.com.

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