Kerkorian Dumps Ford Shares

Billionaire investor Kirk Kerkorian has decided to take his money out of Ford Motor Co. and put it into something more likely to pay off â€" like gambling.

Kerkorian's Tracinda Corp. announced Oct. 21 that Kerkorian sold about 7.3 million shares of Ford on Oct. 20, at an average price of $2.43 per share, for a total of about $17.7 million.

Furthermore, he may sell the rest of his remaining 133.5 million shares of Ford, which amounts to about 6.1 percent of the company.

Tracinda said, "in light of current market conditions, it (Tracinda) sees unique value in the gaming and hospitality and oil and gas industries, and has, therefore, decided to reallocate its resources and to focus on those industries."

In April, Kerkorian offered $8.50 per share for 20 million Ford shares. Even at the time, that was a premium to the market price of $6.36 on June 9, when the tender offer expired.

Today, Kerkorian must wish Ford shares were worth even that much. He already had about 100 million Ford shares before disclosing the offer in April. The additional 20 million shares put him over 5 percent ownership of Ford, which triggered disclosure requirements.

Depending on when he bought them, Kerkorian probably paid more than $6.36 per share for his Ford stock, maybe a lot more. But even the loss from the June 9 price to the Oct. 21 closing price of $2.17 represents a potential loss of more than $559 million, for his remaining 133.5 million shares.

That's a big loss, even for Kerkorian. His willingness to suffer such a loss makes you wonder a couple of things: The profit potential in "the gaming and hospitality and oil and gas industries" must be good; and/or the future for Ford must look pretty bad. It's also entirely possible, of course, that some other situation not directly related could motivate Kerkorian to take the cash, despite such a horrendous loss.

If history is a guide, 90-year-old Kerkorian will be back for another run at the auto industry, as long as he's able. He already took two runs at buying Chrysler, in 1995 and again in 2007, and unsuccessfully courted General Motors in 2006, before buying his Ford bloc this year.