Breakingviews: GM is better off avoiding David Einhorn's proposal

Breakingviews
Tom Buerkle
David Einhorn
Adam Jeffery | CNBC

General Motors looks like it could do with some tinkering. The U.S. automaker has roared back from its 2009 bankruptcy, posting record profit in North America last year. Its shares also have outpaced the over the last year, but trade at just 5.6 times expected 2017 earnings, the lowest valuation in the index. That explains why hedge-fund boss David Einhorn wants to try some financial engineering.

His Greenlight Capital claims a proposed stock split would add as much as $38 billion in value at $54 billion GM. Einhorn's plan, which he will push at the annual meeting after months of trying and failing to win over Chief Executive Mary Barra and the board privately, would give investors one share for each they already hold entitling them to the company's annual $1.52 dividend in perpetuity and another that would hand over any additional profit generated from growth.