General Motors Company (GM) & American International Group, Inc. (AIG): Why These 2 Bailout Stocks Are Up Today

U.S. stocks opened up this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average (INDEXDJX:.DJI) gaining 0.24% and 0.15%, respectively, at 10:05 a.m. EDT.

2 bailout babies mature
Call it a comeback! After yesterday’s market close, S&P Dow Jones Indices announced that it will add automaker General Motors Company (NYSE:GM) to the S&P 500 and the megacap S&P 100 index after Thursday’s close. GM will replace H.J. Heinz Company (NYSE:HNZ), which is being acquired by a group that includes Berkshire Hathaway. The index provider will also add another bailout stock, insurer American International Group, Inc. (NYSE:AIG), to the S&P 100. This is a big deal, particularly for General Motors Company (NYSE:GM) — $1.3 trillion in assets are indexed on the S&P 500. Little wonder the stock is up 1.8% this morning.

While American International Group, Inc. (NYSE:AIG)’s shares traded on the New York Stock Exchange throughout the crisis, General Motors Company (NYSE:GM)’s were de-listed after the company declared bankruptcy in June 2009. In November 2010, the company offered new shares to the public in one of the largest IPOs in U.S. history. However, the stock is roughly flat since then — in a roaring bull market:

GM Total Return Price data by YCharts.

Worse yet, investors have had to endure substantial downside swings without the sort of upside compensation that American International Group, Inc. (NYSE:AIG) shareholders have enjoyed. Indeed, AIG, has absolutely demolished the S&P 500 since the latter put in its low on March 9, 2009: