Kerkorian Rolls the Dice, Loses Big

For a man who owns and runs casinos for a living, Kirk Kerkorian is sure unlucky. His feckless flier on Ford, which he's said he's in the process of unwinding, appears to have cost him well north of half a billion dollars.

Based on public filings with the Securities and Exchange Commission and press releases from his personal investment vehicle, Tracinda Corp., the legendary investor has lost more than $100 million a month on his 6.4 percent stake in Ford Motor Co. since he began to accumulate the automaker's stock in April.

Tracinda, which is based in Los Angeles, said on April 28 that it had acquired 100 million Ford shares for $691 million. In mid-June it bought another 20 million shares, for $170 million. By the end of June, Tracinda said it owned 140.8 million shares, suggesting it had added 20.8 million in the third week of June, when Ford shares traded for $6.09 to $6.75 on the open market.

That implies Tracinda invested between $987.7 million and $1 billion in Ford in those three months. Then oil prices soared, the economy tanked, credit markets froze, and automobile sales drove off a cliff. Ford's share price followed sales into the abyss.

Tracinda said today that it had sold 7.3 million Ford shares for an average price of $2.43 a share, netting a little more than $17.7 million before paying commissions and fees.

Kerkorian's company said it has contacted an investment bank for advice on the "possible sale" of its remaining stake of 133.5 million shares "depending upon market conditions and available sales prices." At the intraday market price of $2.26 a share, they're worth about $300 million.

Tracinda's total loss, then, works out to about $670 million to $683 million, or about $3.8 million per day.

In its press release, Tracinda said it will refocus its attention on its gambling and energy interests. It owns significant stakes in casino-hotel operator MGM Mirage and in two oil companies, Tesoro Corp. and Delta Petroleum Corp.

One small hitch: Tracinda pledged a sizable portion of its gambling and energy holdings as collateral on a $600 million line of credit it opened at Bank of America in April, as it was starting to invest in Ford.

by Mark Stein

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