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The 'simple gambler' worth $9bn
Kirk Kerkorian backed ailing GM - and has come up trumps, writes Edward
Helmore
Sunday July 24, 2005
Observer
Few investors have the capacity to confound convention and get away with
it like Kirk Kerkorian. Last week, the legendary 88-year-old investor,
said to be America's fourth richest man, was reported to have made $100
million in a little over a month on a highly counter-intuitive bet on
General Motors shares.
In early June, Kerkorian bought 18.9 million GM shares just as the
troubled carmaker's stock was downgraded to junk. His surprise purchase
not only sparked rumours he might try to take over the firm (as he once
tried to take over Chrysler) but caused turmoil among hedge funds and
institutional investors who bet wrongly that the company's shares would
fall. (One British fund, GLG, lost £500m. )
Kerkorian now owns 40.9 million shares, or 7.2 per cent, of GM stock,
making him the third-largest shareholder in the world's biggest - and
sickest - carmaker. What he actually wants with GM is less clear. After
all, he once built up a supposedly passive stake in Chrysler before
launching a takeover bid. He is currently suing the combined
DaimlerChrysler arguing he was fooled in supporting the merger.
Many have tried and failed to understand Kerkorian's business strategy.
But whether it's carmakers, troubled airlines, film studios or Las Vegas
casinos, the ex-Mosquito pilot has a knack for buying low and selling
high. He's an eccentric and inscrutable octogenarian with the energy of
someone one-third his age who has built himself an $8.9 billion fortune
from nothing.
And while he possesses some of the requisite accessories of a
billionaire - a Boeing 737 and 192 foot yacht, for instance - there is
nothing flashy about him. His office, located on a quiet Beverly Hills
side street, isn't listed in the building directory and the nameplate of
his company -Tracinda, after his daughters Tracy and Linda - isn't on
the door.
But even as owner of the legendary Hollywood studio, MGM, he still
watches the Oscars on TV and queues when he goes to the pictures in LA's
Century City (he drives himself, in a Jeep Grand Cherokee). At dinners
at the famous Polo Lounge he always pays cash (he is said to carry
around a bundle of $10,000.) His only concession to vanity is a $150
haircut once a month.
A second-generation Armenian - his father came to America a century ago
- Kerkorian has been a generous benefactor of his ancestral home,
building roads and restoring an opera house. Armenians have tried to
name an avenue or airport after him. According to the country's US
ambassador, Kerkorian does not want it.
Unlike similarly successful men such as Warren Buffett, Bill Gates or
Steve Jobs, Kerkorian does not want to see his reflection in the popular
culture. He has bought and sold MGM film studios three times and has a
controlling stake in MGM Mirage, the Vegas casino giant, but has never
named a Las Vegas hotel casino after himself, the way his competitor
Steve Wynn just did.
Even in photographs, he says, you can tell which one is him, because
he's got his mouth shut. Kerkorian says he is simply shy. His education
ended at 15 and he's self-conscious that his conversation betrays it. 'I
wish I could talk like Donald Trump or Steve Wynn,' he says. 'Hell, I'd
love it.' Friends insist he's a gambler at heart and doing deals is what
keeps him alive. 'He's a born gambler with a sixth sense for sniffing
out value,' says friend and former Chrysler boss, Lee Iacocca.
What keeps him rich, Kerkorian told the LA Times in a rare interview
earlier this year, is doing deals. 'You get a checklist and then you
just sort of ride herd on it.' He makes his success sound like no more
than a happy accident. 'I just lucked into things. I used to think that
if I made $50,000 I'd be the happiest guy in the world.'
In one apocryphal tale, Kerkorian summoned his banker at Bear, Stearns
to his house on a Sunday morning in mid-1990 and announced he wanted to
buy 22 million shares of Chrysler; his banker offered that Chrysler,
with billions in debt, looked like a poor bet and offered to prepare a
report on the firm. 'I'd rather you wouldn't,' replied Kerkorian. So the
banker went to his boss, Alan 'Ace' Greenberg, who advised: 'Don't tell
Babe Ruth how to hold his bat.' In two years, Chrysler's value tripled.
There are echoes in Kerkorian's story of Howard Hughes - they both flew
planes, owned airlines, Hollywood studios, Vegas hotels and casinos.
Kerkorian knew Hughes but only compares himself to him to illuminate his
own lack of achievement. 'This guy broke real speed records. He designed
airplanes. He was a great engineer. He did huge things.'
Kerkorian was born in 1917, rumoured to have been an unwanted child. His
father lost their 1,000-acre raisin farm in the Depression and the
family ended up moving 20 times when he was a child because they
couldn't pay the rent. Once asked what he'd learnt from his father's
difficulties he said it was to not bet everything you have on one roll
of the dice.
