Billionaire dumps his ford shares and cops a huge loss

Ghiadude · 30-12-2008, 07:09 PM

see here
http://www.news.com.au/business/mone...-31037,00.html

Gobes32 · 30-12-2008, 07:46 PM

The reason behind the sale is that the MGM Grand casino, of which Kerkorian is a major stakeholder, is bleeding money and he has been forced to sell. He is standing behind Ford and in particular, Alan Mulally, and wishes them the best with their re-structuring.

phillyc · 30-12-2008, 07:57 PM

Written for a headline only. Another cheap grab of basic information with no actual journalism attached. Those above have hit the nail on the head.

KK wanted to keep the Ford shares, in fact wanted more, but his original cash cow (casino) is bleeding so badly he had to sell.

Shame this will continue to be smeared around the world.

Wretched · 31-12-2008, 12:49 AM

Quote:

Originally Posted by Gobes32

The reason behind the sale is that the MGM Grand casino, of which Kerkorian is a major stakeholder, is bleeding money and he has been forced to sell. He is standing behind Ford and in particular, Alan Mulally, and wishes them the best with their re-structuring.

Is there an article about the MGM issue? I can't find anything about this.

Ohio XB · 31-12-2008, 04:02 AM

Quote:

Originally Posted by Wretched

Is there an article about the MGM issue? I can't find anything about this.

Here you go.....

http://www.forbes.com/afxnewslimited...fx5823219.html

NEW YORK/LOS ANGELES, Dec 15 (Reuters) - MGM Mirage said on Monday it agreed to sell the Treasure Island Hotel & Casino on the Las Vegas strip to real estate mogul Phil Ruffin for a total of $775 million to help boost its liquidity.

MGM, a major holding of billionaire Kirk Kerkorian's Tracinda Corp, in October reported a 67 percent drop in quarterly profit.

Casino companies have been hit hard over the past year by slower consumer spending and tight credit markets. MGM's shares, which had plummeted from $86.75 a year ago, were up about 7 percent to $11.47 in afternoon trading.

I knew about this back in October with the initial sale of Kerkorian's Ford stock. He is consolidating his money to work on his core business, the same way that Ford is by selling off Jag and Land Rover, and Aston Martin earlier. Ford also sold down their stake in Mazda.

Steve

GTP290 · 30-12-2008, 10:13 PM

Just saw a news flash which stated "More bad news for Ford", relating to this issue,which I thought was a bit rich!

Gobes32 · 30-12-2008, 10:19 PM

Interesting that Ford are in so much trouble, they have announced they will be profitable in 2011 even with the downturn in sales forecasted for next year, meanwhile, GM don't even know if they will make it to the end of the financial year, Toyota announces MASSIVE losses and return to profitability same time as Ford. Yet it is Ford who are in Trouble? At the end of the day, maybe it is better to be the underdog?

snappy · 30-12-2008, 10:56 PM

Poor billionaire lots some money . :baby bott
Come on fella's time to pass the collection plate around .

Ghiadude · 31-12-2008, 01:38 PM

AHA! i was wondering if there was more to it. That explains it.

Ohio XB · 31-12-2008, 02:40 PM

Yeah, it's funny how some of us schmucks, like Gobes32, phillyc, and me seem to know more of the "rest of the story" than professional journalists.

BTW, Ford stock had hit a low of $1.64 USD in November and got up to over $3.00 USD in December. If someone had bought a lot of stock while it was at $1.64 they could have made a killing, almost doubling their money, in about 3 weeks.

Steve

Gobes32 · 31-12-2008, 03:23 PM

Makes you wonder what Ford stock will be in 2011?

Also, I watch a lot of Fox Business news here in Australia on Foxtel. Gives you a great inside look at whats going on over in the states. Funny thing is, Americans are giving GM absolute hell, kind of like what our media does to Ford.

lowriding · 01-01-2009, 09:30 AM

Quote:

Originally Posted by Gobes32

The reason behind the sale is that the MGM Grand casino, of which Kerkorian is a major stakeholder, is bleeding money and he has been forced to sell. He is standing behind Ford and in particular, Alan Mulally, and wishes them the best with their re-structuring.

not quite correct , infact its the other way around . He is selling the Ford shares as they are starting to impede on his MGM interests .

Quote:

Originally Posted by Gobes32

Also, I watch a lot of Fox Business news here in Australia on Foxtel. Gives you a great inside look at whats going on over in the states. Funny thing is, Americans are giving GM absolute hell, kind of like what our media does to Ford.

lol at fox news as a business source or any information source , you are aware that's the equivalent to say, the Daily Telegraph in NSW or Herald sun for the Victorians .

