GM stock drop hurts Dodge & Cox, other investors

BOSTON (Reuters) - Some large value investors, including Dodge & Cox and Mason Hawkins' Southeastern Asset, are nursing steep losses from the recent plunge in General Motors Corp stock, data show.

GM shares hit a 54-year low last week, slumping 15 percent on Wednesday, after analysts raised concerns about the auto maker's liquidity, given a deep slump in sales. That stock drop was GM's biggest one-day fall in percentage terms since 1999.

The stock was down 1.2 percent at $10.00 on Monday afternoon in a weaker overall market. But it is down about 56 percent since the end of April and GM's market capitalization has fallen over that period to $5.8 billion from $13.1 billion.

By comparison, Toyota Motor Corp now has a market cap of $160 billion.

"Since they had such a precipitous decline throughout the quarter, many fund managers don't want GM showing as a top 10 holding," said Jeff Tjornehoj, senior research analyst at Lipper Inc.

"A lot of the decline in the last week or so was perhaps a bit of window dressing," he said, referring to the end-of- quarter sprucing up of portfolios by some managers.

GM's stock drop would have hurt Dodge & Cox, which bought its entire 8.7 percent GM stake, or 49.3 million shares, in the first quarter of 2008. Dodge & Cox was the second-largest institutional shareholder of the U.S. auto maker at end-March, according to Reuters data.

Even if Dodge & Cox bought the stake at GM's lowest price of $17.47 in the first quarter, the value of its holdings today, if it continued to hold all the shares, would have fallen by about $343 million. Dodge & Cox declined to comment.

"It's certainly not helping their returns, or any fund that owns GM," said Gregg Wolper, senior mutual fund analyst at Morningstar.

Hawkins' Southeastern Asset Management owned 7.3 percent, or 41.1 million GM shares, as of end-March, according to Reuters data. Capital Research Global Investors owned 32.3 million and Peter Langerman's Franklin Mutual Advisers, part of Franklin Resources Inc, owned 17.1 million GM shares as of end-March, the data show.

Southeastern and Franklin did not return calls asking for comment. Capital Research declined to comment.

State Street Global Advisors, a unit of State Street Corp, is the biggest institutional shareholder of GM, with a 15.5 percent stake, but much of that holding could be shares held in custody for other owners and in State Street's exchange-traded funds. The company declined to comment.

Among individual mutual funds, the Dodge & Cox Stock Fund was the biggest investor in GM shares, owning 28 million at end-March. Hawkins' Longleaf Partners Fund owned 14.2 million shares and the Franklin Mutual Shares Fund owned 9 million as of end-March, according to Reuters data.

Tjornehoj of Lipper said Dodge & Cox and other value managers have known of GM's problems for a while now, but may be betting on a rebound in its shares as seen in 2006. GM shares fell 51.5 percent in 2005, but bounced 58 percent in 2006.

"They may be looking at this as an opportunity to catch GM stock in a free-fall and wait it out," Tjornehoj added.

(Editing by Andre Grenon)