Posts Tagged ‘General Motors’

Is it Time to Trade General Motors (NYSE:GM)?

Thursday, January 6th, 2011

General Motors Options Ideas It’s a new year, and analysts are adjusting their opinions on stocks and sectors.  This week, Goldman Sachs (NYSE:GS) expressed a bit of optimism on the newly resuscitated General Motors (NYSE:GM), initiating coverage on the stock with a “buy” rating.

The covering analyst set a 12-month price target of $43, representing about 16% of upside from current levels. He noted, “GM is ideally positioned to take advantage of the cyclical … and secular auto demand opportunities” and added, “we think the stage is set for profitability not seen since the 1970s, which is not fully discounted in the shares.”

December 28 was the first day banks involved in GM’s IPO were allowed to rate the shares.  That day, four firms issued reports on the automaker, two of which gave “outperform” ratings and two of which rated the stock an “overweight.”  Price targets for the upcoming 12 months ranged from $42 to $50. (more…)

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General Motors (NYSE:GM) Options Start Trading

Wednesday, December 1st, 2010

Ford and GM options trading Twelve days ago, we had the much-anticipated initial public offering (IPO) of General Motors (NYSE:GM). Monday of this week, options on the Detroit-based automaker were (again) listed for trading.

One might have thought that the new GM options would trade with a higher implied volatility than its competitor Ford Motor (NYSE:F), which is free of any government assistance and in the hands of the public. One would, however, be wrong. (more…)

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Ford (F) Options Surge in Popularity Ahead of GM IPO

Thursday, November 18th, 2010

Ford Motor option volume Ford Motor (NYSE:F) has seen options volume and volatility ramp higher this week in anticipation of today’s General Motors IPO.  According to our volatility charts, 30-day implied volatility has increased in Ford over the past week from 39% to 52%, hitting its highest point since early July. This compares to 30-day historical volatility of 33%.  The increasing trend suggests F options are in greater demand, and are therefore getting more expensive.

Roughly 810,000 Ford options traded on Monday (2.3 calls for every put) and about 730,000 traded on Tuesday (1.5 calls for each put).  This compares, for example, to October’s average daily option volume of 125,000 contracts. (more…)

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President Obama Speaks on CNBC… Here’s What I Heard

Tuesday, September 21st, 2010

Obama's Town Hall Speech President Barack Obama gave us another chance yesterday to witness his eloquent, seemingly Switzerland-like delivery and response to some fairly direct and tough comments and questions. Deflect, deflect, deflect (and maybe spin a little).

I happen to respect the man greatly for his intelligence and his ability to handle situations. I also think his job in office has certainly been better than I could ever do, but certainly not one that deserves acclaim.

This opinion was shared by a devout Democrat who was a CFO and mother of two kids headed off to college, when she expressed her disappointment in the actions (or lack thereof) of the current administration. She was hoping for change, but like many of us has had yet to see it. I understand that changing the economic health and sentiment of a nation takes time, so maybe it’s the grand promises that were made that are now blossoming into disappointments. (more…)

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General Motors (GM) Returns to Market (Don’t Get Lost in the Pink Sheets!)

Thursday, August 19th, 2010

General Motors (GM) returns to the market MTLQQ – “Motors Liquidation Company” – is the somewhat cumbersome ticker symbol for the entity that was set up to liquidate General Motors’ assets in bankruptcy. It is in no way shape or form connected to the “new GM” that will begin trading later this year.  According to Reuters, this new GM will be dually listed on the New York Stock Exchange as well as the Toronto Stock Exchange between late October and Thanksgiving of this year.

The preliminary GM initial public offering (IPO) filings have taken place. This is expected to be a relatively large offering with some estimates above the $20 billion mark (although this is still unknown).  The company will also reclaim the old “GM” symbol (naturally).

Understand that the IPO of this new entity is almost like bringing a new company public with only half a year of earnings data to consider. Since restructuring was complete, GM has released just two quarters of earnings data. Remember, this company was on a trajectory for complete failure before being saved by the U.S. government/taxpayers and others.  There are arguments on both sides of this offering.  Some are projecting success, while others think it couldn’t be a worse time to bring this company to market.

It is also hard to ignore the political agenda behind this offering.  According to the Detroit News, the U.S. Treasury owns about 60% of the reborn car maker. The Canadian and Ontario governments jointly hold a stake of roughly 12% and the remaining 28% or so is split between the United Auto Workers’ healthcare trust fund (17.5%) and unsecured creditors (bondholders).

(more…)

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OptionsHouse Roundup: A Broad Market Rally and Heavy Options Activity in Ford (F) and Research in Motion (RIMM)

Thursday, April 1st, 2010

No April fool’s day pranks here as the broad market marches on higher. This rally is broad even when you look inside the indices; four stocks are up for every one that is down.

All the major market indices rallied higher today after jobless claims fell 6,000 in the week ended March 27 to 439,000 (seasonally adjusted). This lower number was a positive surprise to traders looking for a recovery in the labor markets since the prevailing consensus prior to the announcement was a prediction of 443,000.

The non-farm payroll data will be out tomorrow and will be closely watched, even on Good Friday. Markets will be closed in observance of the holiday, but we will be covering the event in our blog.

Ford (F)

Ford (F) revealed some strong overseas sales numbers in China and India, while GM (MTLQQ) reported strong sales domestically. We did see some heavy options activity in Ford this morning in a couple strikes:

F: $12.83 up $0.2600 or 2.07% volume: 79.46 million shares
Apr10 13.00 Calls: volume over 11193, versus open interest of 76446
Jun10 9.00 Puts: volume over 10930, versus open interest of 17963

Research in Motion (RIMM) was also topping the tape with a mixed, although mostly positive, earnings report. However, the company missed its earnings per share, coming in .01 below analysts’ expectations and sending the stock lower 5% towards the $70.00 level. Options traders were jockeying positions in this issue as well with volume at a relatively high level in the options and stock markets. We saw heavy action in the following strikes, but have not received detail on whether they were bought or sold.

