Ever since Kirk Kerkorian revealed last month that he was buying a major stake in General Motors Corp., people have been speculating about his motives.
Here's one safe bet: The wealthiest man in Los Angeles is not acquiring shares in the biggest and sickest automaker out of any special affection for cars.
Unlike many wealthy folk, Kerkorian does not fill his garages with lovingly shined roadsters. In a city where you are what you drive, he drives a Jeep Grand Cherokee. Before that, he drove a Taurus.
Long ago, he cared. When Kerkorian first became rich, he bought a lavish Cadillac and outfitted it with spiffy wire wheels. Then he got bored and got rid of the car.
For Kerkorian this is a familiar pattern.
"I used to have beautiful watches," he says, extending his right wrist beyond the cuff of a crisp white shirt. It's bare. "I've done those things," he adds, dismissing all sorts of luxury goods and high-profile events. The man who owned the legendary Hollywood studio MGM watches the Oscars on TV.
There's only one thing whose appeal has remained constant: doing deals. For 60 years, Kerkorian has been buying and selling airplanes, airlines, movie studios and Las Vegas casinos and hotels, trading his way to what Forbes magazine estimates is a $9-billion fortune.
This week has been a big one, even for him. On Monday, Kerkorian turned 88, an age at which most moguls would be taking it real slow. Tuesday, he was the ghost in the room as unhappy GM shareholders assembled in Wilmington, Del., for their annual meeting. Wednesday, Kerkorian disclosed that he had acquired an additional 19 million GM shares in a tender offer, boosting his stake to 7%.
In Detroit, the reaction to Kerkorian has been half hope, half dread and complete surprise. Even his onetime partner, former Chrysler Chairman Lee Iacocca, says he was "stunned" that Kerkorian "had taken such a position in a difficult time."
Maybe, the optimists think, Kerkorian can spark management into saving GM, somehow pumping up its sales while slashing its healthcare costs. Or perhaps, the pessimists counter, he'll push for a breakup, splitting the cash-rich financing arm from the ailing car-making part. That might be the end of GM as we know it.
Kerkorian denies any plans to exert an influence. "I'm a very passive investor," he says.
Many remember his 1990 passive investment in Chrysler. It turned into a hostile but unsuccessful takeover attempt in 1995. Yet it's possible that he has no master plan for GM, and simply believes it's a good buy.
"He's a born gambler with a sixth sense for sniffing out value," says Iacocca, who joined in the ill-fated Chrysler bid. "Doing deals is what keeps him alive."
Doing them simply is what keeps him rich. "You get a checklist," Kerkorian says, "and then you just sort of ride herd on it." It's always just a few items on a single sheet of paper.
His lawyer, Terry Christensen, has watched him invest for 35 years. One of Kerkorian's strengths is his ability to screen out the extraneous.
"He likes something on a clear table, where he can see what it is," Christensen says.
At the moment, Kerkorian's desk is actually quite cluttered, but he says this is atypical. He's been away at the Cannes Film Festival, which he enjoyed from the deck of his 192-foot yacht, the October Rose.
This office, on a quiet Beverly Hills street, makes an unlikely command post. It's discreet to the point of invisibility. The suite isn't listed in the building directory and the nameplate on the locked door is blank.
Inside, there's nothing to impress a visitor. Kerkorian's office has a big desk, a small table and a couch. There are models of his Boeing 737 and, more incongruously, a sailing ship -- a gift, he says, like many things in this room. There are few personal touches beyond the photos of Tracy and Linda, the children from his long-dissolved marriage to former Las Vegas dancer Jean Hardy.
His daughters, born in 1959 and '65, provided the name for Kerkorian's holding company, Tracinda, and his foundation, Lincy, but have no direct involvement with his business.
Also on the shelves are a smattering of books. Several are about Armenia, the former Soviet republic that is Kerkorian's ancestral land.
Exactly a century ago, his father left Armenia for the San Joaquin Valley. Kirk, born in Fresno, initially spoke Armenian. Although he quickly learned English, the country has always exerted a strong pull. Many of his closest friends and colleagues have been of Armenian descent. Since the country declared its independence in 1991, he has been its benefactor to the tune of hundreds of millions of dollars.
The Armenians have tried to express their gratitude. "Everyone wanted to name something for him. An avenue, a plaza, a city -- you name it, why not?" says Haik Gugarats, assistant to the Armenian ambassador to the United States. "But it was his wish that we don't."
Always, his wish is that you don't. In "Fade Out," Peter Bart's 1990 account of MGM Studios during Kerkorian's ownership, Bart calls the billionaire "ever-mysterious," "reclusive" and an "enigma," and that's just on Page 12.
He's not reclusive, just quiet. Even in photographs, he says, you can tell which one is him, because he's got his mouth shut. Unlike folksy Warren Buffett or geeky Bill Gates, Kerkorian casts no reflection in popular culture. Mention his name to people and they tend to confuse him with Jack Kevorkian, the suicide doctor.
