We wondered if Kirk Kerkorian wasn't just a little mad when he bought a 5.5% stake in Ford after selling his GM stock and unsuccessfully attempting to buy Chrysler. News that he's now bailing on his investment has some estimating that Kerkorian, who owns the primary stake in MGM Grand, lost upwards of $670 million on his gamble. The math below the jump. Kerkorian's company, Tracinda Corp., added approximately 141 million shares of Ford between April and June of this year at an estimated cost of approximately $1 billion. This was when sales were bad. Now car sales are worse and the economy, obviously, is in the crapper. Kirk has already unloaded a little more than 7 million shares at a price of $2.43 per share (average), or about $18 million. As of this writing Ford is trading at $2.17 per share. Assuming it sells at that rate, the total value of the remaining stocks equals about $291 million. Add in the $18 million from the recent selloff and you're looking at a $1 billion purchase now worth $319 million. Even if he can sell the rest of the stock at $2.43 a share (he probably can't) there is still a loss of over half-a-billion dollars. To make matters worse for KirkKerk, he apparently used some of his casino business and other holdings as collateral for the credit to invest in Ford. This makes us wonder if betting on Ford wasn't more like Russian Roulette than Blackjack. [Portfolio]
He's such a near sighted old fella isn't he? Too many entrepreneurs these days don't look far enough into the future when investing money.
They expect almost instant returns on their investments, big business tries to fulfil their expectations by cutting costs and the generality is that everyone else from the workers and their families, support businesses and products suffer so guys like Kirk can have that ivory back scratcher. And when guys like Kirk suffer from their little gamble, it's government bailout time!