Speculators finally get the message on 'old GM' shares

It shouldn't have taken this long, but speculators in shares of the old General Motors Corp. at last seem to understand that the stock is worthless. It just took a two-day suspension of trading -- and a change in the ticker symbol.

Shares of old GM -- now called Motors Liquidation Co. -- plunged as low as 35 cents today on the pinksheets.com market, down from 55 cents at the close on Wednesday and down from $1.15 on Friday.

The new General Motors emerged from bankruptcy court protection on Friday. That same day the stock jumped 37% to $1.15. But that made no sense, because the remaining shares outstanding no longer had anything to do with the newly reorganized company.

Rather, the stock represents the "bad" assets of old GM, which will be liquidated over time to pay off creditors. As the company has said repeatedly, it didn’t believe anything would be left for shareholders after the liquidations were completed.

Apparently angered by penny-stock touters who were recommending the stock to investors, securities regulators at the Financial Industry Regulatory Authority stepped in on Friday, halting trading in old GM before the closing bell and issuing a warning about the shares. They kept the stock suspended on Monday and Tuesday.

When it reopened for trading on Wednesday as Motors Liquidation -- with the new ticker MTLQQ -- it immediately sank.

Eventually, Motors Liquidation stock will be canceled. Until then, it will remain a playground for speculators -- but at least for now at prices much closer to its probable ultimate value of zero.

-- Tom Petruno

Comments

[fdupwthgov]

The media was misrepresenting GMGMQ as if it was the new GM. If you look at the volume there were many little guys trying to get a piece of a new company. At the end of the day the Financial Industry Regulatory Authority halted trading when GMGMQ closed at 1.15. a 30% gain. Not bad for a worthless stock penny stock.

The top question/complaint at the SEC Monday was the reason of the halt of trading of GMMQ. Then 2 days later the authority changed the name again and confused the issue even more.

The SEC agrees that the government should protect investors by immediately halting any company that files for bankruptcy and be clear about when it will continue what happens to the ownership.

In this case the US Government controls the good new company while the stockholders own what is left of the bad. And this bankruptcy plan took place in 45 days??? What the , this has to be a record. I hope to listen to the congressional hearings on this one.

Can't help to think there will an investors class action.

[Allan]

What is the ticker symbol of the NEW General Motors Corp., post bankruptcy?

[Tom Petruno]

@ Allan: There is no ticker for the new GM because it has no publicly traded securities. The new GM is owned by the government, the UAW and creditors. They expect to float an initial public offering of new GM shares some time in 2010.

Tom Petruno