What does Kirk Kerkorian know that others on Wall Street don't know?

That was one analyst's meditation after the billionaire investor's Tracinda Corp. indicated in an SEC filing that it has increased its stake in Ford(NYSE:F) by about 20 million shares to a 6.49% stake from 5.5%, The Associated Press reported Thursday. Tracinda now owns 140.8 million shares of Ford.

Ford's shares were virtually unchanged on the news, gaining 5 cents to $6.27 in Thursday morning trading.

Kerkorian now owns 140.8 million shares in the U.S. automaker, and stock analyst C. Leonard Bauer said Kerkorian is either venturing forth where no seasoned investor would go, or is on to something.

A high-risk investment

"On its face, this is a high-risk stake, a calculation that could hurt dearly. There's not a lot running in Ford's favor right now, from an operational standpoint," Bauer said. "Ford wants us to believe their transformation is progressing reasonably well, but it isn't. I've seen little in Ford's fleet or prototypes that suggest a whole new generation of young adults will suddenly run out and buy Fords, and they are still behind-the-curve on efficiency, styling, innovation, and must-have vehicles." Bauer added that he does not have a rating on nor own shares in Ford.
Bauer said what Ford needs now is "a game-changer." Initially, Bauer thought that game-changer had to be rooted in curb appeal: a model that attracted both young single adults and young couples. Now, however, he's not so sure: the arrival of the $4 per gallon gasoline era has shifted car buyers' - - and automakers' - - hierarchy of needs, Bauer said.

"Now, the priority has to be increased fuel efficiency. If Ford can engineer a substantial increase in fuel economy for selected vehicles while retaining current performance characteristics, it can tread water, more or less, until the U.S. economy improves," Bauer said. "Absent that, the outlook for Ford is serious and guarded, at best."