Question

Has anyone made GM valuation? On Damodaran's site the ROE of GM is reported -115,06%. Is it a non-cash ROE?

Answer 1

That is with 2009 data and it is a regular ROE. GM's book equity was negative in 2009. If you are looking at GM today, you have to reboot and start fresh.

Answer 2

When I received your e-mail about GM IPO I begun to evaluate the IPO price.I used the data from SEC filings up to June 30 and calculated the non-cash ROE -193,34% as a result of negative difference between last year's Book value of Equity (2009 $21,957) and Cash and Marketable Securities ($22,813).So I used the regular ROE of 7.54% (I mean NI at the end of June 2010/BV of Equity2009).The value per share according to FCFE valuation was 37.38$. But to find it's fair market value I decided to take into account the options and warants granted to MLC (136363636 shares at 10$ and another warant at the same quantity at 18.33$) and New VEBA (45454545 shares at 42.31$ per share).The waighted avarege price would be` (37,38*478000000+10*136363636+18,33*136363636+42,31*45454545)/(478000000+136363636+136363636+45454545)=29.71$ per share.Now it's traded at 30-32$,is it a fair market value?