Pssst. Here’s a stock tip, from an unexpected source. The U.S. Treasury considers GM’s publicly traded shares to be significantly undervalued.
As with any stock tip, it’s important to keep in mind the financial interests of the tipster. The Treasury, and by extension every American, owns 500 million shares of the automaker — acquired through the government bailout of the car industry during the financial crisis of 2008.
GM shares closed Friday at $24.80. The stock is worth somewhere in the $30s, according to a report in The Wall Street Journal that quoted people familiar with the Treasury’s thinking. When the stock hits that target range, assuming it ever does, the Treasury would consider selling its multibillion-dollar stake, the Journal reported.
If you’re uneasy about the federal government speculating in the stock market with taxpayer cash, we’re with you.
We believe the Treasury should have sold its GM shares long before now, as soon as the financial crisis subsided. As a rule, the government has no business holding stakes in private companies.
Fact is, the Treasury has been busy wheeling and dealing. Under the Troubled Asset Relief Program that helped to stabilize the financial system, the Treasury acquired hundreds of billions of dollars in assets. Among its investments were equity stakes in GM, Chrysler, AIG, Citigroup, Bank of America and other financial institutions.