Kerkorian made a cool $100 million off GM
12-04-2006, 03:59 PM
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Kerkorian made a cool $100 million off GM
He lost only 8.6 million on buying/selling of GM stock but reaped in a cool $100 million in dividends.
http://money.cnn.com/2006/12/04/news...ion=2006120416
http://money.cnn.com/2006/12/04/news...ion=2006120416
Kerkorian saw narrow loss on GM trades
Billionaire investor lost about $8.6 million on stock trades but got $100 million in dividends.
By Chris Isidore, CNNMoney.com senior writer
December 4 2006: 4:11 PM EST
NEW YORK (CNNMoney.com) -- Billionaire investor Kirk Kerkorian apparently lost about $8.6 million buying and selling GM over the past 19 months, although dividends from the troubled automaker allowed him to walk away with more than $100 million in cash from the investment.
The trading losses came in 2005, not this year, when GM (Charts) shares have been the best performer of the 30 stocks that make up the Dow Jones industrial average. Still, when all his trades of GM shares are compiled, Kerkorian ends up with a narrow trading loss since he started buying shares in April 2005.
His sales of what had been a 9.9. percent stake in GM over the past two weeks were often done at below-market prices, and they helped send the stock into a downward spiral. Shares of GM were up about 1 percent in trading Monday, although they are still off 15 percent since the last day before Kerkorian started dumping shares.
Kerkorian's latest filing on his GM holdings Thursday said he had 28 million shares of GM left, or slightly less than a 5 percent stake in the automaker, after the second sale of 14 million shares in just longer than a week.
But the Bank of America (Charts), which had loaned Kerkorian about $243 million of the money he used to buy GM shares in 2005, confirmed Friday that it bought a block of 28 million shares late Thursday from an undisclosed buyer in a private transaction. That price was reported at $29.25 a share.
Assuming that price is correct and that Kerkorian is the seller, as has been reported by TheWall Street Journal and The New York Times, then his total sales of GM stock brought him $1.935 billion, after he paid a total of $1.944 billion for those shares, according to his filings with the Securities and Exchange Commission. That makes the $8.6 million trading loss essentially a break-even investment.
Kerkorian will have received a total $115.4 million in dividend payments from GM when he gets his final dividend payment on Dec. 9 for shareholders of record on Nov. 17. The $106.7 million net gain from dividends after trading losses comes to a 5.5 percent return on his $1.9 billion investment over the course of 20 months.
Jerry York, Kerkorian's key adviser on his GM holdings, had advocated in a speech in January that GM cut its dividend to 25 cents a quarter from 50 cents a quarter in order to conserve cash and to help it win concessions from workers. GM announced the dividend cut about a month later. The reduced dividend cost Kerkorian about $56 million this year.
Kerkorian at one point this year filed for permission to increase his holdings above the 9.9 percent stake he held, but he also battled with GM management, pushing it to join an alliance with Nissan (Charts) and Renault that would have included cross-ownership of shares with the Japanese and French automakers. GM management held talks with those automakers but rejected such a combination, which brought a new round of criticism from Kerkorian.
Soon after those talks ended, York resigned his position on the GM board, stating in his letter of resignation that he had, "grave reservations concerning the ability of the company's current business model to successfully compete with those of Asian producers."
Kerkorian's sale is seen as reducing some of the pressure on GM management, although it still faces challenges to stem losses on its auto operations, stop the loss of market share in its home market and win a new labor deal with the United Auto Workers union that allows it to be more competitive with overseas automakers who don't have the Big Three's cost structure.
While Kerkorian never owned more than 56 million shares of GM at any time, in December he sold 12 million of that 56 million stake at an average price of $20.96 a share in order to lock in losses for tax purposes. Those losses on the 2005 sales ranged from $60.7 million to $160.9 million, depending upon the original price of shares he sold at that time. In January he repurchased another 12 million shares, this time at an average price of $21.89.
GM, Ford Motor (Charts) and the Chrysler Group unit of DaimlerChrysler (Charts) are all losing money on their core North American automotive operations and have been losing U.S. market share to Japanese competitors such as Toyota Motor (Charts), as well as to Korean and some European automakers.
Billionaire investor lost about $8.6 million on stock trades but got $100 million in dividends.
By Chris Isidore, CNNMoney.com senior writer
December 4 2006: 4:11 PM EST
NEW YORK (CNNMoney.com) -- Billionaire investor Kirk Kerkorian apparently lost about $8.6 million buying and selling GM over the past 19 months, although dividends from the troubled automaker allowed him to walk away with more than $100 million in cash from the investment.
