Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Quick Hits: Kerkorian Folds on Ford

By

Brief scrutiny of today's headlines.

PrintPRINT
You know there are tough times ahead for the auto industry when Kirk Kerkorian unloads 7.3 million shares in Ford (F) at a loss.

The billionaire investor sees better value in other industries, including hotels, gambling, oil and natural gas.

This suggests that Kerkorian takes the long view and is betting on a rebound. Neither hotels nor casinos will do well in the short term as people cut back in a downbeat economy buffeted by falling housing prices, tight credit and rising unemployment.

Kerkorian didn't say what sectors of the oil and gas industry interested him, but he holds about a 35% stake in Delta Petroleum (DPTR). Oil field services or infrastructure – pipelines, tankers or makers of specialized equipment – might be a good bet, too.

Kerkorian's decision to dump his shares in Ford comes about 4 months after Tracinda, his investment firm, bought 20 million of the automaker's shares, boosting his stake to about 6.5%. The purchases were announced 2 days after Kerkorian met with Alan Mulally, Ford's top dog, to discuss Ford's turnaround plan.

No matter what Kerkorian is thinking, his decision to sell will almost certainly be seen as a thumbs-down on Ford's long-term prospects. Ford's September sales were down 34% year-over-year.

Last week, Ford's falling stock price forced Kerkorian to pledge another 50 million shares of MGM Mirage (MGM) to back the $600 million credit line he used to purchase Ford shares. This didn't make much sense and Kerkorian says he plans to further reduce his stake in Ford.

Kerkorian holds about a 53.8% interest in MGM Mirage. His apparent interest in increasing his stake is almost certain to create a buzz around competitors such as Las Vegas Sands (LVS) and Wynn Resorts (WYNN).

Some analysts expect Las Vegas' 2009 revenue growth rate be off about 5% year-over-year, but that beats the recent decline in auto sales and next year's grim outlook as credit remains tight.

Kerkorian's choice of sectors for future investment seems counterintuitive, but that's why he's the billionaire, while someone else is just an ink-stained (pixel-painted?) wretch.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE