Got a press release from Russell Investments yesterday informing me that they could add General Motors — fresh from its successful initial public offering (IPO) — to its U.S. broad market index, the Russell 3000, by yearend. Yes, GM the former poster boy for U.S. industrial might and an anchor in the Dow Jones Industrial Average could be added to an index of 3000 public companies.
It was June 2009 when GM fell into bankruptcy and was jettisoned from the Dow 30. On Thursday it raised 20.1 billion in what is being called the biggest U.S. IPO in history and has consistently traded above its $33 IPO price throughout its first (new) day of trading.
The IPO takes the government’s stake in GM to 33% from 61%, which is good news I guess. The real question is: is the success of the IPO based on a leaner more competitive car company or that the government cannot afford to let it fail again and will be proactive in preventing that?
Not sure but this is a company whose shareholders were wiped out 16 months ago so the fact that people came in to trade it, volume of more than 400 million shares on its first day, is pretty impressive.
