General Motors Corp. shares extended losses Wednesday, skidding to a double-digit decline this week after top individual shareholder Kirk Kerkorian disclosed in a filing that he sold 14 million shares.
Concerns that the giant automaker is headed toward a tough round of union contract talks also pressured the stock over the past few days.
In midday trading, the Dow component (GM : General Motors Corporation
GM32.03, -0.58, -1.8%) was down another 3.3% to $31.53, having started the week at $35.37.
Kerkorian said in a filing with the Securities and Exchange Commission that, after the recent transaction in which he sold the 14 million shares at $33 each, his stake in the company is now 7.4%, down from 9.9%.
Shares of the Detroit-based GM closed off 4.6% at $32.61 on Tuesday, retreating after United Auto Workers President Ron Gettelfinger said the union plans to fight to defend terms in its existing deal when contract negotiations kick off in July.
The thorniest of these issues looks to be the controversial "jobs bank" program, under which laid-off workers continue to draw nearly full pay and benefits.
"These are monumental talks, and there's a lot of anxiety out there among investors and analysts over the Delphi and jobs bank issues," said David Kudla, Mainstay Capital's chief investment strategist. He manages the savings for about 1,000 GM retirees and employees.
"These negotiations are going to be much more contentious than years past," he said.
The stock weakened early when word that Kirk Kerkorian is upping his investment in MGM Mirage MGM54.21, +5.21, +10.6%) stirred concerns the billionaire investor might be moving his focus, and cash, away from General Motors.
Tracinda Corp., Kerkorian's investment vehicle, announced plans to buy 15 million MGM Mirage shares at $55 each. The bid represents a 12% premium to MGM's closing price of $49 on Tuesday. If the tender offer is completed, it would raise Tracinda's stake in the casino operator to 61.7%. See full story.
Despite the retreat this week, GM's stock is still up more than 30% in the past year as the company's massive restructuring efforts have drawn approving nods from Wall Street.
GM bonds have also been pulled into the sell-off, with spreads widening both Tuesday and Wednesday.
Spreads represent the difference between the yield on a corporate bond and the yield of a Treasury bond of comparable maturity.
Narrower spreads signal investor confidence, while wider spreads point to wariness.
Shelly Lombard, an auto industry credit analyst with GimmeCredit, said that the idea of GM without Kerkorian is spooking investors.
"He's been an advocate for positive change at the company," she said. "He is seen as spurring management along and making sure that the company does the right thing. People think that the loss of an advocate would hurt the company."
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