Word: gm
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Dates: during 2000-2009
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Kerkorian took another big swing last week. His investment vehicle, Tracinda, named for daughters Tracy and Linda, announced it had bought 22 million shares of General Motors and planned to buy up to 28 million more, for nearly a 9% stake, which would make Kerkorian one of GM's largest and most potentially nettlesome stockholders. Why GM, and why now? Just a couple of months ago, when a friend broached the idea, the billionaire brushed it off. "He said, 'They have a lot of problems,'" recalls Mason. GM stock has been a dud, and despite popping 18% after Tracinda announced...
That Kerkorian doesn't even drive a GM car suggests he may not be in love with the goods. Loaded down with excess factory capacity, waning SUV sales and crushing health-care liabilities, the company is no quick turnaround play. So you have to wonder, What is he thinking? Kerkorian isn't talking--he has been virtually silent with the press since 1971. But there was no shortage of speculation on Wall Street and in Detroit. The scuttlebutt: that Kerkorian will try to force GM to spin off its lucrative financing unit, GMAC; that he will try to line...
Crazy as all this sounds--we're talking GM here, the world's largest automaker--Kerkorian practically wrote the how-to book on such tactics. In the late '70s he loaded up on shares of Columbia Pictures, then turned into such a litigious nightmare that Columbia bought his stake for a 50% premium, a settlement that Fay Vincent, then CEO of Columbia, called "greenmail" (a characterization disputed by a Kerkorian spokesman). In the '90s Kerkorian was at the center of a gear-grinding saga with Chrysler. After buying a big stake and standing by for a few years, he launched...
Christensen promises that Kerkorian will be a gentlemanly, silent partner this time. "We made a courtesy call to GM senior management and had a friendly conversation," he says. "They said, 'welcome aboard.'" In a perverse way, Kerkorian may be the bogeyman GM needs, allowing CEO Rick Wagoner to play the good cop in negotiations with GM's union, with the specter of a Kerkorian-led breakup in the background. GM can now go to the United Auto Workers and say "you can deal with nice Rick Wagoner or Gordon Gekko," says auto analyst Stephen Cheetham of Bernstein Research...
Whatever Kerkorian's motives, associates say his intentions are clear. "Kirk tends to be a long-term investor, and don't let the fact that he's 87 fool you," says friend Mason, suggesting that Kerkorian will wait patiently for a GM turnaround. Says Ralph Whitworth, a financier who worked with Kerkorian in the '90s: "He's not a control freak. He just likes to get good returns...