updated 12/21/2005 10:47:02 AM ET 2005-12-21T15:47:02

Billionaire investor Kirk Kerkorian reduced his stake in General Motors Corp. to 7.8 percent this month, taking a significant loss on his investment in order to qualify for a tax break, according to a regulatory filing.

Kerkorian — who has lobbied for greater input over GM’s operations and a seat on the automaker’s board — owned nearly 10 percent of the company’s shares at the beginning of December. He sold 12 million shares in transactions on Dec. 15 and Dec. 19, according to the filing Monday by his private investment firm with the Securities and Exchange Commission.

The sales represent a loss of at least $120 million, based on the company’s higher share price earlier this year.

Beverly Hills-based Tracinda Corp. said it sold the shares so that it can end its fiscal year with a capital loss, making it eligible for certain federal and California income tax breaks. The loss will offset certain gains from an unrelated transaction, the private equity firm said in the filing.

A spokeswoman for Tracinda said the company had no comment beyond the filing.

David Healy, an analyst who tracks GM for Burnham Securities Inc., said the move could suggest Kerkorian has cooled off a little on GM.

“Selling a good chunk of his holdings after he’s taken a bath on it does not build confidence that he’s really a long-term investor there, but it’s hard to say,” Healy said. “I’d be surprised if he sold the whole thing.”

Even after the stock sale, Kerkorian, who sold his stake in the MGM movie studio last year for more than $2 billion, remains among the largest individual GM shareholders. The MGM deal closed in April.

Before the sales, Tracinda had been steadily increasing its stake in GM for several months. A bid by Tracinda to get a seat on the GM board appeared to hit a snag earlier this month as discussions between the automaker and the investment firm stalled.

Kerkorian sold his GM shares at $22.02 apiece in the first transaction and $20.21 in the second sale — realizing $251.6 million total. He paid $31 a share, or a total of $585.9 million, for the 18.9 million GM shares he bought in June, a purchase that raised his stake in the company at that time to 7.2 percent from 3.89 percent.

He paid $460 million for an additional 13.1 million shares in three transactions in September.

GM shares dropped to their lowest point in more than 15 years Tuesday, and closed down 5.7 percent at $19.85 on the New York Stock Exchange on reports that Asian rivals are increasing their market share Toyota Motor Corp. poised to overtake GM in terms of global production.

The Detroit automaker, which has struggled amid slow sales of trucks and sport utility vehicles, recently announced a number of plant closures and job cuts.

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