Why Is Kerkorian Bailing On Ford Now?

The mantra has always been, buy low and sell high, but that's pretty much the opposite of what billionaire Kirk Kerkorian is doing. A press release from Kerkorian's Tracinda Corp. stated "In light of current economic and market conditions, (Tracinda) sees unique value in the gaming and hospitality and oil and gas industries and has, therefore, decided to reallocate its resources and to focus on those industries." There is undoubtedly some serious spin going on in that statement. I guess you have to say something like that when your nearly billion dollar investment has shrivelled in size.

So why wouldn't Kerkorian wait around until 2010 or so to see if things got better? The easy answer to the headline's question is that Kerkorian cannot afford to risk his controlling stake in the MGM Mirage gaming empire and therefore wants to cover his lines of credit that he used to buy the Ford stock. However, there could be more at play here. Recently at Ford there have been a few cracks appearing. CFO Don Leclair abruptly left, supposedly to spend more time his family, but it's pretty hard to swallow that a high profile officer would leave on such sudden notice when the company is in an unprecedented situation. The Detroit News reports that Leclair may have left due to "philosophical disagreements" with other executives. Furthermore, two Ford board members stepped down just one week after Leclair left.

Ford has stated that the departures are unrelated, but Kerkorian might be betting otherwise.

sources: wsj, detroit news