At 13 he dropped out of a reform school, got a job in Sequoia National
Park and wanted to be a prize fighter - losing only four times in 33
bouts. But flying intervened when he was taken under the wing of
legendary aviator Florence Barnes, Hollywood's first woman stunt pilot.
She put him up at her Happy Bottom clubhouse and in return for working
her fields, Kerkorian received flying lessons. He became an instructor
and then, during the Second World War, ferried Canadian-built RAF planes
to England.
But instead of hopping from Labrador to Greenland, thence to Iceland and
Scotland, Kerkorian risked flying the Mosquito bombers non-stop from
Labrador to Scotland. On one 1944 nonstop flight, Kerkorian broke the
old record of 8 hours and 56 minutes; on another, he ran out of fuel as
he was landing.
He bought his first transport plane for $60,000 in 1947. Figuring that
high rollers didn't want to waste precious gambling time on a 10-hour
car trip, he used the plane to start a charter service between LA and
Vegas, which became Trans International Airlines.
Kerkorian sold that for $104m in 1969 and used the money to eventually
buy Metro-Goldwyn-Mayer, open the International Hotel in Vegas, and set
about buying and selling virtually every big-name hotel in town over the
next three decades. Today, Kerkorian owns 11 casino-hotels on the strip
and accounts for 49 per cent of all the rooms.
What the one-time farm boy will do next is open to question. He is a man
who bores quickly. He's had all the luxuries money can buy. As for every
gambler, all the promise in the world is in the next throw, or in his
case the next deal. He used to stay at the tables until everything was
gone but soon realised the strategy didn't pay off. So he has learnt to
walk away when he has reached his pre-ordained limit. But even with
limits, he says, 'I'm a gambler at heart. That's my life.'
Profile
Name Kerkor Kerkorian
Born 6 June 1917, Fresno, California
Family Two daughters
Career 1947, founds Trans International Airlines, running charters from
California to Las Vegas; 1962, buys 80 acres of land in Las Vegas, rents
it to developers to build Caesar's Palace; 1967, builds International
Hotel, then largest in the world, in Las Vegas; 1973, buys MGM studios,
builds first MGM Grand Hotel (later destroyed); 1986 sells MGM to Ted
Turner; 1993 builds new MGM Grand
From: Emil Lazarian | Ararat NewsPress
Kirk Kerkorian backed ailing GM - and has come up trumps, writes Edward
Helmore
Sunday July 24, 2005
Observer
Few investors have the capacity to confound convention and get away with
it like Kirk Kerkorian. Last week, the legendary 88-year-old investor,
said to be America's fourth richest man, was reported to have made $100
million in a little over a month on a highly counter-intuitive bet on
General Motors shares.
In early June, Kerkorian bought 18.9 million GM shares just as the
troubled carmaker's stock was downgraded to junk. His surprise purchase
not only sparked rumours he might try to take over the firm (as he once
tried to take over Chrysler) but caused turmoil among hedge funds and
institutional investors who bet wrongly that the company's shares would
fall. (One British fund, GLG, lost £500m. )
Kerkorian now owns 40.9 million shares, or 7.2 per cent, of GM stock,
making him the third-largest shareholder in the world's biggest - and
sickest - carmaker. What he actually wants with GM is less clear. After
all, he once built up a supposedly passive stake in Chrysler before
launching a takeover bid. He is currently suing the combined
DaimlerChrysler arguing he was fooled in supporting the merger.
Many have tried and failed to understand Kerkorian's business strategy.
But whether it's carmakers, troubled airlines, film studios or Las Vegas
casinos, the ex-Mosquito pilot has a knack for buying low and selling
high. He's an eccentric and inscrutable octogenarian with the energy of
someone one-third his age who has built himself an $8.9 billion fortune
from nothing.
And while he possesses some of the requisite accessories of a
billionaire - a Boeing 737 and 192 foot yacht, for instance - there is
nothing flashy about him. His office, located on a quiet Beverly Hills
side street, isn't listed in the building directory and the nameplate of
his company -Tracinda, after his daughters Tracy and Linda - isn't on
the door.
But even as owner of the legendary Hollywood studio, MGM, he still
watches the Oscars on TV and queues when he goes to the pictures in LA's
Century City (he drives himself, in a Jeep Grand Cherokee). At dinners
at the famous Polo Lounge he always pays cash (he is said to carry
around a bundle of $10,000.) His only concession to vanity is a $150
haircut once a month.
A second-generation Armenian - his father came to America a century ago
- Kerkorian has been a generous benefactor of his ancestral home,
building roads and restoring an opera house. Armenians have tried to
name an avenue or airport after him. According to the country's US
ambassador, Kerkorian does not want it.
