I had an interesting conversation with a hedge fund manager on the way home tonight — he bet me (an expensive dinner) that 5 years from now, GM is back int he need of some reorganization.
His view: GM is not as clean as it appears, the disclosures on the book (prospectus) note that the “We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”
And, he argues, the Fed has to raise rates eventually — ending the cheap financing that helps GM;Lastly, the company is not strong enough to survive the next recession.
I took the bet — 5 years hence, GM should still be here surviving.
How would you have bet ?