Why Does GM Have So Much Cash?

General Motors (NYSE: GM  ) maintains a huge cash reserve, over $20 billion worth. That has led many observers to ask: Why doesn't GM return that cash to shareholders with a big dividend, or invest it in something, or pay back the federal government for its bailout?

It turns out there are very good reasons for GM to be holding a huge cash position. In this video, Fool.com contributor John Rosevear takes a closer look at what GM is thinking -- and at why the company's fans and shareholders should cheer GM's newfound financial discipline.

Few companies provoke such strong feelings as General Motors, but ignoring emotions to make good investing decisions is hard. The Fool's premium GM research service can help you understand the real risks facing General Motors -- and the real opportunities for investors. Just click here to get started now.


Read/Post Comments (10) | Recommend This Article (5)

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  • Report this Comment On June 18, 2013, at 11:43 AM, AmericanFirst wrote:

    John,

    I'm sorry, your presentation of GM's Fortress Cash Position / Balance Sheet was laughable. GM's 'Fortress Balance Sheet" is a primary result of Obamaruptcy as follows: $50B cash bailout funding, $45B income tax benefits (which will prevent GM from paying corp. income taxes for years), fleecing GM Bondholders for $30B, which will and has saved GM $B's in interest expense in future years, plus non-payment of the principal. .

  • Report this Comment On June 18, 2013, at 12:01 PM, ramesses05 wrote:

    They have all that money because they did not pay back everything they owed us taxpayers!

  • Report this Comment On June 18, 2013, at 12:24 PM, npruitt wrote:

    I know one reason why the have some money . They keep jacking up the price on Cadillacs and lowering the quality on them. Its sad when a Chevy malibu thats half the cost of a Cadillac is better equipped and better built!

  • Report this Comment On June 18, 2013, at 1:14 PM, ValueInvestor999 wrote:

    Very good points AmericanFirst .... I might also add that since the unsecured bond holders were technically fleeced in the courts since the pensions/unions got illegal preferential treatment over them , it will be a long long time if ever that GM can borrow unsecured debt.

    I wouldn't lend GM a nickel after what happened.

  • Report this Comment On June 18, 2013, at 1:31 PM, TMFMarlowe wrote:

    @npruitt: You and I must be looking at different Cadillacs. The new ones I've seen have been a big step forward. Go check out an ATS or XTS... nice cars.

    @AmericanFirst: For a guy who claims to be a patriot, you sure are stuck on coming up with more and more dubious reasons to bash an American company on the upswing. I remain unimpressed.

    John Rosevear

  • Report this Comment On June 18, 2013, at 1:52 PM, BillD64 wrote:

    Not sure why everybody thinks GM hasn't paid back the loans. They never spent the money they borrowed and paid it back a while ago. The major investment the government made was purchasing stock in the new GM. The big issue in the bankruptcy proceedings was the major haircut they gave GM's Bond holders who really got screwed. The government will get their money back when Bunghole US car buyers realize they own a piece of a company and buy that companies products to support their investment. That will cause the stock to go up and when the government sells it will get its money back or even make money. You hear all of this Government Motors bs and then you hear all the myths about quality and they just aren't true. GM builds a competitive product and doesn't get credit for it because of BS.

  • Report this Comment On June 18, 2013, at 3:12 PM, NineD930thTA wrote:

    The people who cry the taxpayer is owed money need to shut the heck up. You tools dont realize you have no claim to that money at all so why do you care? You should be more concerned with the government giving taxpayer money to Syria and all these other countries with no repayment or benefit at all to the USA but you dont say boo about it.

    You are hypocrites plain and simple. Banks screwed up and forced the government to do what they did and you fault GM and Chrysler. Then when the banks were restricted for Exec pay all of a sudden they came up with the same amount of cash they didnthave but needed to pay the government back. They got it by screwing their customers.

    Yes bond holders got the shaft in the GM bankruptcy but guess what someone always gets the shaft in chapter 11 protection. ALWAYS!

  • Report this Comment On June 18, 2013, at 4:03 PM, rachael321 wrote:

    Pennystockchief dotcom (Dot means .), is a central hub for analysis on GM stock as it provides great insight

  • Report this Comment On June 18, 2013, at 5:09 PM, dennypat38 wrote:

    Hear again it is not about people not likeing GM it is about paying the money BACK. And the VILLAGE IDIOT ROSEVEAR will not write a story on the OVER 100 BILLION from the Bush and OBAMA ADM. They STILL owe 40 BILLION or MORE and that is the REAL WORD

  • Report this Comment On June 18, 2013, at 6:29 PM, AmericanFirst wrote:

    John,

    I'm not bashing GM, I was stating facts that contradicted your slobbering comments regarding

    GM's Fortress Balance Sheet, which again is a primary result of gov. wealth (taxpayer) redistribution as I identified in my previous comments. Like Jack Nicholson stated "you can't handle the truth."

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