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Behind The Wheel

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Oct.21

10:24 AM ET

Tuesday, 21 Oct 2008

Kerkorian Cashes In Ford Chips With Losing Hand

Posted By:Phil LeBeau

Topics:CEOs and CFOs | Economy (U.S.) | Economy (Global) | Automobile Industry

Sectors:Automobiles and Parts

Companies:General Motors Corp | Ford Motor Company

Kirk Kerkorian
AP
Kirk Kerkorian
The billionaire investor who said he bought Ford stock as a long term investment is pulling out of the automaker after a short, money losing ride. Kirk Kerkorian still owns more than 6% of Ford's outstanding common shares.

But in selling 7 million shares, the legendary investor says he may further liquidate his Ford stake.

Back of the envelope math: Kerkorian bought the stock for roughly $6.91 a share and sold at $2.43 a share meaning he lost $32.7 million. So what does all this mean?

For the average investor you can take this as a sign that Kerkorian and Jerry York, his chief lieutenant on auto investments, do not see Ford [F Loading... () ]rebounding anytime soon. In fact, Kerkorian's firm Tracinda Corp believes its money is now better allocated in gaming and hospitality investments. In other words: Ford shares are dead money for the foreseeable future.

But in an auto industry on the cusp of consolidation, selling off of brands, and painful changes, Kerkorians move is harder to read.

I never bought into the idea some floated that Kerkorian wanted to wrestle control of Ford away from the Ford family. I think he truly saw a beaten down stock and company that has been making the necessary moves to ultimately profit and thrive under CEO Alan Mulally. And let's be honest, when he bought Ford at $8.50 a share it looked like a decent bet.

Kerkorian Sells Part of Stake in Ford Motor

But it never worked out. And once again, Kerkorian and Tracinda corp get out of an American automaker on a less than triumphant note. He sued Daimler Chrysler over his investment in Chrysler. He bowed out of GM [GM Loading... () ]after failing to get the automaker into an alliance with Nissan/Renault. And now he is bailing on Ford with the stock close to a 25 year low. In short, Kerkorians investment history in Detroit has been as reliable as a Big 3 car built in the late 70's.