MTLQU - GM Liqudating Trust

[Packer16]

Has anyone looked at this?  It appears to have a combination of GM stock, A & B warrants and sizable number of claims against the estate.  If the yet to be resolved claims are similar to those that have been resolved, then there is some good upside from the sum of the GM securities held.  The acceptance of the claims is on the order of 15% and the implied acceptance rate of remaining from the MTLQU pricing is about 67%.  VIC has a good write-up of the situation. 

 

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[Olmsted]

Interesting.  Was a bondholder back in the day.  Any excerpts for those of us without VIC access?

[Packer16]

Since the entry is more than 45 days old, you can view a guest.  There is also a write-up at Distressed Debt Investors Club.

 

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[17thstcapital]

I love bankruptcy stubs and have followed this one for a while but don't own it.  It does appear to trade cheap to the common assuming that max allowed claims pool comes in around ~$33bn or lower.  However, as you know, the intrinsic value is so sensitive to the claim pool figure than a billion here and there can cause material shifts in the eventual recovery of the instrument. If you really have conviction in the claim pool here (I don't), you can even short the common and try to arb this. 

 

If someone wants exposure to GM, I think you can own this but I certainly would not be comfortable taking a big position with only this instrument.  I know folks have added this to the mix with the stock and maybe even the warrants to get GM exposure. 

 

I own and still like the GM pfd B as a way to play GM.

[Packer16]

I own the B warrants due to the cheap financing cost and undervalued GM.  I looked at the Pfd B but was trying to figure out how it was better than common/warrants.  At the current price, it is equal to its conversion value plus remaining dvidends at a small discount rate.  In addition, at around $33 to $40 the number of shares declines.  Am I missing something?

 

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[17thstcapital]

No you're not missing anything.  Just a matter or preference.  I like getting paid 6% (at current price) to buy GM at a 10% discount to the common.  I recognize that I might be leaving some money on the table if the stock trades above 33 before December 1, 2013.  I guess if you feel that a 38%+ move in GM in a little over a year is highly probable, then you might be better off with the warrants/options/common. 

[stahleyp]

17, can you discuss a bit about how you're getting a 10% discount on the common? I'm not very familiar with convertibles. Thanks for the insight! :)

[persistentone]

No you're not missing anything.  Just a matter or preference.  I like getting paid 6% (at current price) to buy GM at a 10% discount to the common.  I recognize that I might be leaving some money on the table if the stock trades above 33 before December 1, 2013.  I guess if you feel that a 38%+ move in GM in a little over a year is highly probable, then you might be better off with the warrants/options/common.

 

17thstcapital, can you explain what is the issue with MTLQU trading about $33 before 12/1/2013?