Tuesday, October 21, 2008

Another Billionaire Bit By The Economic Squeeze

We recently reported on the possible liquidation by 85 year old billionaire Sumner Redstone of parts of his huge portfolio as a result of current financial conditions.

Although not in as tight a position, 91 year old billionaire Kirk Kerkorian has sold part of his stake in the Ford Motor Company and may divest his remaining shares

The Tracinda Corporation, Kerkorian’s investment company, said this morning that it sold 7.3 million shares of Ford on Monday at a huge loss and intended to further reduce its remaining 6.09 percent stake.

In a statement, Tracinda said that “current economic and market conditions” and other investment opportunities — in gambling and energy — led to its decision on Ford.

“Tracinda also stated that it intends to further reduce its holdings in Ford common stock,” the company said. “Including the possible sale of all of its remaining 133.5 million shares, depending on market conditions and available sales prices.”

When you get the likes of Redstone and Kerkorian taking huge hits, you know this is a serious downturn. These guys have seen a lot, but they obviously aren't up to date on business cycle theory, or they would have been protecting themselves in July at much higher prices.

1 comment:

  1. Whenever I hear about these big investors I wonder how much of the stock do they actually own free and clear? It’s one thing to actually own the stock, its another if they bought it using borrowed money or if they used the stock as collateral on other deals. In either of the latter cases then they are no where near as rich as it might appear since their liabilities especially in these times might be a big percentage of their supposed wealth and even in some cases might be more then their actual wealth.

    It's like the big investment banks, they looked great as long as nobody looked to closely at all the liabilities they had created while making themselves appear rich.

    Or for that matter the USA, where the US government seems hell bent on taking over every liability that anyone with some political connections can dump on it.