Kerkorian Deals Vegas In, Cuts GM Off

The billionaire offered to buy $825 million in MGM Mirage shares at the same time he's said to be selling off shares of the Detroit giant.

In the end, it appears that billionaire Kirk Kerkorian has decided upping his investments in Las Vegas is a better gamble than trying to fix General Motors (GM).

On the same day, Nov. 22, that Kerkorian's company, Tracinda, said it is tendering an offer to buy $825 million in MGM Mirage (MGM) shares, it also said it is selling off a chunk of its GM stock, reducing its stake in the automaker from 9.9% to 7.4%. The move, say analysts, signals that the dissident shareholder will likely not pursue a proxy battle with GM, and will continue to dial down the firm's investment in the struggling automaker.

News of Kerkorian's sale sent GM shares plummeting nearly 5%, closing at $31.09 on the New York Stock Exchange, on Nov. 22. GM's shares had fallen about 10% from Nov. 17 through Nov. 22 as Wall Street analysts expressed doubts about the speed at which GM can achieve sustained profitability and recover market share.

Looks like the "smart money" is giving up on GM.

Apparently, Kerkorian is not placing much faith in either GM's potential for a near term turnaround, or its break-up value.

Either way, this does not bode well for the auto giant.

You mean he don't like gettin' rich from free tradin'

In 1994 "[w]hen GM began to see the market potential, the decision to proceed [with China] was not a difficult one. China, with 1.3 billion people, could potentially become the world's largest vehicle market."

GM in China:

In 2005, GM’ s sales rose 35.2 percent . . .

GM's partner Shanghai Automotive Industry Corp. Group engages in several ventures with GM including GMAC-SAIC Automotive Finance Co., Ltd. (the first of its kind)

In 2004

GM "continue[d] the aggressive growth of its business in China [including] the development of new facilities at its local engineering and design center, the expansion of existing manufacturing joint ventures and the launch of a new financing joint venture. The proposed investment is expected to exceed US$3 billion over the next three years."

Next three years? Beginning in 2004? Hey that's when GM started running out of money here..

(Info above from GM web sites.)

Maybe Mr. Kerkorian is not worried about fixing GM but instead he's worried about the fix GM is getting into. Same thing happened when U.S. investors rushed tons of money to Nazi Germany. They were stuck. They eventually lost everything until damned government interference paid 'em for their losses. Could it happen again.

"Looks like the "smart money" is giving up on GM.

Apparently, Kerkorian is not placing much faith in either GM's potential for a near term turnaround, or its break-up value.

Either way, this does not bode well for the auto giant."

Months ago I asked my friend and fomer car designer from GM what he thought Kerkorian was up to. H laughed and said "He's just trying to make some money".

That seems to be born out today. He sold several million shares at $33 each. Isn't that a considerable profit? Didn't he buy it at a much lower price?

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.