Kirk's Kooky Logic
Kirk Kerkorian adamantly believes that his 37% stake in MGM Mirage (MGM - Get Report) should be worth more. In fact, the billionaire investor is so confident his shares are undervalued that he just may sell them.
All together now: Huh?
Smart investors, and that includes Kerkorian (or at least it used to before his disastrous ventures into Ford (F) and GM), generally hold onto, or accumulate more of a company's shares if they believe the market is not giving it a fair shake. Not Kerkorian, however. On Tuesday, he said through his investment firm Tracinda Corp. that he is "exploring the possibility of strategic partnerships or other alternatives" for his massive stake in the struggling Las Vegas-based casino company.Don't understand the method to Kirk's madness? Don't worry. MGM Mirage CEO Jim Murren can't seem to figure it out either. "I can't speak for what their intentions are right now, but I can say that their investment intent has apparently changed," said Murren. "And it's gone from one as a somewhat a passive investor to one that's going to take a more active role in attempting to increase shareholder value for all shareholders." Pray tell, Jim, how on earth does actively dumping a ton of shares into the open market accomplish that? MGM Mirage closed at $11.93 on Tuesday, up 1.1% for the day but down more than 87% from its Oct. 23, 2007 peak, when it closed at $92.69. No, what MGM really needs is less shares for sale and more buyers of condos in that huge $8.5 billion white elephant on the Las Vegas Strip it calls CityCenter. MGM Mirage also said Tuesday that its third-quarter earnings will show a $955 million charge to reflect the falling value of CityCenter. MGM Mirage said its stake in CityCenter was worth about $2.44 billion as of Sept. 30. While threatening action, albeit of an unknown sort, Tracinda said it would not make a move until after the casino at CityCenter opens in late December. At that time the world will know if Kirk plans to hold 'em or fold 'em. Right now, however, it sure looks like he plans to walk away. Or maybe run. Dumb-o-meter score: 90 -- Captain Kirk can't figure out how to save this enterprise.