Why is there so much trading on GM today, when it's the last day before de-listing? Who's buying, and why? What does a share get you?
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M$2 Answers
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M$
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M$
That's the gist of what I'm seeing. Quoted from the link you provided on Chapter 11 re-organization:
"In most instances, the company's plan of reorganization will cancel the existing equity shares."
So, everyone rushing to buy at <$1 right now will likely lose everything along with the other existing stockholders.
From Morningstar (http://quicktake.morningstar.com/Stocknet/san.aspx?id=293365):
"Thursday's 8-K filing also outlined a possible capital structure of the new GM upon emergence from bankruptcy. The new company will have $17 billion of debt ($8.0 billion owed to the U.S. Treasury, $2.5 billion owed to the voluntary employees' beneficiary association, and $6.5 billion of other debt). Also, $9 billion of preferred stock will be issued, with $6.5 billion of it going to the VEBA and $2.5 billion to the Treasury. GM's common equity will be 72.5% owned by the U.S. Treasury (although some of this amount may eventually go to the Canadian and Ontario governments), 17.5% owned by the VEBA, and 10% owned by the unsecured bondholders. This allocation means existing GM stockholders would have their entire stake wiped out, so we see no reason to buy GM stock."
Many mutual funds are "indexed" to the Dow industrials, meaning that they are obligated by their prospectus to maintain holdings that match the Dow. Therefore the delisting of GM (and Citi group) required them to sell those positions.
As for who is buying? I suppose one can always find a buyer at the right price. Some may consider it an opportunity to buy in large holdings at a very low price assuming that GM will survive (quite likely) and perhaps even thrive once again (somewhat more speculative)
I understand the removal from the Dow Index...the new lineup comes out on June 8. That's different than delisting from the NYSE, which occurs tomorrow (June 2).
To whom does one liquidate? In order to sell, there has to be a buyer. Who's buying?
You'll have to pardon my layman's understanding of the market. I thought everything was buy-sell...a two-sided transaction.