Kerkorian Is Boosting Stake in GM Again

Billionaire Kirk Kerkorian’s investment company said Wednesday that it was again boosting its stake in General Motors Corp. and might now seek a seat on the struggling automaker’s board of directors.

The move “is inconsistent with earlier statements that he’s just a passive investor,” said Sean Egan, a corporate bond analyst at Egan-Jones Ratings Co. in Philadelphia. “This is typical aggressive investor action.”

Kerkorian’s Tracinda Corp. said in a filing with the Securities and Exchange Commission that it wanted to increase its stake in GM to as much as 9.9% from the 9.53%, or some 53.9 million shares, now owned by the Beverly Hills investment company. Tracinda is GM’s third-biggest shareholder.

GM would not have to award Kerkorian any board seats, “but the investment climate today is very aggressive and the board would have to seriously consider a request,” Egan said.

As part of its filing, Tracinda said it didn’t “have a present intent” to acquire control or to attempt to influence management control of GM, but might want to seek representation on the company’s board.

Neither Kerkorian nor GM would comment on the filing.

In early May, Kerkorian began aggressively boosting his GM holdings -- at the time he held 4%. Since then, Kerkorian, 88, has been saying that he is merely a passive investor.

GM’s stock rose to $37.52 a share in late July after Kerkorian began buying at $31 a share. But the stock has been declining for the last two months. GM fell 38 cents Wednesday to $30.70.

Pinched by fierce competition, massive healthcare costs and a dependence on slow-selling large sport utility vehicles, GM lost $1.39 billion through the first half of this year. GM, which has been talking to the United Auto Workers about cutting healthcare costs, has a number of new models it expects will boost its U.S. sales.

“I think [Kerkorian’s] activity reflects how the stock price has been going,” said Craig Hutson, who follows the auto industry for Gimme Credit Publications Inc., a New York firm specializing in bond analysis.

Kerkorian’s effort to get a board seat will probably energize shareholders who believe that the company needs some new blood, Hutson said.

Not everyone believes that he could shake things up at GM.

“I seriously doubt he has anything to bring to the party except the ability to make more money for himself,” said David Healy, an auto industry analyst at Burnham Securities. “GM might be better off humoring him and giving him a seat on the board if that’s what he really wants.”

Kerkorian got into the auto business in 1990 by investing in a faltering Chrysler Corp. In 1995, he teamed with former Chrysler boss Lee Iacocca in a hostile takeover bid for the company that failed when he was unable to raise the financing.