Shareholders tendered billionaire investor Kirk Kirkorian 1.02 billion shares -- almost half of Ford's shares outstanding -- on growing concern that CEO Alan Mulally's turnaround plan won't work, Bloomberg News reported Tuesday.Kerkorian is seeking and will buy an additional 20 million shares at $8.50 per share to add to his existing 100 million shares, held by his Tracinda Corp., The Associated Press reported Tuesday. Prior to the 20-million share tender, Kerkorian's average share cost was $6.91.
Shares of Ford (NYSE: F) fell 19 cents to $6.17 in Tuesday afternoon trading.
"I guess one can call Kerkorian's latest tender sufficiently oversubscribed," said C. Leonard Bauer, independent stock analyst. "Seriously, the flood of shareholders willing to sell is investors' statement regarding Ford's remake. It's a sign their's deep doubt regarding the near-term probability of a return on investment. A price of $8.50 looks like a pretty good price for Ford's shares right now." Bauer added that he does not have a rating on nor own shares in Ford.
Ford: Not a Wall Street favorite
Further, Bauer said that investors driving Ford's shares down has not been an unwarranted sequence of events. Although Mulally has done good job lowering legacy costs, Ford's fleet remains inadequate, he said. The company was slow to notice the downcycle in SUV sales, and remained wedded to a generally lower-miles-per-gallon fleet despite a doubling of gasoline and diesel prices as the decade progressed, Bauer added. Gasoline and diesel's latest jolt higher during the last three months has subsequently stressed F-Series pickup truck sales.
"Ford now has to re-engineer for major gains in fuel efficiency, styling, and emissions, and introduce new models, while revenues remain low and against strong competition from Asian and European imports. It's a daunting task," Bauer said. "At the very least it means there's no short-term turnaround in Ford's shares, which is why many investors are willing to take an $8.50 exit."
Last month, Ford announced that it longer expected to return to profitability in 2009, The AP reported.
Why is gold making a new high, trading at $1,118.00 per ounce?
Chasing Value: Ten stocks for 2010 -- Part 1 
Closing Bell: A six-day rally (AIG, REGN, M, MOT, PALM, RIMM)
Reader Comments (Page 1 of 1)
6-10-2008 @ 11:51PM
Rolla said...
Why wouldnt everyone offer to sell there shares for 8.50 and then turn around and buy them back at market????
6-11-2008 @ 8:13AM
Jobu37 said...
Rolla you are right on.
Many stockholders who bought in at $5.25 less than two months ago could have sold and taken the $3.00 gain and then turned around bought back in when the stock fell to below $6.00. They end up with more shares than they had in a company that long-term is on the right track. This works especially well if you are trading in a Roth IRA since their would be no tax implications.
It is probably more sensationalist to portray the story as "investors fleeing Ford shares!" such as this blogger and almost every media outlet covering this story has slanted this story.