President Barack Obama at General Motors PlantDear Mr. President:
I know you're proud of the effort made by your team back in 2009 to save General Motors (GM).

You should be: You took a lot of flak for it at the time, but it has worked out better than we all expected.

GM 2.0 still has work to do, but it's already booking solid profits, has tons of cash in the bank, and is putting out some great new cars and trucks – with lots more on the way next year.

Saving GM was a big accomplishment for your administration (and to be fair, for President Bush, too, who got the ball rolling back in 2008). Heck, some pundits are saying that it might even have been the key to your reelection -- or at least to your victory in Ohio.

But as good as this GM thing has been for you, with the election now over, it's time to let go.
Mr. President, it's time for you to direct the Treasury to sell its stake in General Motors.

The Stock Price Is Stuck, and the Feds Are Part of the Problem

I know, I know, you haven't sold yet because the time hasn't been right. You need the stock price to get over $50 to have any hope of breaking even on your "investment," and it's been stuck below $30 for ages.

But here's the thing: You're part of the problem. Not you personally, but just the fact of the position held by the government. It's a huge, huge block of shares -- 500 million, to be exact.

Investors are reluctant to buy GM stock because they're afraid that when you do sell, the dilution will drive prices down.

It's kind of a catch-22: You want GM's stock price to go up before you sell so that you can tell taxpayers that you didn't lose money on the TARP program. But the stock price isn't going to go up to where you want it until after the Treasury cashes out. That's when big investors will feel comfortable about wading back in.

I know that you couldn't do it before the election. And nobody really expected you to -- not even GM CEO Dan Akerson. There would have been too much of an outcry over the loss, and the bailout had already become a big hot-button issue by summer. It just wasn't happening.

But now you've been reelected. You'll never have to face the voters again. You can afford to take the heat.

And if you do it right, it won't even hurt the stock price that much.

A Gradual Approach Is the Best Approach

Some investors seem worried about the possibility that you'll dump the stock all at once. But I know you won't do that. You'll have the Treasury Department sell it gradually.

The Treasury sold down its stake of American International Group (AIG) gradually, over time. I bet the folks over there already have a plan to do the same with GM.

An approach like that won't hurt prices much. It might even help. Once word gets out that you're starting to sell, GM's stock price is likely to begin moving up. The Treasury even turned a profit on AIG, though that seems less likely with GM. But still, you might get more for your stake than you think right now.

I know you'd like the stock to move up more before you start selling. But here's the thing: It has already come a long way recently. GM bottomed out under $19 a share in July. Since then, it has risen about 33%, thanks to good earnings and signs of progress in Europe.

But I get the sense that it's not going to go all that much further until you sell. I hope you'll get started soon.

Thanks for reading,
-- A GM shareholder

At the time of publication, Motley Fool contributor John Rosevear (@jrosevear) owned shares of General Motors. The Motley Fool owns shares of and has bought calls on American International Group. Motley Fool newsletter services have recommended buying shares of General Motors and American International Group.






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231 Comments

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freethedems2012

The government should stay out of the private sector.

November 12 2012 at 9:02 PM Report abuse rate up rate down Reply
parthenon1

Mr. Rosevear, you are incorrect Obama should not be proud or at least the rest of the country should not be. Letting GM and Chrysler go through regular reorganizing bank ruptcy was. This would have shared the pain between bond holders and the UAW not just illegally killed the bond holders interest. Many widows were living on these bond invesments and they went out the window immediately when the Socialist in chief decided to protect the retirements of the UAW

November 12 2012 at 12:48 PM Report abuse +1 rate up rate down Reply
coochiescooter

Got Food Stamps ?

November 11 2012 at 4:54 PM Report abuse -1 rate up rate down Reply
Plato

It would be really wrong to sell GM now, as none of the other automakers are as 'strong' as GM is now. Following bankruptcy GM is in the best financial position of all the major automakers, the world over. Can you take your head out of your keister long enough to compare enterprise value between GM and Ford, Honda, Toyota, VW, and so on??? One more world shakeup could send any of the them, except for GM, over their own fiscal cliff !!! And grow up already you complainers, the bailout happened long ago, so get over it !!! As for never buying a GM product again, what if we all played that game and decided to only buy foreign products ??? Should I say that I will never buy a product or service from someone because they will never buy from GM ??? Our economy would die !!! Get over this GM hate---move on---hate something else that has more recently jacked you up. Start acting like adults !!!

November 10 2012 at 5:16 AM Report abuse -1 rate up rate down Reply
4 replies to Plato's comment
susan

Aince the taxpayers pais for this, maybe the government should offer the people our money back, as GM is out of money once again..GM closed plants here and moved 11 to China, a few more to South America..Government Motors is one company I wouldnt buy from...

November 10 2012 at 4:22 AM Report abuse +5 rate up rate down Reply
braniff66

I'd say GM is doing very well. They are investing hundreds of thousand dollars in a plant in South America. Glad to know our tax money is going to good use. So much for more American jobs.

November 10 2012 at 3:42 AM Report abuse +3 rate up rate down Reply
1 reply to braniff66's comment
onephotowrk

Obama, Reid, Pelosi cares nothing about the American worker.....

November 10 2012 at 4:28 AM Report abuse +1 rate up rate down Reply
1 reply to onephotowrk's comment
dembaitnswitch

Well at least the non-union ones anyway.

November 10 2012 at 8:32 AM Report abuse +1 rate up rate down
chainsawd2

No don't sell.

It's making a profit right?

Well, change the name to American Motors, (remember that brand), and have the government take over auto manufacturing as well as healthcare. Heck, take over Walmart and change it the AmericanMart.

November 10 2012 at 12:57 AM Report abuse -2 rate up rate down Reply
magsmom1101

yeah sell to china,, what the heck ,,you know that they want it.. and there's a plant that's already got a good chunk of our taxpayer money.. so let's wash our hands of them, since they're going to go bankrupt again anyway..

November 09 2012 at 11:02 PM Report abuse -1 rate up rate down Reply
1 reply to magsmom1101's comment
susan

They are building 11 plants in China, too late ...and once again the people are theones that lose...Thanks GM

November 10 2012 at 4:24 AM Report abuse +3 rate up rate down Reply
jper747

ok for starters....at presnt stock prices we lose 26 billion on the stock. No big deal right? well just print more. This article is not entirely correct. GM europe is still hemorraging money. they won't turn a profit for years. Barry padded his campaign with 200 million from the UAW. It smells and is total b.s. He bought this election indirectly and we are too stupid to see it. Why would people want santa claus to go away?

November 09 2012 at 10:52 PM Report abuse +1 rate up rate down Reply
lenla

Another words, screw the taxpayers, you bailed out your union friends, what a joke this president is. We will lose how much in this deal?

November 09 2012 at 9:58 PM Report abuse +4 rate up rate down Reply