This anonymity lets Kerkorian take his girlfriend to movies in Century City and Westwood without attracting attention. "The Upside of Anger," a family drama starring Kevin Costner, was a recent favorite. He tried to see the remake of "The Longest Yard," the prison football film, and it was sold out. This is a problem he could avoid by attending private screenings, but he says he'd rather be out with the public, usually in a middle row.
Unlike many moguls, his ego isn't stroked by appearing in the press -- this interview, which he did reluctantly but graciously, is a very rare exception. He's not in the business of selling Kirk Kerkorian. He would never conceive of naming a Las Vegas hotel casino after himself, the way his competitor Steve Wynn just did. He goes into his hotels and the staff doesn't recognize him, which is the way he likes it.
But there's another explanation for Kerkorian's reticence: shame. His formal education ended after the eighth grade when he left Jacob Riis, a school for delinquent boys at Sixth and Main streets in Los Angeles, and he thinks his conversation betrays it.
"I wish I could talk like Donald Trump or Steve Wynn," he says. "Hell, I'd love it."
A final reason is simply impatience. Reminiscing is something Kerkorian doesn't have time for.
That's not because he's 88. No matter how old you are, he once told a friend, you've got to act as if you have 15 more good years. For Kerkorian, this may be the simple truth. His grandfather died in a Los Angeles convalescent home in 1940, at what he said was 116. Even if the old man was off by five or 10 years, Kerkorian says, that's not bad.
Kerkorian could pass for a youth of 68. He's being treated for macular degeneration, the deterioration of the central portion of the retina, so he sits out of the glare of the sun. But otherwise, thanks in part to endless games of tennis, he's in splendid shape.
"I think it's in our genes," says his sister, Rose. "I'm 94, and I still kick the dog around."
In 1916, Lily Kerkorian, Kirk's mother, discovered she was pregnant. Again. Having figured her child-bearing years were over, she was annoyed, then determined. She consulted with the local Armenian wise women, who said she could induce an abortion by taking scalding baths.
It didn't work, so the elders changed tack. Says Kerkorian, who learned as a teenager that he was unwanted: "They finally convinced her, now that you're going to have it, it might be your lucky thing. He'll take you to Hawaii."
Ahron Kerkorian, Kirk's father, was an entrepreneur. He put together 1,000 acres of farmland near Bakersfield, but a recession hit and he couldn't come up with $8,000 to stave off the bankers. Ahron moved his family to Los Angeles, where he became a fruit broker but found success elusive. "We had to move every three months because we couldn't pay our rent," Rose remembers.
Kirk learned two things: First, don't attach yourself too much to anything you own, because it might be taken away from you. "I'm not married to anything," is the way he expresses it in "Kerkorian: An American Success Story," a 1974 book by the late Los Angeles Times reporter Dial Torgerson.
A second lesson absorbed from his father's travails: Don't bet everything you have on one roll of the dice, because if you fail you won't have anything left to bet next time.
Kirk first wanted to be a boxer like his older brother Nish. At nearly 6 feet, he was taller than opponents in his weight class, giving his arms a longer reach. At his second fight, in Bakersfield, he flattened the other fighter with one quick shot. The press nicknamed him Rifle Right Kerkorian. In 33 bouts, he only lost four times.
His ambition was to fight in Madison Square Garden but he got diverted -- luckily, he says now. "My brother got really damaged fighting, and it probably would have happened to me. I'd be a punch-drunk fighter someplace."
What intervened was flying. Kerkorian was working with a friend, installing furnaces in houses in the San Gabriel Valley. During lunch, the friend would stop at Alhambra Airport, where he would take a Piper Cub up for a brief flight.
"I watched him do it three or four times," Kerkorian says. "I said, 'You're wasting 3 bucks on this?' But I took a ride, and got hooked."
He became a student, paying for the lesson but not the extra 50 cents to rent a parachute. He became an instructor, then a military instructor. During World War II, he was a ferry pilot for the Royal Air Force, earning $1,000 a month transporting planes from their Canadian factories to England. The work was incredibly dangerous, because the bombers weren't designed for the North Atlantic's bad weather or the long distance.
Some war historians believe that working for the Ferry Command was more hazardous than fighting the Luftwaffe. But it wasn't quite exciting enough for Kerkorian.
The safest way to take one of the Mosquito bombers to England was to leapfrog from Labrador to Greenland to Iceland to Scotland. To go from Labrador directly to Scotland was barely possible, if the winds cooperated by hurtling you along.
On one 1944 nonstop flight, Kerkorian broke the old record of 8 hours and 56 minutes -- but the other plane on the trip had gone even faster, diminishing his achievement. On another nonstop he was flying solo when the winds died in mid-ocean. Kerkorian nursed the plane in. As he was landing, it ran out of gas.
