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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (7568)	6/21/1999 6:35:00 PM
From: James Clarke	Read Replies (3) \| Respond to of 78667

If you figure the implicit value of Hughes and GMAC in a GM share I think you will find that the auto business is trading at a P/E of about 5. (Ford looked just like this until they spun off Associates, then the stock tripled). GM was buying back shares like crazy until they inexplicably decided to spend a billion on a Hughes equity infusion. (Hmm, we could buy back our own stock at 5 times earnings or we could buy Hughes stock at 90 times earnings. OR, we could sell Hughes to the public at 90 times earnings and use the proceeds to buy our own stock at 5 times earnings. Out of that menu they picked the worst choice. How could management of a company the size of GM in 1999 still be so stupid?) GM's CEO opposes a spin-off of Hughes though it makes eminent sense. He may be gone in a year, then the deal gets done and GM goes to 90. I consider GM's price an incredible bargain even for GM, which I regard as an awful company. Does anybody here own GM?