This post is part of our feature on Money Losers of 2008. See all 20.
Our series of Money Losers for 2008 has its share of millionaires and billionaires on it. Personally, I think that is just wrong. While these people may have lost billions of dollars this past year, it doesn't seem fair to call them money losers. They will certainly survive this troubled time and still have their house, their cars, and (at least some of) their fortune. However, on the flip side, no one would read an article about Frank the farmer from Iowa who lost 50% of his life savings.
Kirk Kerkorian made his fortune by developing real estate and hotels in Las Vegas and by buying and selling movie studio MGM three times over. According to the Forbes 2008 list, he is the world's 41st-richest person with a net worth of $16.0 billion.
This year has seen some bumps in the road for Mr. Kerkorian. His private investment corporation Tracinda owns about 55% of MGM Mirage (NYSE: MGM) and made a very prominent bad call on Ford (NYSE: F) earlier this year.
MGM peaked around October of last year with a stock price upwards of $95. At that time, Tracinda's 55% state would have been worth about $14.5 billion. However, with today's share price of just $13.50, that chunk of MGM is "only" $1.5 billion. Of course these are only paper gains and paper losses at this point, but it still stings a little bit to look at the bottom line.
The Ford fiasco played out quite publicly and, while the end result wasn't a major blow to Kerkorian's wealth, he ended up with some egg on his face. Kerkorian once owned about 10% of General Motors (NYSE: GM), but sold that stake in late 2006 while share prices were still reasonable. After a failed attempt to buy Chrysler at a bargain basement price in April 2007, his attention turned to Ford in early 2008. Tracinda bought 20 million shares of Ford just this year, giving it a total position of 100 million shares with an average cost of $6.91. However, this past year has not been kind to the auto industry and Tracinda backed out of this position starting in October. Tracinda sold 7 million shares at $2.43, for a loss of 65%, and indicated it would sell the rest as well. Currently, Ford is up about 40 cents from the price at which they sold it.
While we won't be collecting canned food donations to feed Mr. Kerkorian any time soon, he and his investment firm have made some missteps over the past year. Most people in the markets have lost money, but he has lost billions, making him one of our Money Losers of 2008.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in F, GM, or MGM.
Be sure to check out more Money Losers of 2008.
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