Moments ago, General Motors holder Greenlight Capital released a presentation in which David Einhorn recommended that GM should distribute, on a tax-free basis, a second class of common stock that the holder calls “Dividend Shares.”
Greenlight wants GM to split its common stock into two classes: one that pays dividends and a second that would entitle its holders to all earnings, including stock buybacks, after the dividend is paid, according to people familiar with the matter. Greenlight believes the move could attract new investors who are willing to pay more for potential earnings growth. GM has a market value of about $52.2 billion, and it pays an annual dividend of $1.52 per share.
The Dividend Shares should trade separately from the existing common stock. As shown in the presentation below, Einhorn believes that the proposed plan will unlock between $13 billion -$38 billion of shareholder value.
However, as CNBC's David Faber reports, GM said to not agree with Greenlight’s proposal as it would jeopardize GM's IG investment rating. Even so, GM shares are up 3% after Einhorn's activist presentation. To be sure, this is not the first time Greenlight has pushed for higher prices at GM, which is one of his top holdings: Einhorn said as far back as October 2012 that GM has a chearp valuation.
His full presentation below (link).
http://www.scribd.com/embeds/343290943/content