By IPOfinancial.com; The Street ~ Aug 19, 2010

There is one thing that we are thankful for with the General Motors(GM) filing -- the simple fact that it is now a reality. The TV media has hammered this entire "upcoming GM filing " announcement as if it were going to be a seismic event for the market. The reality is that it is important for GM and not an "all clear" signal for the IPO market. Well, the offering is out and now the smoke has to settle.

The first thing investors have to get past is the sheer size of the prospectus. With more than 500 pages, GM has left no stone unturned regarding disclosure. In fact, it probably brings new meaning to the phrase "full disclosure." The key to this offering is to gauge the before and after transition of what GM used to be vs. what it is today. In that area, GM gets marks that go off the scale for a brilliant job of being reborn.

Most of the time, criticism gets pushed in the area of the legal teams of those companies going public. We are not going to do that. In fact, we would give them a strong dose of praise for the incredible job the legal team did to reduce costs in the bankruptcy.

Moving forward, the real question is what will happen to the taxpayers in this deal. This is a simple posture for us. The taxpayers did not have the choice whether or not to get involved with the bailout of GM, and certainly they don't have any say in the exit strategy.

The taxpayers are not going to get a 1099 when the deal is done. Will the shares offered by the government be offered at too low a price? We believe yes, because valuation models are very low for IPOs in general. Ideally, this is not the right time to be coming public as an issuer, because this is a buyer's market.

The pressure will be coming from the administration, in our opinion, to get this deal done before the election, so that all the candidates that were in favor of the bailout can gain the mileage from hammering home how their vision of prosperity was borne out. It also serves to squash the banter about how the U.S. was turning into a socialist government. That's just more fodder for the supporters of the bailout.

But the big question is whether or not investors will get behind this offering. Even though there are no terms in the prospectus for valuation considerations at this point, we believe this offering is destined for success. The reasons will be numerous, but most of the institutions will be involved in this offering because of GM being a company that will be added to a multitude of indices. That is separate from the basic strong fundamentals of GM that are very self-evident in the prospectus.

If you want to know about the strategic initiatives for GM, you will find them in the prospectus. If you want to know about the cost savings that came about as of the bankruptcy, you know where to find them. In fact, the most interesting subject in the prospectus is the business of GM and how most people perceive the U.S. to be their largest source of revenue. The reality is that only 33% of the company's revenues come from the U.S.

Getting back to considerations by investors to get involved with the GM IPO, it must be very clear that this is not going to be a stock that will open with a big premium. This is about going back to basics in IPO investing. Remember the phrase "long-term capital gains?" If you don't have that mindset, don't obsess about whether or not you should be in the deal.

We do not know what the tentative price range is going to be, but keep this in mind, the government owns 45+ mil warrants to purchase an equal amount of shares of common stock at $30, and an additional 45+ mil warrants at $55 per share. The big shocker is that 15+ mil warrants are owned by the UAW pension system at an exercise price of $126.92 per share.

We question if the person at the UAW who negotiated that deal has a job today. We point this out to show how the price range disparity triggers questions as to how valuations during the bankruptcy period were all over the board.

What to do? Take a deep breath and don't get crazy between now and when the terms of the offering are released. The news media will do their best to stir the pot of controversy until that time. This will be your time to actually read the prospectus to gain some perspective on what GM really is today.

We still don't know how much of the stock is going to be sold in this offering from all the holders, and how much convertible preferred stock will be sold. That is why we said that we have to wait until the smoke settles. By the way, the proceeds of the preferred offering will go directly into GM's bank account.

We will follow up with more articles as more information and terms become available.