GM's Big Move to Cut Spending


Corvettes are sexy. Bond issues aren't. But both are important to GM's bottom line, and to the prospects for GM stock. Photo credit: General Motors.

It's not as sexy as an all-new Corvette or as fun as a new ad campaign, but the two big moves that General Motors made last week to shore up its finances are both at least as important to the health of GM and the prospects for its stock.

At first glance, those moves don't sound like much. First, GM announced that it had bought back some of its preferred stock from a UAW trust that had received it in lieu of cash payments while GM was in bankruptcy. Then, GM said that it would issue its first unsecured bonds since emerging from bankruptcy, with part of the proceeds going to pay for that stock purchase.

What's the big deal? As Fool contributor John Rosevear explains in this video, these two moves will save GM millions of dollars a year -- and even though it sounds arcane, that's something that should get GM stockholders excited.

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Fool contributor John Rosevear owns shares of Ford and General Motors. ou can connect with him on Twitter at @jrosevear.The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published