When has Chrysler ever been worth $188 billion before? Never

You have to marvel at Stephen Harper and his total naivety and complete incompetence on matters pertaining to investments and the stock market. He can’t get anything straight;

First he trashes Canadians’ life savings and source of retirement income by $35 billion by first promising never to tax income trusts, and then turns around and does exactly that using the fraudulent argument that income trusts cause tax leakage using an analysis that treats deferred taxes like exempt taxes. Does the man not understand rudimentary finance?

Second he campaigns during an election and actually encourages people to put money in the market, Perhaps he was hoping to nuke them a second time. If so he succeeded, since the market tanked by about 30% immediately thereafter.

Now he is investing $3.8 billion in bankrupt Chrysler for a 2% stake, at a time when car sales are moribund and Chrysler has a weak product line up. That implies a market value/enterprise value for Chrysler of $188 billion. Does Harper even know what the term enterprise value means? Maybe he should check with his “in-house” financial advisor Dominic D’Alessandro who could have informed him of the following, as being the recent high water mark for the valuation of Chrysler at a time when it was the subject of a takeover/merger with Daimler Benz:

Back in 1998 before the Daimler Benz merger the stock got up to $59 with about 685 diluted shares outstanding, so market cap peaked at about $40 billion. At that point they had about $17.6 billion in debt and $8.7 billion in cash so Enterprise Value was about $49 billion.

At that point (based on 1997 data as merger occurred in the middle of 1998) their EBITDA was $8.3 billion and Net Income was $2.8 billion, Cash from Operations was $6.4 billion, Free Cash flow was negative as capex was pretty high that year.

So here we have Harper paying roughly 4 time as much for a company, whose metrics are the worst they have been. This guy is completely lacking in experience and judgment. And wreaks financial havoc wherever he goes.

Speaking of the worst things have ever been, did I mention who our Prime Minister cum Portfolio Manager of Canada is?