Tracinda Hits the GM Brakes

York resigned from his board seat after GM broke off talks with Renault-Nissan about a global partnership that Kerkorian had publicly supported. Shortly before the partnership talks broke down, the Vegas mogul indicated he would take the legal steps necessary to boost his stake over the 10% threshold. Afterward, he reversed course.

His latest move suggests that Kerkorian may not press his case at GM in the form of a proxy battle against management, as many investors had speculated after York's resignation relegated Tracinda back to outsider status at the automaker.

"This lessens the likelihood of that to some degree," says Toomey, who owns shares of GM and holds a buy rating on the stock.

Meanwhile, news of the lowered GM stake comes just after the Vegas tycoon's investment firm disclosed that it's boosting his investment in casino operator MGM Mirage (MGM Quote).

"This may just mean that Kerkorian wanted to beef up his position elsewhere," says Toomey.

It may also reflect recent concerns about upcoming labor negotiations at GM and its bankrupt supplier and former subsidiary, Delphi. Both companies are struggling to cut costs under pressure from foreign-based manufacturers, and the heavy burdens posed by their pension and health care obligations to unionized workers are widely viewed as the logical place to lower the hatchet.

"Kerkorian bought GM because he liked the fundamentals, and he still owns a big stake in the company because he likes the fundamentals," says David Healy, analyst with Burnham Securities who also owns the stock and recommends it to clients. "Before investors let this news scare them off, they should look at the dramatic turnaround in operating earnings that has taken place and GM this year and realize that it's going to continue."