From Fleck:
Mr. Kerkorian Completes a Flawless Triple Axle
Turning to what Mr. Kerkorian is up to, my guess is as follows: He made a bold maneuver in buying his first 22 million shares of GM at around $26.33 (according to his press release). Now, with GM trading higher than its bid, he could walk away from the tender, sell the stock, and make a tidy profit.
Whether or not he'll do that, I don't know. I can only say that it would be extremely unusual (unless the stock was illiquid) for somebody who really wanted to own the stock as an investment to make a tender offer above the price the stock was trading at, when he could have quietly accumulated those shares to the point where he'd purchased 4.9%. After that time, he would still have had 10 days to buy stock before making his 13D filing.
Therefore, Mr. Kerkorian's ploy strikes me more as gamesmanship than a serious desire to take a major stake in GM. It looks like it was a brilliant maneuver that appears to have worked. (Fortunately, I was not caught short the stock when this occurred.) In any case, this does not change my view that GM's equity is headed to zero -- unless somebody can get the union, pensioners, and bond holders to take sizable prospective haircuts. Then, all the assets that GM has lent against need to be money good. Could all that happen? Sure. Will it? Not likely.
The Moral of the Short Story
Kerkorian's maneuver also shows how difficult life can be on the short side, as you have to worry about all the different ways that you can get hurt. This is another reason why I encourage folks at home not to mess around with short-selling. It looks easy while stocks are going down, but trust me, it's anything but.
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