Despite Warning, Investors Flock To GM Stock

The management of Motors Liquidation Co., the new name for the old General Motors, is reminding investors of its "strong belief" that the company's stock will have no value. That, however, isn't deterring investors. Motors Liquidation Co. CEO Al Koch calls the trading "a little bit of a head-scratcher."

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ROBERT SIEGEL, host:

We have a stock tip for you: Don't buy stock in Motors Liquidation Company. That should go without saying since the management of Motors Liquidation Company on the companies Web site reminds investors of its strong belief that the stock will have no value. At the moment it's trading for under a dollar a share and some investors are apparently buying and selling it. Motors Liquidation Company is the new name for the old General Motors, which is bankrupt. So far there isn't any stock for sale in the new General Motors and it's a little puzzling that people are buying and selling stock in the old one.

Joining us is Al Koch whose corporate consulting firm is now in charge of the old GM. So he is the CEO of Motors Liquidation Company. Welcome to the program.

Mr. AL KOCH (CEO, Motors Liquidation Company): Well thank you very much.

SIEGEL: You're a CPA, you're an expert in bankruptcies. First, why is there any trading at all in the stock of a bankrupt firm that's in liquidation?

Mr. KOCH: Well it's always a little bit of a head-scratcher but it occurs in virtually every bankruptcy. I saw it also in Kmart and Delphi. And in almost no large bankruptcy do shareholders ever see any recovery whatsoever. But I can't think of a single, large bankruptcy where the stock didn't actively trade. And Motors Liquidation is no exception.

SIEGEL: Yeah. I read last week that almost 13 million shares traded last Thursday. Is that about what you're seeing in terms of volume?

Mr. KOCH: You know, I don't track the daily volume but I did read that there was substantial trading. General Motors says over - the old General Motors -has over 600 million shares outstanding so it doesn't surprise me that trading would be at that level.

SIEGEL: Who do you figure would be buying stock in Motors Liquidation Company nowadays?

Mr. KOCH I believe that there is probably a fair bit of day trading that goes on. And then there are some people who are covering short positions and perhaps other people who mistakenly believe that they're investing in new General Motors Company.

SIEGEL: If I understand trading rules, Motors Liquidation Company is traded not the way ordinary stocks of solvent companies are but on pink sheets. It has a two Q's actually in its ticker symbol which means - it's a caution, I gather. So there'd be plenty of signs saying danger don't buy this stock?

Mr. KOCH: Absolutely.

SIEGEL: And yet some people are out there buying it.

Mr. KOCH: Unfortunately, they are.

SIEGEL: Now you…

Mr. KOCH: Very unfortunate.

SIEGEL: …you are commonly described as a turnaround expert so that might have some people thinking, well, maybe it'll turnaround, maybe something will come of this stock.

Mr. KOCH: Well, I hope they're not thinking that because we've made it very clear that what we're going to do is sell off the assets and do environmental remediation, and ultimately settle the claims and distribute the stock that we're holding for the creditors of old General Motors Corp.

SIEGEL: So is there a date you have in mind that could be the final closing of the doors on this company?

Mr. KOCH: Not at - it's a little too early to estimate when that might be.

SIEGEL: And again just to summarize here, somebody who is tempted to buy stock in Motors Liquidation Company, your guidance as it's CEO is…

Mr. KOCH: Absolutely do not buy.

(Soundbite of laughter)

SIEGEL: Okay, thank you very much for talking with us.

Mr. KOCH: My pleasure.

SIEGEL: That's Al Koch, who is a CPA and who is now the CEO of Motors Liquidation Company - that's the new name for what used to be called General Motors.

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