With GM a Cost-Cutting Story, Will Kerkorian Cut and Run?

Bill Smith of SAM Advisors says something I agree with in this Wall Street Journal report:

Mr. Kerkorian in the past has sold GM shares only to turn around and repurchase the same amount. He made such a move last January, when he bought back 12 million shares he sold in December. Less than two weeks after disclosing that move, Mr. York was awarded a seat on GM's board.

However, Bill Smith, president of SAM Advisors in New York, said it's more likely now that Mr. Kerkorian plans to continue selling. GM's turnaround "is still a cost-cutting story, and [Mr. Kerkorian] doesn't want it to be," said Mr. Smith, who owns GM shares.

My hunch is that Kerkorian is in the process of unloading his General Motors (GM/NYSE) position. It's just that -- a hunch -- and nothing more. But I'm thinking he probably hasn't been able to get the company's other major shareholders to join his crusade.

Remember, the top five or six GM shareholders controlled the majority of the stock as of a few months ago.

So even if he couldn't sway the Board of Directors, he could still wreck havoc on GM management during any proxy fight. IF he had the votes. It's looking like he doesn't.

But my investment in GM isn't based on Kerkorian being bullish or bearish on the company. Long time Controlled Greed.com readers know I bought the stock BEFORE Kerkorian came on the scene. And I'm prepared to continue holding should he leave it.

One thing in the linked WSJ report that popped out at me is this:

Tracinda disclosed the GM share sale in a filing with the Securities and Exchange Commission. The firm said it agreed on Monday to sell 14 million shares in a private transaction for $33 a share, and that the purchase will be settled today. It was unclear who bought the shares.

I wouldn't mind knowing who bought that block of stock.

Comments

[2L]

wasn't his buying back last Jan completing the flipside of his sell in Dec for tax reasons?

[John]

2L: Yes, that's my memory.

[Cris]

What do you think about recent 2for1 stock split announced by WLT and 1.9MWA stock for every 1WLT stock distribution?
Is this a + or - development and what significance has for the share price of your hodlings (WLT and MWA)?

[John]

Cris: WLT spinning off the remainder of Meuller Water has always been in the cards, so it has no effect on my long-term view of the company.

[Cris]

Ok, so if you are a WLT shareholder you get 1.6-1.9 stocks of MWA?

[John]

Cris: According to WLT's website, when the spinoff happens in December, shareholders will receive approximately 1.68 or 1.65 Class B shares of Mueller Water. The exact number depends on the exact number of shares outstanding on the spinoff date.