Barely a month after dumping 12 million shares of General Motors (NYSE: GM ) , billionaire investor Kirk Kerkorian is bulking up on stock in the automaker again. According to this filing with the SEC, Kerkorian bought the stock in two separate purchases on Monday and Tuesday. His buy-in prices ranged from $21.40 to $22.25 per stub, both equaling a healthy discount to today's levels.
I'll admit that the conspiracy theorist in me started dancing on the precipice of the absurd the minute I first read about the buy. Fortunately, my cool-headed editors have since talked me down off that slippery ledge. But I still think something is going on, and it may be a lot more than tax-loss selling. (That is, selling shares that have lost money to offset gains realized during the year, thereby reducing capital gains tax.)
Remember what's happened over the past month. First, Kerkorian sold in late December. Then, a little more than three weeks later, he sent his top adviser to the Detroit Auto Show to tell analysts what he believes GM should do. On the proposed to-do list: cut the dividend by 50%, reduce annual compensation costs from $27 to $30 billion to $16 billion or less, and dump non-core brands such as Saab and Hummer. So far, there's been no action from GM on any of these items. Only a giant miss in the latest quarterly earnings report. Whoops.
Kerkorian has been seeking a seat on GM's board for some time. Thus far, he's been rebuffed, despite holding a 9.9% stake in the company for much of 2005. Thanks to this week's purchases, however, his ownership stake is once again bumping up against 10%. The bottom line? I wouldn't be surprised if his negotiations with the board begin again very soon.
Don't drive away yet! We've got related Foolishness for you:
- How's that for a coincidence? Both GM and I went into a ditch.
- GM's dividend is about as stable as a 100-year-old wood-plank bridge in a mold forest. Or something like that.
- The first step to solving a problem is admitting that you have one, GM.
Tired of stocks that overpromise and underdeliver? Stick with what works by getting paid to invest. Sign up for a risk-free 30-day trial toMotley Fool Income Investor, and you'll get access to all of chief analyst Mathew Emmert's market-beating picks and advice on more complex investments, such as real estate investment trusts and master limited partnerships. Or subscribe or renew today, and we'll throw inStocks 2006, which features our analysts' best picks for the year ahead. All you have to lose is the prospect of a richer portfolio.
Fool contributor Tim Beyers really put his Mercury Mountaineer in a ditch last week. He thinks it unlikely a GM truck would have spared him the experience. Still, wouldn't it have been cool if it did? Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.