Brian Nelson

GM Repurchasing Two Hundred Million Shares from the US

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Wednesday morning, US auto giant General Motors (click ticker for report: ) announced that it will repurchase 200 million shares from the US government for $5.5 billion. The US government also announced that it will sell its remaining 300 million shares opportunistically over the next 12-15 months. The sale will leave the US with a loss, but for the purpose of investing, the loss means little to us. Though the price GM will pay—approximately $27.50 per share—exceeds the current market value, it is still lower than our median fair value estimate. More importantly, however, it removes the worry (overhang) that the government-owned shares would be dumped on the market, putting downward pressure on the share price. We like the move for both reasons, … Read more

Sprint/Clearwire Deal Closes at $2.97 Per Share

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Wireless provider Sprint (click ticker for report: ) will acquire Clearwire (click ticker for report: ) for $2.97 per share, pegging the company’s enterprise value at $10 billion. The deal also includes bridge financing of $800 million, and as wtih the SoftBank deal, it is expected to close mid-2013. Last week, Sprint offered $2.90 per share for the company, and shares spiked to well over $3. We’ve seen several large minority shareholders voice concerns about the relatively low valuation the deal gives the company based on its net asset value, which appears to be a valid concern given the recent deals for spectrum. However, the previous connection (Sprint owns over 50% of Clearwire) between the two companies has put Clearwire … Read more

GE Boosts Its Dividend; Remains a Solid Dividend Growth Idea

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On Friday, industrial conglomerate General Electric (click ticker for report: ) raised its dividend 12% to $0.19 per share per quarter (slightly better than we had expected), and it also added $10 billion to its share buyback program. The firm didn’t give any additional updates, but both moves display management’s confidence in the company’s future. We plan to update our dividend report on GE soon. The higher dividend payout gives shares of GE a 3.5% yield at current levels, making it a relatively attractive income play, in our view. In its third quarter, GE reported positive earnings growth across all 5 of its industrial segments for the first time since 2005, so the firm’s fundamentals are heading in the right … Read more