Research in Motion (RIMM)

RIMM: $70.24 down $3.7300 or 5.04% volume: 23.11 million shares
Apr10 70.00 Calls: volume over 13762, trading last: $1.87 bid: $1.86 ask: $1.88 OI: 13896
May10 75.00 Calls: volume over 10035, trading last: $1.53 bid: $1.52 ask: $1.54 OI: 10975

In summary, there is much more data on the near-term horizon, not to mention the start of a new quarter and earnings’ season. This season will be closely watched as many would like to see the trailing p/e of the SPX, currently hovering near 19, drop down to a more normal level of 14-17. For most retail traders, the key will be staying on top of your portfolio as volatility may begin to pick up.

Remember there are a couple hours left in the trading day and the volume of these issues may continue to rise, but this is where we are seeing some heavy options activity today. Also remember that options can be bought or sold and volume does not indicate which.

These are a few of my team’s observations this morning. If you have others you would like to add to this list, please feel free to share them in the comments.

Photo Credit: wallyg

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August Roundup: A Look at Some Specific Stocks Compared with Major Market Averages

Saturday, August 29th, 2009

With August almost in the books I believe it is worthwhile to look at some specific sectors and stocks relative to the major market averages.

For a reference point the SPX index started the year at a level of 903.25.  So with today’s close at 1028.93 the overall market is up almost 14%.  It is more impressive to remember that on March 9th the index closed at 676.53, after hitting a intra-day low of 666.79 (up 54% from intra-day low)

On the sector front the best performing sector has been Info Tech up almost 40% YTD.

Within the highest weighted Tech companies Apple (AAPL) stands out,  up almost 100% .  Google (GOOG) a more pedestrian 51%.  Microsoft and Intel 27% and 38% respectively.

Also a leading sector the Materials sector has enjoyed just over a 30% YTD return

Freeport McMoran (FCX) a copper and gold company stands 167% higher than the start of the year!

Heavy weight Monsanto (MON) is only better by 18%

Consumer Discretionary names as a sector are up by 23.6% from the start of the year.  This sector as it is driven by consumers has definite winners and losers.  McDonald’s Corporation (MCD) which was a relative bastion of safety in the last quarter of 2008 is actually down9.8% on the year.  This is likely because investors have rotated out of safety into higher beta higher risk names.

Ford (F) is back from the dead, taking the pole position of the top 15 members in this sector up 237%.  Remember this company did not take government money as Chrysler and General Motors (MTLQQ.PK) did.  Amazon (AMZN), up 61%, Target  (TGT) up 37% and Kohls (KSS) up 45%, are three retailers that compare favorably.

The consumer staples sector is higher by only 3% as investors have rotated out of traditional safety stocks.  Proctor Gamble (PG) is down 13% Wal Mart (WMT) is down almost 9% and Coca-Cola (KO) is up only 8%.

Lastly Financials are up 17% for the year.  This sector has had the biggest thrill ride at the lows it was down over 50%, from the lows it is up 143%!

Goldman Sachs (GS) is up 94% to lead the charge

American Experess (AXP) is higher by 84% as the consumer is still using the little green cards.

In the Banking subsector Wells Fargo (WFC) is still down on the year losing 7.3%

Citigroup (C) still has issues down 22%

Bank of America (BAC)  has recovered 27%

And J.P. Morgan Chase (JPM) is up a respectable 36% which is great by most measures, unfortunately they measure vs. Goldman Sachs typically.  So Jamie Dimon is probably disappointed.

The next move in the overall market is anyone’s guess.  The 10 day historical vol is calculated today at 10.79%.  The VIX is stubbornly staying near the 25% level, possibly indicating we are entering a more volatile trading environment into the last 4 months of the year.  The more dispersion between sectors, and between stocks in performance the more “normal” trading will be.

Remember the stock market is the ultimate forward looking indicator of future cash flows and expected growth for the economy and individual companies.

There is no better indicator out there.

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Stocks on the Move

Monday, November 10th, 2008

A very negative article on General Motors (GM) appeared in Barron’s over the weekend – it basically stated the company is all-but-guaranteed to need a massive bailout ($50 Billion was referenced). Such a bailout would come with equity ownership stakes for the government.

All this is thought to be extremely negative for current shareholders and the periodical advises avoiding the stock. The shares are down around 30% in the early going to around $3/share.

Goldman Sachs Group (GS) is down again to the low seventies. Barclays’ analysts slashed fourth-quarter earnings estimates to a loss of $2.50/share. Many rumors are swirling as to whether Goldman will need a strategic merger, be taken private, or will split the company in two – separate trading and advisory companies. The options are currently priced at a133% volatility in November, which implies a greater-than 20% move in the next two weeks.

Google (GOOG) is a drag on the tech sector today. Earnings estimates were lowered on the search giant as well, with macro weakness blamed for the reductions.

And finally, American International Group (AIG) announced a $24.5 billion loss for the third quarter. The bigger story is that the size of the taxpayer bailout here has been expanded to $150 billion from $123 billion.

All this negative news has taken the wind out of the market as a whole. The Nasdaq-100 Index (NDX) is down 1%. The S&P 500 Index (SPX) is now down slightly on the day, though the Dow Jones Industrial Average (DJIA) is still positive, up 50 points.

–Steve Claussen

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