Billionaire investor, Kirk Kerkorian, the largest investor in Ford Motors outside the Ford family, has sold all of his remaining shares of Ford Motors where he once held 6.3-per cent stake, losing millions of dollars in the now devalued company.
The billionaire stuck to his October plans when he had announced that he would exit from Ford Motors and focus on his other investments like gambling, energy and hotels especially the Las Vegas based entertainment company, MGM Mirage. (See: Kerkorian loses faith; starts selling Ford stock)
Kerkorian's exit from Ford has made him lose millions, as the activist investor had a mixed bag of records in investments in all the three Detroit automakers as well as his failed bid to acquire Chrysler when he made a $4.58-billion bid, but lost out to private equity firm Cerberus Capital Management, which acquired 80 per cent of the company for $7.4 billion last year.
He held a 9.9-per cent stake in General Motors at one time but sold that stake in 2006, when GM rejected his proposed tie-up with Nissan Motor Co and Renault.
In April this year Kerkorian's Beverly Hills-based investment arm Tracinda Corp made a cash tender offer for up to 20 million shares of Ford at $8.50 per share, over and above the earlier 100 million shares or 4.7 per cent that Tracinda earlier bought at an average price of $6.91. (See: Billionaire Kerkorian to increase stake in Ford; offers premium for 20 million shares)
At that time Tracinda said the automaker under CEO Alan Mulally is ''starting to achieve highly meaningful traction in its turnaround efforts.'' It also applauded the company's results where it posted a $100 million first-quarter profit in April ''despite the difficult US economic environment.''
Kerkorian disclosed in late April he had acquired 100 million shares of Ford, and said on 19 June that he had boosted his stake to 140.8 million shares, or 6.43 per cent. He expressed support for Mulally's efforts to revamp the automaker with job cuts, plant closings and new car models after $23.9 billion in losses since 2005.
The Ford family holds just under 3 per cent of Ford's shares but has a controlling right with 40 per cent of the voting power through a separate class of shares.
The 6.43-per cent stake in Ford Motors had cost Kerkorian over $1 billion at an average price per share of $7.10.
But in October, the automaker's biggest supporter started losing faith in the company and sold 7.3 million shares of Ford Motors on 20 October at an average price of $2.43 a share for proceeds of about $17.7 million. Additionally, it had contacted an investment bank about unloading the rest. Tracinda's remaining 133.5 million shares were valued at around $300 million at prevailing prices in October.
Tracinda also stated at that time that it intended to further reduce its holdings of Ford common stock, including the possible sale of all of its remaining 133,500,000 shares or approx 6.09 per cent of the outstanding shares, depending upon market conditions and available sales prices, and that it has contacted an investment banking firm regarding the possible sale of such shares.
Although it is not known how much Kerkorian had lost, analysts believe that Tracinda would face a loss of approx $475 million, based on its average acquisition cost for the shares.