Dear fellow Americans: I tried, but it didn't work out.
I tried to do my patriotic duty by offering to take a few shares of General Motors (NYSE: GM ) off of our government's hands, but it was not to be. I registered my interest via my broker (Fidelity) last week, dutifully confirmed it once the issue had been priced on Wednesday night, and awoke Thursday to find ... nada. Zilch.
I had been passed over.
I wasn't alone in being shut out of the General's IPO. If media reports are any indication, lots of individual investors tried without success to get a piece of the government's favorite automotive pie. The IPO that was too soon, from the company that was too damaged, turned out to be more popular than anyone would have expected even a month or two ago.
For everyone who tried to buy a bit of the IPO and didn't succeed, the next question is the obvious one: Should they -- we -- buy GM's stock now?
Trying to value an enigma
The first step toward answering that question is to figure out what the company is worth, but determining GM's intrinsic value at this moment in history isn't all that simple. While guesstimating full-year sales and revenues would give us some food for thought, the multiple to apply to those numbers is very much an open question.
Why? Because this GM doesn't have much of a track record. The company's management team is still shiny-new. Will it be able to execute over the next few years?
Ponder these questions: How good will GM's 2014 models be? How well will they be marketed? How will they stack up against the competition? My answer to all of them is the same: Signs are promising, but the company's track record doesn't inspire confidence.
- A freshly cleaned balance sheet;
- At least a couple years' worth of tax advantages, thanks to a provision in the TARP program;
- A big share of the world's biggest growth market. (That'd be China.)
But Ford's product renaissance is at least a couple of years ahead of GM's, and it might be the understatement of the year to note that Ford CEO Alan Mulally and his team have something of a track record at this point.
Those promising signs
Still, there's lots of evidence that this isn't the old GM. Chief Financial Officer Chris Liddell, who came to GM from Microsoft (Nasdaq: MSFT ) , says his goal is to have a "fortress" of a balance sheet, with minimal long-term debt and fully funded pension obligations. CEO Dan Akerson, a private-equity veteran, may lack Detroit experience, but his statements focusing on profit margins rather than market share represent a clear and conscious break from the General's old ways.
And it's not just management. New GM products like the Chevy Volt and Cruze are a far cry from the "good enough" cars from old GM. GM's best products are on a par with offerings from Toyota (NYSE: TM ) and Honda (NYSE: HMC ) and show that the company's product people really can deliver at a no-excuses level. Transaction prices (and margins) are up, and likely to rise further, and resale values are likely to follow suit.
It looks good and sounds good. But will it be good, two or three years from now?
I think the answer is yes, but because of GM's history, I say that with some hesitation. Still, while Dan Akerson's no-nonsense style might not be enough to drive radical cultural change immediately, I think the example of Ford's success might be: GM's old litany of excuses just isn't plausible anymore, and everyone knows it.
Be greedy while others are still fearful?
GM's stock isn't exactly rocketing skyward as I write this on Friday, a day after the IPO. My sense is that investors, even sophisticated ones, seem to be having a hard time believing that new GM really is different from old GM. Sure, the latest batch of new products looks great, but won't the company be back to its old clueless arrogance any day now?
I don't think so, but that pessimism might make this moment a buying opportunity. At the same time, the historical record gives plenty of reasons for skepticism. What do you think? Is the new General Motors poised for success? Or is it the same old story, waiting to play out again? Scroll down to leave a comment with your thoughts.
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Fool contributor John Rosevear owns shares of Ford, which is a Motley Fool Stock Advisor pick. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.