Unlike similarly successful men such as Warren Buffett, Bill Gates or
Steve Jobs, Kerkorian does not want to see his reflection in the popular
culture. He has bought and sold MGM film studios three times and has a
controlling stake in MGM Mirage, the Vegas casino giant, but has never
named a Las Vegas hotel casino after himself, the way his competitor
Steve Wynn just did.
Even in photographs, he says, you can tell which one is him, because
he's got his mouth shut. Kerkorian says he is simply shy. His education
ended at 15 and he's self-conscious that his conversation betrays it. 'I
wish I could talk like Donald Trump or Steve Wynn,' he says. 'Hell, I'd
love it.' Friends insist he's a gambler at heart and doing deals is what
keeps him alive. 'He's a born gambler with a sixth sense for sniffing
out value,' says friend and former Chrysler boss, Lee Iacocca.
What keeps him rich, Kerkorian told the LA Times in a rare interview
earlier this year, is doing deals. 'You get a checklist and then you
just sort of ride herd on it.' He makes his success sound like no more
than a happy accident. 'I just lucked into things. I used to think that
if I made $50,000 I'd be the happiest guy in the world.'
In one apocryphal tale, Kerkorian summoned his banker at Bear, Stearns
to his house on a Sunday morning in mid-1990 and announced he wanted to
buy 22 million shares of Chrysler; his banker offered that Chrysler,
with billions in debt, looked like a poor bet and offered to prepare a
report on the firm. 'I'd rather you wouldn't,' replied Kerkorian. So the
banker went to his boss, Alan 'Ace' Greenberg, who advised: 'Don't tell
Babe Ruth how to hold his bat.' In two years, Chrysler's value tripled.
There are echoes in Kerkorian's story of Howard Hughes - they both flew
planes, owned airlines, Hollywood studios, Vegas hotels and casinos.
Kerkorian knew Hughes but only compares himself to him to illuminate his
own lack of achievement. 'This guy broke real speed records. He designed
airplanes. He was a great engineer. He did huge things.'
Kerkorian was born in 1917, rumoured to have been an unwanted child. His
father lost their 1,000-acre raisin farm in the Depression and the
family ended up moving 20 times when he was a child because they
couldn't pay the rent. Once asked what he'd learnt from his father's
difficulties he said it was to not bet everything you have on one roll
of the dice.
At 13 he dropped out of a reform school, got a job in Sequoia National
Park and wanted to be a prize fighter - losing only four times in 33
bouts. But flying intervened when he was taken under the wing of
legendary aviator Florence Barnes, Hollywood's first woman stunt pilot.
She put him up at her Happy Bottom clubhouse and in return for working
her fields, Kerkorian received flying lessons. He became an instructor
and then, during the Second World War, ferried Canadian-built RAF planes
to England.
But instead of hopping from Labrador to Greenland, thence to Iceland and
Scotland, Kerkorian risked flying the Mosquito bombers non-stop from
Labrador to Scotland. On one 1944 nonstop flight, Kerkorian broke the
old record of 8 hours and 56 minutes; on another, he ran out of fuel as
he was landing.
He bought his first transport plane for $60,000 in 1947. Figuring that
high rollers didn't want to waste precious gambling time on a 10-hour
car trip, he used the plane to start a charter service between LA and
Vegas, which became Trans International Airlines.
Kerkorian sold that for $104m in 1969 and used the money to eventually
buy Metro-Goldwyn-Mayer, open the International Hotel in Vegas, and set
about buying and selling virtually every big-name hotel in town over the
next three decades. Today, Kerkorian owns 11 casino-hotels on the strip
and accounts for 49 per cent of all the rooms.
What the one-time farm boy will do next is open to question. He is a man
who bores quickly. He's had all the luxuries money can buy. As for every
gambler, all the promise in the world is in the next throw, or in his
case the next deal. He used to stay at the tables until everything was
gone but soon realised the strategy didn't pay off. So he has learnt to
walk away when he has reached his pre-ordained limit. But even with
limits, he says, 'I'm a gambler at heart. That's my life.'
Profile
Name Kerkor Kerkorian
Born 6 June 1917, Fresno, California
Family Two daughters
Career 1947, founds Trans International Airlines, running charters from
California to Las Vegas; 1962, buys 80 acres of land in Las Vegas, rents
it to developers to build Caesar's Palace; 1967, builds International
Hotel, then largest in the world, in Las Vegas; 1973, buys MGM studios,
builds first MGM Grand Hotel (later destroyed); 1986 sells MGM to Ted
Turner; 1993 builds new MGM Grand
From: Emil Lazarian | Ararat NewsPress