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

To: Dennis 3 who wrote (47728)	5/3/2012 11:39:05 PM
From: Spekulatius	1 Recommendation Read Replies (3) \| Respond to of 78472

re GM - Any thoughts ? My thought is that your calculation of the EV value is wrong. You have not taken into account. When I subtract net current liabilities from net current assets, i get about a 12B$ surplus on net current assets (which is not quite cash). However there is ~ 10.3B$ in cash and there are 32B$ in Pension/healthcare liabilities. Look at it another way, GM's intangible assets are ~ to GM shareholder assets, which means that tangible book is about zilch. Also as far as pensions are concern, keep in mind that for GM pension plan, the gross liability is 133B$, which is covered by 108B$ in pension plant asset for a 25B$ deficit. the dangerous thing about the high gross liability is that the return assumption is still 8%, which is hard to achieve using a high fixed income allocation. If the expected return of assets were lowered by 10%, the gross (not net!) liability would increase by almost 10%, do the math. If you now calculate all those liabilities and add them to the EV, you will find that GM trades at a premium to other and much better positioned car companies like Daimler and even VW.DE (if you eliminate the finance ops from the passive and active side).