Fidelity Sells Off More than One Third of Its Chrysler Holdings

08/19/96

Reuters reported that a group led by Fidelity Investments, Chrysler Corporation's second-largest shareholder and the country's biggest mutual fund manager, disclosed that it sold more than one third of its shares in Chrysler last month.

FMR Corporation, Fidelity's parent, notified the Securities and Exchange Commission that the group reduced its Chrysler holdings down to 57.2 million common shares, which is 7.85 percent of Chrysler's outstanding shares.

Last February, before Chrysler's two-for-one stock split in July, the group held 13.07 percent of Chrysler's outstanding shares (49.6 million common shares).

The group's announcement did not seem to trouble Chrysler's stock; Chrysler closed up 12.5 cents on Thursday, to $28.25 per share on the New York Stock Exchange, although some institutional share holders said Fidelity's has put downward pressure on Chrysler stock that won't let up until the firm reduces its holdings further.

Seth Glickenhaus, president of Glickenhaus & Co., which holds several million Chrysler shares said, "It's been a painful period, I think it'll take them two months to sell their shares."

Analysts said that Fidelity's move did not signal a broad institutional movement to sell-off automaker's stock, but rather indicated the replacement of Fidelity Magellan Fund's manager Jeffery Vinik with Robert Stansky.

Burnham Securities analyst David Healy said, "It looks to me as if Fidelity still likes the autos, but Stansky doesn't have as big a bet on it as Vinik did".

Fidelity would not comment on the issue

Fidelity's sell-off leaves billionaire Kirk Kerkorian as the automaker's largest shareholder. Last year Kerkorian tried to buy Chrysler but failed. Kerkorian signed a five-year peace agreement with Chrysler in February, agreeing to limit his stake in the automaker to 13.75% of the Company's outstanding shares. Kerkorian has had to sell shares to stay under that limit as Chrysler buys back stock under a $2 billion repurchase plan. During Kerkorian's battles with Chrysler's Chairman Robert Eaton, Fidelity was widely viewed as one of Eaton's biggest supporter.

Paul Dever -- The Auto Channel