He lost $700 million in 4 months -- and it gets worse
Posted
Oct 21 2008, 11:28 AM
by
Charley Blaine
Rating:
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?)
