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Two investors score big in GM purchase

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Two investors score big in GM purchase

David Shepardson / Detroit News Washington Bureau

Washington -- Among the big winners today of General Motors Co's decision to buy AmeriCredit Corp: two big institutional investors.

GM said it would acquire the Texas-based lender for $3.5 billion -- or $24.50 a share -- a 25 percent premium. On Thursday, 70.7 million shares traded hands, nearly 50 times the usual volume as the stock closed at $23.92.

Leucadia National Corp. -- a New York-based holding company that's been called a "mini-Berkshire Hathaway" -- holds a 25 percent stake in AmeriCredit, or nearly 34 million shares, according to its most recent disclosures statement.

Leucadia acquired its stake for $418.6 million; with GM's deal to pay a 25 percent premium for AmeriCredit, the investment is worth about $825 million at the sale price.

Another major investor, Fairholme Capital Management LLC, holds 31.5 million shares of AmeriCredit, or about 5.2 percent of its total holdings, according to securities filings. It also holds another 3.3 million shares indirectly through its investments in Leucadia.

Leucadia's stock jumped 7 percent on the news to $21.32.

In its annual report, Leucadia explained why AmeriCredit was a strong company.

AmeriCredit has done well and made "profits by being able to select more credit worthy customers and to charge more for loans," Leucadia said. "As in much of life, (AmeriCredit)'s secret to success is discipline."

While eventually other competitors may jump back into the market just to make lots of loans -- even if it isn't wise -- AmeriCredit will be patient.

"We hope (AmeriCredit) will eschew volume, efficiently harvest its portfolio and watch the lemmings as they launch themselves off a cliff," they wrote.

Leucadia agreed to support the GM acquisition. In a securities filing, they agreed not to sell their shares.

From The Detroit News: http://detnews.com/article/20100722/AUTO01/7220472/1148/auto01/Two-investors-score-big-in-GM-purchase#ixzz0uVefbToo

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