Kerkorian sheds Ford shares,could dump stake

(chinadaily.com.cn)

Updated: 2008-10-22 11:30

If Kirk Kerkorian's $1 billion shares of Ford in April gave investors some confidence in the reeling auto markets in the United States, the billionaire's latest decision of a sell off may have shattered investors' last ray of hope.







This combo shows Billionaire investor Kirk Kerkorian stands in front of a Ford car.

Kerkorian sold part of his $1 billion shares, or 6.49 percent, of the Ford Motor Company on Tuesday after a "huge loss", according to The New York Times. The remaining 133.5 million shares, which accounts for a 6.09 percent stake in the world's No. 2 automaker, will be probably dumped in the future, the paper reported.

Kerkorian's holding group Tracinda said it had sold 7.3 million shares in Ford for an average price of $2.43 per share – a big loss compared to $8.50 dollars per share in June.

"We intend to further reduce our holdings of Ford common stock, including the possible sale of all of its remaining 133,500,000 shares, depending on market conditions and available sales prices," The New York Times cited a Tracinda Corp spokesman.

In a statement, Tracinda explained that "current economic and market conditions" and other investment shifts toward "gambling and energy" led to its move on Ford.

Kerkorian's divestment underscored the waning state of Ford and its two Detroit rivals, General Motors and Chrysler, which are in merger talks.

"Investors are becoming more pessimistic about the Detroit Three's prospects in the environment of a deepening recession and restricted access to credit," wrote Sean Maher, an analyst for Economy.com, referring to the US motor industry giants.

Ford shares fell 6.9 percent to $2.17 on Tuesday in a broadly negative market. They have shed about 65 percent of their value since the beginning of the year while G.M. has seen its stock fall more than 80 percent from a year ago.

Kerkorian, 91, built a position in Ford earlier this year. The billionaire investor, who made a fortune from running and selling Las Vegas casinos, bought the shares in Ford after referring at the time to a "meaningful traction in its turnaround efforts."

But despite Kerkorian's high profile buying, circumstances worsened for Ford and the auto industry. Ford lost $8.7 billion in the second quarter and was forced to abandon its goal of returning to profit in 2009.

Since then the Detroit giant has battled to sell its heavy vehicles in its domestic market as consumers struggle with rocketing fuel prices and recent financial crisis has also hit sales.

In a recent announcement, Ford said sales in the US fell 34 percent to 116,734 vehicles in September while year-to-date sales were down 17.3 percent at 1.5 million vehicles.

Kerkorian, renowned for turning around troubled companies with his smart investments, has a mixed history in the auto industry, often failing to achieve his ambitions.

He was at a time, Chrysler's biggest shareholder and launched his own bid for the auto giant in 1995 before backing a deal to sell the firm to Germany's Daimler-Benz.

In 2006, Kerkorian increased his stake in General Motors, the largest US automaker, and won a board seat for one of his associates, but later reduced his holdings after failing to motivate an alliance with Nissan-Renault.

He announced another bid for Chrysler in 2007 before the announcement of the sale of the US division to private equity firm Cerberus.



New York Time contributes to the story