GM Redemption Seen Culminating in Return to S&P 500 Index
By Tim Higgins & Lu Wang - May 1, 2013 12:01 AM ET
As the U.S. Treasury sells off its shares of General Motors Co. (GM), the automaker is likely to return to the Standard & Poor’s 500 Index in the next year, passing another milestone in its redemption.
“GM is a pretty highly eligible candidate for an addition to the S&P 500 because it’s got a lot of things going in its favor,” said Bo Huang, an equity-index strategist at Deutsche Bank AG in New York. He cited GM’s string of profitable quarters, its market capitalization of more than $40 billion and its increasing percentage of shares available to the public.
Whenever this happens, it will be more than just an honor: Getting back into the S&P 500 (SPX) would help U.S. taxpayers expedite their exit from the company, likely boost GM stock in the short term and help support the shares in the long run as well.
GM, based in Detroit, will probably report its 13th straight quarter of profit May 2 when it announces results for the first three months of the year, according to a survey of 16 analysts by Bloomberg. Revenue likely slipped 3 percent as the automaker geared up to introduce about 20 new vehicles in the U.S. this year, including a redesigned Chevrolet Silverado pickup and Impala sedan this quarter.
The automaker has said it expects modest improvement this year compared with 2012, when it earned $6.19 billion, the third profitable year since emerging from a $49.5 billion U.S. government bailout and bankruptcy reorganization in 2009. GM returned to the stock market in November 2010 with an initial public offering that raised $15.8 billion, before expanding to $18.1 billion when underwriters exercised the over-allotment option.
more:
http://www.bloomberg.com/news/2013-05-01/gm-redemption-seen-culminating-in-return-to-s-p-500-index.html
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