Kieron · 01-01-2009, 04:31 PM

Quote:

Originally Posted by lowriding

not quite correct , infact its the other way around . He is selling the Ford shares as they are starting to impede on his MGM interests .

Depends on how you want to tell the story, Ohio XB said it the most accurate way, all business including the gabmling industry is in tourble, he's simply focusing on his core business exactly like what Ford did when unloading Jag/AM and in fact has been selling shares over the last few months.

Ohio XB · 01-01-2009, 04:32 PM

Quote:

Originally Posted by lowriding

not quite correct , infact its the other way around . He is selling the Ford shares as they are starting to impede on his MGM interests .

lol at fox news as a business source or any information source , you are aware that's the equivalent to say, the Daily Telegraph in NSW or Herald sun for the Victorians .

How are Ford shares impeding on his own MGM interests? Kerkorian has sold off Treasure Island Casino and Hotel and who knows what else he has in the works. Since his MGM casino lost 67% in profits in October would it not be wise to reel his money in on other ventures to shore up his main businesses? With the economy being in the tank there aren't as many people venturing to Las Vegas and chancing their money on gambling.

Do you have a link to an article that explains your statement? I'd be interested in reading it since your comment is the first I have heard of this.

Steve

lowriding · 01-01-2009, 05:47 PM

Quote:

Originally Posted by Ohio XB

How are Ford shares impeding on his own MGM interests?

Basically he had a US$600 million LoC to buy the Ford shares, which he did at $7 ea . After the shares tanked to US$2ea a/ it values the company at worthless in practice given their liabilities b/ triggers a margin call from the Bank of America who's investment of 600 million is now worth $200 million , falling and with nothing set to change anywhere ,anytime soon .BoA asked for more security 2 months ago in the form of 50 million mgm shares . Investors and the market consider F is the poison chalice which the becomes a viscous circle as that de-values mgm further .Since dumping the Ford shares mgm has rallied and is up 8% .
Basic figures tell the story as to why he's doing what he's doing, from an investment PoV .

regards

(NYSE: MGM)

Last Trade: 13.76
Trade Time: Dec 31
Change: Up 1.00 (7.84%)

1y Target Est: 26.39

vs

(NYSE: F)

Last Trade: 2.29
Trade Time: Dec 31
Change: Down 0.04 (1.75%)
Prev Close: 2.29
Open: 2.29
Bid: N/A
Ask: N/A
1y Target Est: 2.54

Here (opinion piece but accurate)

Gobes32 · 01-01-2009, 06:41 PM

Quote:

Originally Posted by lowriding

lol at fox news as a business source or any information source , you are aware that's the equivalent to say, the Daily Telegraph in NSW or Herald sun for the Victorians .

So I watch fox business news AND I read the herald sun, is that going to be a problem?

lowriding · 01-01-2009, 06:55 PM

Quote:

Originally Posted by Gobes32

So I watch fox business news AND I read the herald sun, is that going to be a problem?

nah mate , shouldn't be too big an issue . You will only lose your piece of mind, your sanity and your ability to reason . But its a happier place when you get there :hihi:

Ohio XB · 02-01-2009, 03:34 AM

Lowriding, I followed you up to your point "b" and then that is where I don't understand something.

I just learned that Kerkorian actually borrowed the money to invest in Ford, as you stated. That was something I didn't know. However, though I understand what you said about margins, Businessweek, a very respected publication here in the US, paints a slightly different story.

http://www.businessweek.com/autos/au...ian_out_o.html

Kerkorian’s decision to pull out stemmed from a combination of Ford’s collapsing stock price, as well as his own financial needs brought about by the stock market meltdown and the financier’s investments in other companies.

The article states here that Kerkorian used 50 million shares of his MGM as collateral for the $600M loan and then pledged more as his MGM stock plunged. It would seem to indicate that he sold off his Ford stock in order to have more liquidity in his own business holdings since the price of his own stock (MGM) plummeted so much.

Kerkorian received a $600 million loan earlier this year from Bank of America for which he pledged 50 million shares of MGM Mirage, or about one-third of Tracinda’s holdings. Since his loan, MGM shares have sunk to below $13 from $53. Kerkorian last October had to pledge an additional 50 million shares as collateral for bank loans.

I'm not trying to bang heads here as I know I am certainly not a banking master, but rather checking all angles. Let me know if you get the same thing out of that article as I did. The article you linked to didn't seem to state anything about needing the money to repay margins but rather did say this though......

Meanwhile, MGM is struggling through the recession, and with prices so cheap right now (it's selling at just 9.7 times this year's expected earnings), I'd say using the cash from the Ford liquidation to invest in MGM's much more optimistic future would be a far more prudent decision for Tracinda.

The writer of that article seemed to believe Ford is doomed, from everything he wrote.

Steve