Kerkorian's Tracinda Sells 12M Shares of GM

Posted by Jason R. Job

Late yesterday, when General Motors (NYSE: GM) closed trading at a 23-year low, Tracinda, the investment vehicle for Kirk Kerkorian, filed with the SEC that it has sold 12 million shares of General Motors, reducing its stake to 44 million shares.  The SEC filing can be found here.  According to the filing, the following describes the purpose of the sale:

On December 15, 2005, and December 19, 2005, Tracinda sold 5,000,000 shares and 7,000,000 shares, respectively, of General Motors common stock in private transactions. Tracinda sold these shares

because it is eligible for substantial federal and California corporate income tax savings if it incurs a capital loss prior to the end of its current fiscal year, January 31, 2006. The capital loss will offset certain capital gains realized by Tracinda in an unrelated transaction. The Filing Persons may determine, based on market and general economic conditions, the business affairs and financial condition of General Motors, the market price of its shares and other factors deemed relevant by the Filing Persons, to acquire or dispose of additional shares. In this regard, the Filing Persons may consider acquiring additional shares when they are able to do so without jeopardizing the tax benefits realized as a result of the sales described herein.

Kerkorian's Tracinda sold the shares of general motors for $251 million.  A far cry from the $372 million he would have paid for those shares from his $31 per share May 2005 tender offer.

Even though Kerkorian's reason for selling the stock, I feel is somewhat legit.  I do question whether his true motivation is to lessen his stake in a company that is having some major problems, allowing him to sleep better.

Today, GM shares have traded as low as $19.30, but currently are trading for $20.15.