Kaminsky's Call: Big Players Win Out Over Mom and Pop Investors
Morgan Stanley, Vice Chairman
Is what's good for General Motors, good for the hedge fund industry?
That appears to be the early read. According to Kate Kelly's excellent reporting, heavy demand from institutional buyers will prevent retail participants from getting a piece of the most hotly watched IPO (initial public offering) since Google, this despite early whispers from bankers that a third of the offering would go to mom and pop investors, and the fact that the U.S. taxpayer financed GM's bailout in the first place.
But it gets even better. That's because big players are going to profit off the little guy again, and here's how.
GM is expected to price next week in the $26 to $29 range, but indications in the bond market suggest it could trade as high as $35.
With returns like that, it's little wonder hedge funds and mutual funds are leaping over each other to get a piece.
But instead of holding it, these so-called "long-term" investors will look to flip it at a profit to the same retail player who couldn't get in in the first place.
Thank you Uncle Sam.
A key tell? Volume. If the number of traded shares exceeds the float, we'll know for certain the stock was flipped.
I know who the real winners are gonna be, but what do you think? Click here to send me an email and I'll respond on this blog.
Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
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