Why would a mutual fund portfolio manager continue to hold General Motors stock, which fell 52% in 2005 and earned the distinction of being the worst performer among those in the Dow Jones Industrial Average?

Despite continued speculation that the company might file for bankruptcy and the fact that its debt has been marked down to "junk," many managers evidently are banking on a turnaround at the company, The Wall Street Journal reports.

While fewer mutual funds hold the stock now than a year ago - 227 versus 292 - they still account for a sizable chunk of the Detroit automaker. Of the company's total market cap of $13.1 billion, mutual funds own $2.84 billion, or 21% of total shares. That's quite a vote of confidence.

Providence, R.I.-based Longleaf Partners Fund, for instance, had 4.9% of its $8.78 billion in assets invested in GM, and last month, renown private equity investor Kirk Kerkorian, of Tracinda Corp. in Las Vegas, increased his stake in the company from 7.8% to 9.9%. In addition, some high-yield bond funds have small positions in GM, and index and exchange-traded funds also have exposure due to the fact GM is part of the Dow and the S&P 500 indexes.

Further, those funds that bet on stocks with the highest dividend yield are interested in GM. Dividend yields are calculated by dividing the dividend by the stock price, so as a stock's value decreases, its yield increases.

For its part, GM has pledged that it has a turnaround plan and is addressing "the structural issues" it faces.

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