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December 30th, 2008

What to Interpret from Kerkorian’s Sell-Off



When stocks hit a low point, many investors could tell you that’s the perfect time to take advantage of a potentially great deal. When companies go through a shakeup — or are the recipients of substantial government assistance — many investors, sensing a rebound, would encourage you to take advantage of the situation. Judging by those circumstances, it should seem like now is the perfect time to invest in Ford. Yet, should you interpret big-time investor Kirk Kerkorian’s decision to sell all of his shares of Ford Motor Co as a sign to stay away from, or sell, Ford stock?

Motley Fool has put Kerkorian’s decision into a much more personal perspective (a perspective that dictated a sell was right for him — but is it right for you?).

Kerkorian held several investments that were losing money by the fistful when he sold off his shares. Rather than hope for an extreme turn around, he decided to move on to a better investment. Perhaps he sold off his stocks so quickly because he feared the same fate Fannie and Freddie’s common stockholders — they were wiped out.

While the exact date of when he cashed in his Ford shares is unknown, Motley Fool anticipates it was before the bailout. What they do know is that beginning last spring, Kerkorian spent nearly a billion dollars purchasing 141 million shares of Ford at $7.07.

Since your investment is likely to be a lot less than what Kerkorian held, a moderate gain in share price is far likely to benefit someone with a smaller investment who doesn’t have as deep of a loss to recoup.

We’ve heard a lot of chatter recently about stocks like Ford’s — a once strong investment now downgraded to a much cheaper price. READERS: do you think Ford is a worthwhile investment, or did Kerkorian have the right idea to get out before the stock completely evaporated?

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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