DETROIT -- With one tart letter to the Chrysler Corp.'s board, Kirk Kerkorian, the largest investor in the company, made $100 million in paper profits yesterday.
He said he planned to increase his 9 percent stake in Chrysler, the No. 3 U.S. automaker, and would put pressure on the board to quickly raise the share price.
Chrysler stock surged $3.125 on the news, to close at $49, with almost 4 million shares changing hands. It was the second-most-active issue on the New York Stock Exchange.
Mr. Kerkorian, a secretive 77-year-old investor who made a fortune aggressively trading airline and entertainment stocks, sought clearance from the government yesterday to buy more Chrysler shares. But some Wall Street analysts speculated that his true goal might be to increase the price in order to sell his 32 million shares more profitably.
In his letter, Mr. Kerkorian called the performance of the stock, which has fallen from a peak of $63.50 Jan. 19, "very disappointing." If Mr. Kerkorian sold at the latest price, he would realize a gross profit of about $1.2 billion -- $450 million less than his investment was worth in January. Chrysler has posted record earnings this year, but its stock has declined as investors have deserted auto stocks.
"I think Kerkorian is suffering from the same frustration that bullish analysts on Chrysler are suffering from," said David Healy of S. G. Warburg. "The company is performing, and the stock is not."
Mr. Kerkorian urged a series of measures to revitalize the stock, asking Chrysler to buy back some shares within a year, split the shares 2-for-1 and increase the quarterly dividend, now 25 cents.
He also asked the board to eliminate Chrysler's "poison pill" provision, which was strengthened after Mr. Kerkorian bought his stake late in 1990, when Chrysler was trading at just under $12. The provision is set off when a shareholder buys more than 9.99 percent of the stock, diluting the aggressor's ownership stake.
In his filing under the Federal Hart-Scott-Rodino Act, an antitrust measure, Mr. Kerkorian sought permission to accumulate as much as 15 percent of the stock. He also held open the option of selling, rather than buying.
The automaker had little public reaction to Mr. Kerkorian's letter. "Chrysler will consider these requests, as its considers the requests of all stockholders," said Steven J. Harris, a spokesman.
Mr. Kerkorian gave the board until Dec. 15 to take the steps he recommended. If it did not, he wrote, "I intend to take all appropriate steps to pursue these proposals, including legal action to invalidate the poison pill."
It was not clear what other actions he could take. An executive with his Las Vegas-based Tracinda Corp. declined to rule out a takeover. "If management and the board of directors don't respond satisfactorily, then I think we have a whole series of options available to us," said the executive, Alex Yemenidjian.
Given Chrysler's market capitalization of about $18 billion, a takeover seems unlikely. Indeed, it was not clear how much leverage Mr. Kerkorian has. "It doesn't strike me that shareholders are particularly unhappy with Chrysler, so his chances of winning a proxy fight can't be great," said David Bradley, auto-industry analyst with J. P. Morgan, in New York.