The trading losses came in 2005, not this year, when GM (Charts) shares have been the best performer of the 30 stocks that make up the Dow Jones industrial average. Still, when all his trades of GM shares are compiled, Kerkorian ends up with a narrow trading loss since he started buying shares in April 2005.
His sales of what had been a 9.9. percent stake in GM over the past two weeks were often done at below-market prices, and they helped send the stock into a downward spiral. Shares of GM were up about 1 percent in trading Monday, although they are still off 15 percent since the last day before Kerkorian started dumping shares.
Kerkorian's latest filing on his GM holdings Thursday said he had 28 million shares of GM left, or slightly less than a 5 percent stake in the automaker, after the second sale of 14 million shares in just longer than a week.
But the Bank of America (Charts), which had loaned Kerkorian about $243 million of the money he used to buy GM shares in 2005, confirmed Friday that it bought a block of 28 million shares late Thursday from an undisclosed buyer in a private transaction. That price was reported at $29.25 a share.
Assuming that price is correct and that Kerkorian is the seller, as has been reported by TheWall Street Journal and The New York Times, then his total sales of GM stock brought him $1.935 billion, after he paid a total of $1.944 billion for those shares, according to his filings with the Securities and Exchange Commission. That makes the $8.6 million trading loss essentially a break-even investment.
Kerkorian will have received a total $115.4 million in dividend payments from GM when he gets his final dividend payment on Dec. 9 for shareholders of record on Nov. 17. The $106.7 million net gain from dividends after trading losses comes to a 5.5 percent return on his $1.9 billion investment over the course of 20 months.
Jerry York, Kerkorian's key adviser on his GM holdings, had advocated in a speech in January that GM cut its dividend to 25 cents a quarter from 50 cents a quarter in order to conserve cash and to help it win concessions from workers. GM announced the dividend cut about a month later. The reduced dividend cost Kerkorian about $56 million this year.
Kerkorian at one point this year filed for permission to increase his holdings above the 9.9 percent stake he held, but he also battled with GM management, pushing it to join an alliance with Nissan (Charts) and Renault that would have included cross-ownership of shares with the Japanese and French automakers. GM management held talks with those automakers but rejected such a combination, which brought a new round of criticism from Kerkorian.
Soon after those talks ended, York resigned his position on the GM board, stating in his letter of resignation that he had, "grave reservations concerning the ability of the company's current business model to successfully compete with those of Asian producers."
Kerkorian's sale is seen as reducing some of the pressure on GM management, although it still faces challenges to stem losses on its auto operations, stop the loss of market share in its home market and win a new labor deal with the United Auto Workers union that allows it to be more competitive with overseas automakers who don't have the Big Three's cost structure.
While Kerkorian never owned more than 56 million shares of GM at any time, in December he sold 12 million of that 56 million stake at an average price of $20.96 a share in order to lock in losses for tax purposes. Those losses on the 2005 sales ranged from $60.7 million to $160.9 million, depending upon the original price of shares he sold at that time. In January he repurchased another 12 million shares, this time at an average price of $21.89.
GM, Ford Motor (Charts) and the Chrysler Group unit of DaimlerChrysler (Charts) are all losing money on their core North American automotive operations and have been losing U.S. market share to Japanese competitors such as Toyota Motor (Charts), as well as to Korean and some European automakers.
12-05-2006, 12:53 PM
#2
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$100 million on an $8.6 billion investment?
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
Kind of puts this whole Kerkorian vs General Motors episode into perspective, doesn't it?
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
Kind of puts this whole Kerkorian vs General Motors episode into perspective, doesn't it?
12-05-2006, 01:06 PM
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$100 million on an $8.6 billion investment?
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
Kerkorian will have received a total $115.4 million in dividend payments from GM when he gets his final dividend payment on Dec. 9 for shareholders of record on Nov. 17. The $106.7 million net gain from dividends after trading losses comes to a 5.5 percent return on his $1.9 billion investment over the course of 20 months.
12-05-2006, 04:48 PM
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Just goes to show, he does not care about the plight of GM... it's easy stock for him to trade and make himself a small fortune by his lofty measure. He's just a stock investor, not a car guy like Lutz. Thank god for Lutz. He's the man who really cares about cars and famous car companies. He wears his heart on his sleeve.
12-05-2006, 05:01 PM
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Join Date: Nov 2005
Location: Chicago, IL
Posts: 1,028
$100 million on an $8.6 billion investment?
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
Kind of puts this whole Kerkorian vs General Motors episode into perspective, doesn't it?
