He lost $700 million in 4 months -- and it gets worse - Top Stocks Blog - MSN Money
 
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He lost $700 million in 4 months -- and it gets worse

Posted Oct 21 2008, 11:28 AM by Charley Blaine
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Being a billionaire isn't as much fun as it used to be.  Just ask investor Kirk Kerkorian, the investor and casino magnate.

Kerkorian plunked down $1 billion in Ford Motor in the spring, ending with a 6.4% stake in the automaker. In a bit more than four months, he's seen more than two thirds of the value of that investment vanish as Ford and all the automakers have struggled with high gas prices and the crummy economy.

Monday, he said "no mas." In a Securities and Exchange Commission filing, he said he sold 7.3 million shares of Ford at $2.43 a share. And he may sell the rest.

Here's how the math works.

Kerkorian's Tracinda Corp. bought 100 million shares of Ford in April at $6.91 a share. He bought another 20 million shares at $8.50 and added 22 million shares on top of that at $6.54. Total investment: $1.007 billion.

He realized $17.7 million on this week's sale. Ford was selling for $2.22 a share Tuesday morning, which means Kerkorian's remaining stake is worth $317.4 million. So, combining what he did sell with the market value of what's left, his loss is now $689.4 million -- 68.4%.

In fact, 2008 has been very very bad to the 91-year-old financier. His net worth was estimated at $11.2 billion by Forbes magazine in September; it's now much less than that. 

Shares in his best-known holding, MGM Mirage, have fallen 85% in the last year, cutting the value of Kerkorian's shares from almost $15 billion to $2.2 billion -- a loss of $12.7 billion. MGM Mirage is Las Vegas' largest casino company, ranked by hotel rooms. The problem: a weak economy that has slammed business in Vegas.

Plus, his stake in Delta Petroleum has fallen 68.3% since December 2006, leaving Kerkorian with a loss on paper approaching $752.9 million. Worse, as the New York Post noted, he had to put all those shares up as collateral five months ago to get a $600 million credit line from Bank of America. The problem: falling oil prices.

But at least he could get a credit line.

Related reading:

Auto sales crash and burn

Car dealerships the new endangered species?

Americans own too many cars

The death of the minivan (and Chrysler?)

Comments

 

any time a billionare wants to drop me a few $ I'll make it make a profit the old fashon way.

Kirk is the greatest Businessman in the World. He is gonna be richer than ever when the economy gets better!!!

IT,S LIKE A CHESS GAME FOR THE RICH, THIS I HOW THEY HAVE THEIR FUN.

Too many of you narrow minded thinkers seem to be relishing in Kerkorian's loss.  Here are some things you should be considering: (1) He worked hard to build a fortune based on his belief that the AMERICAN dream is attainable to all, (2) Over his lifetime, his accumulated taxation will supply millions with government benefits, and his charitable endeavors will easily exceed most peoples net worth, (3) His money finances jobs.  For those who actually work, what would happen to you and your family if your company owner went bankrupt? He bet on an AMERICAN icon in Ford.  If Ford fails, what will happen to those auto workers and their families or more importantly, to the American auto industry, and (4) Even with the loss, I bet he is still worth more than the lot of you combined.  You hypocrites would delight in having a Billion dollar net worth, but you won't even make the smallest sacrifices necessary build a simple cash reserve.  GOOD NEWS, AT 91, KERKORIAN WILL PROBABLY BE DEAD WHEN YOU UNAMBITIOUS IDIOTS FINALLY KILL THE AMERICAN DREAM!

Kent, what is "trickle up economics"?  How many jobs has employees of a company created.  I hope and pray that someday you become one of the "rich" and you are paying over 90% of the taxes in the U.S.  What tax cut do you think you are going to get from Obama?  You are an idiot if you think he is cutting ANY taxes.  He has NEVER cut taxes or even imposed any form of a tax cut.  The only reason he's saying this is because of ignornat people that only listen to the talking points and don't do their own research.  Please tell me how many times he has voted to raise taxes -vs- how many times he has voted to cut taxes.  The number of times he has voted to cut taxes even you can count.  It's ZERO.  Also, a man is judged by the company he keeps.  Or haven't you heard that before.  If Osama Bin Laden came to you in 20 years and asked for you to be his friend would you embrace him?  Ayers is no different.  He's a terrorist and it doesn't matter how old someone was when they commited the acts.  It's the fact that they commited them in the first place, and he even brags about it to this day.  And this is the guy you think has the judgment to lead this country.  WOW!!!!!!!!!!!!!!!!!!

I think everyone is missing the big picture. We all live in a free enterprise and each and everyone of us can make a million or we can make a hundred (we have the choice). Who am I to judge this man for spending his fortune he's worked to build his whole life. Let's not forget what all this man has lived thru!! We are all having it hard it todays economy but this man has already lived thru it and could be some of the reason he's 91 and considered a billionare. Congratulations goes out to him!! We all could the economy a  bit of good if we all lived within our wallet.

why is this even news??

Self Made Capitalist;  You have layed it out for even the most simple minded people.  However, I bet they too won't get it.

Where were his advisors and heirs when he made these decisions? What does he care - he's 91 - but the rest of them are pretty stupid.

Before many uneducated investors comment on purported Kirkorian's blunder, investigate the dates of purchase and see if he is contemplating purchasing Ford stock "AGAIN", in 31 days to avert the wash sale rules of the IRS. His purchase of $6.91 and the second at $8.50 make it the basis price average to be $7.70 per share. If he were to purchase Ford "AGAIN" in 31 days, he would then have the opportunity to expect a gain if it were to exceed $2.22  (today's price), and still have the benefit of claiming a loss on the $7.70 average previously purchased. This loss could be used to offset any gain on his other profitable holdings and still remain at an advantage if Ford increases above $2.22 per share. I.E. If Ford goes to $4.40,Kirkorina makes a 100% priofit and still has the sold off loss as a deduction. That's not too bad figuring for a 90 year old cunning investor!

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