That's $1 on every $86. A bit less than a 1.3% return over the number of years he's been investing in GM. Even banks offer a better return on your money.
The amount looks impressive only because of the quanity of money we're talking about. If he just left that money in Bank Of America, or whereever he's stashing it, and did nothing (instead of trying to take over General Motors) at 3% intrest he'd have made about $300 million just in the past year alone.
Kind of puts this whole Kerkorian vs General Motors episode into perspective, doesn't it?
Billionaire investor lost about $8.6 million on stock trades but got $100 million in dividends.
then his total sales of GM stock brought him $1.935 billion, after he paid a total of $1.944 billion for those shares, according to his filings with the Securities and Exchange Commission. That makes the $8.6 million trading loss essentially a break-even investment.
Kerkorian will have received a total $115.4 million in dividend payments from GM when he gets his final dividend payment on Dec. 9 for shareholders of record on Nov. 17. The $106.7 million net gain from dividends after trading losses comes to a 5.5 percent return on his $1.9 billion investment over the course of 20 months.
Kerkorian will have received a total $115.4 million in dividend payments from GM when he gets his final dividend payment on Dec. 9 for shareholders of record on Nov. 17. The $106.7 million net gain from dividends after trading losses comes to a 5.5 percent return on his $1.9 billion investment over the course of 20 months.
12-05-2006, 06:48 PM
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Darn. My computer acted up. 
Still, isn't government bonds doing better than the 5.5% he got on his $1.9 billion?
Point still is that the guy apparently saw a company whose assets far outstripped it's stock value, and tried to cash in on it.
He bought in, attempted a scheme to quickly boost GM's value without concern for either the actual competitiveness or long term health of GM, and when his effort to do this by 1st doing an end-run around GM's board and management to hook up with Ghosen and Renault-Nissan, then trying to leverage out Wagoner (a life-long GM emplotee) and the rest of the board of directors failed, he took his chips and left.
I thought the GM-Nissan plan had merrit when proposed if it meant combining purchasing power to lower operating costs. But the group that studied it came to the right conclusion (which I never thought of) which showed that Nissan-Renault would have more to gain (though GM had far less cash and market value) because of GM's size, assets, and global reach. GM demanded cash to even things out, they refused, GM turned down the offer. I can change my position, Kerkorian's own board of directors mole can be convinced (he voted against it as well), but Kerkorian.....???
Think about this:
GM's board of directors canned a CEO who had to deal with his predecessor's mess before his own plan got started (Robert Stempel, Roger Smith's successor was out within 2 years of becoming CEO), and represent a range of people, some not involved at all in automobiles. Yet, despite calls for Wagoner's head last year, not only did they decide to stick with him, they all (including Kerkorian's own guy!) voted against Kerkorian's Renault-Nissan tie in scheme....... unanimously!
GM must have one awesome turn-around plan.
..... and it wasn't enough to for Kirk???!
BTW: Is Jerry York still working for Kirk?
Still, isn't government bonds doing better than the 5.5% he got on his $1.9 billion?
Point still is that the guy apparently saw a company whose assets far outstripped it's stock value, and tried to cash in on it.
He bought in, attempted a scheme to quickly boost GM's value without concern for either the actual competitiveness or long term health of GM, and when his effort to do this by 1st doing an end-run around GM's board and management to hook up with Ghosen and Renault-Nissan, then trying to leverage out Wagoner (a life-long GM emplotee) and the rest of the board of directors failed, he took his chips and left.
I thought the GM-Nissan plan had merrit when proposed if it meant combining purchasing power to lower operating costs. But the group that studied it came to the right conclusion (which I never thought of) which showed that Nissan-Renault would have more to gain (though GM had far less cash and market value) because of GM's size, assets, and global reach. GM demanded cash to even things out, they refused, GM turned down the offer. I can change my position, Kerkorian's own board of directors mole can be convinced (he voted against it as well), but Kerkorian.....???
Think about this:
GM's board of directors canned a CEO who had to deal with his predecessor's mess before his own plan got started (Robert Stempel, Roger Smith's successor was out within 2 years of becoming CEO), and represent a range of people, some not involved at all in automobiles. Yet, despite calls for Wagoner's head last year, not only did they decide to stick with him, they all (including Kerkorian's own guy!) voted against Kerkorian's Renault-Nissan tie in scheme....... unanimously!
GM must have one awesome turn-around plan.
..... and it wasn't enough to for Kirk???!
BTW: Is Jerry York still working for Kirk?
Last edited by guionM; 12-05-2006 at 06:57 PM.
12-05-2006, 09:27 PM
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