"It was a hot ticket, the most exciting two years of my life," he says, and then adds: "Almost."
He doesn't have another period in mind -- that would require too much thinking about what has gone before -- but there's a lot of competition. One candidate: the postwar years, when he dealt in government surplus planes.
In 1947, Kerkorian bought a C-47 transport in Hawaii for $12,000. He knew he could sell it for nearly twice that on the mainland. The trick was getting it there. The 2,400-mile journey from Honolulu to San Francisco greatly exceeded the plane's range.
Kerkorian's solution was to install eight additional fuel tanks. But there wasn't enough margin of error, and the plane was draining the last of its fuel with nothing visible but ocean. Kerkorian and his three-man crew threw their luggage and everything else that wasn't nailed down off the plane, trying to lighten it. That wasn't enough. They were preparing to ditch when the coast, and the airfield, finally came in sight.
A few weeks later, Kerkorian took the plane's sole life raft to the beach and tried to inflate it. Thanks to a hole, the raft was as seaworthy as a piece of paper. "I should have died and I didn't," he says.
That was frequently true. In the late '40s, the entrepreneur started running what are now known as charter flights. "I was the mechanic, I'd clean the plane, I'd sell the tickets and then I'd fly it."
As time went on his natural impatience increased, which was a bad quality in a pilot. Once he was flying from San Francisco to Las Vegas when he noticed an oil smear on the engine cover. I'll check it out later, he decided.
Later was almost too late -- in Vegas, he discovered oil had leaked everywhere.
After that, he left the flying to others. He'd still gamble, but with money and not his life.
In 1990, Kerkorian summoned his investment advisor, Michael Tennenbaum, to his house. It was a Sunday morning in September, and Kerkorian announced that he wanted to buy some stock: 22 million shares of Chrysler.
Tennenbaum, the vice chairman for investment banking at the Wall Street firm of Bear, Stearns & Co., was surprised -- and alarmed. Kerkorian hadn't invested in the auto industry before, and the No. 3 company didn't seem like a good buy for anyone. It had billions in debt and billions more in unfunded pension liabilities.
"Gee, they're in pretty bad shape," Tennenbaum said. He offered to have Bear, Stearns analysts prepare an in-depth report on Chrysler's prospects.
"I'd rather you wouldn't," replied Kerkorian.
Tennenbaum felt like he had had a door slammed on him. You don't treat Wall Street bankers like that. He later complained to the brokerage's chairman, Alan "Ace" Greenberg, who set him straight.
"Don't tell Babe Ruth how to hold his bat," Greenberg admonished.
In two years, Chrysler's value tripled. Tennenbaum, who now runs his own investment firm in Santa Monica, grew more respectful. "Kirk has a special talent," he says. "He can see things."
Kerkorian hasn't changed his approach with GM. "People are dying to find out what investment banker gave him advice," said his lawyer, Christensen. "The answer is, none."
A special talent. Foresight. A golden gut. The ability to see around corners. A sixth sense. His friends and associates differ on the label, but all agree that Kerkorian has a unique ability to make successful bets on the future.
To hear him tell it, though, it's often just a happy accident.
"I've had more people tell me, did you envision this or that?" Kerkorian says. "It would be bullshit if I said anything. I just lucked into things. I used to think that if I made $50,000 I'd be the happiest guy in the world."
Take his investments in Las Vegas. He started going there in 1946, flying high rollers from L.A. who didn't want to waste precious gambling time on what was then a 10-hour car trip. He began investing in the city nine years later, putting $50,000 into a hotel. It wasn't a good moment -- the city was in one of its periodic over-built phases -- and he lost the money.
Subsequent investments, in both land and hotels, were more profitable. Three times -- in 1969, 1973 and 1993 -- Kerkorian built the largest hotel in the world in Las Vegas. He would buy something or build something, sell it when the time was right or, occasionally, when he had to, and then regroup and buy something else.
In April of this year, MGM Mirage, a publicly traded company that is 55% owned by Kerkorian, bought Mandalay Resort Group for $7.9 billion. That brings its Vegas properties to 11, including some of the biggest and best-known: the Bellagio, Mirage, Luxor, Excalibur, New York New York, Circus Circus, MGM Grand and Mandalay Bay hotel-casinos.
Despite his long residence in Los Angeles, Las Vegas is Kerkorian's kind of place. Picture yourself a street kid in the Los Angeles of the early 1920s, he says. What do you do for entertainment when you're not sneaking into movies? You draw a line in the dirt and pitch pennies -- if not for money, for bottle tops.
"I'm a gambler at heart," he says. "That's my life." Every time he landed a plane during the war, he would find the poker game on the base and play for hours.
Kerkorian used to gamble just like everyone else, by chasing bets and staying at the tables forever. One anecdote has him coming to Vegas with friends, sending their bags up to their rooms and plunging into gambling. They lost all their money, sent the bellman up to fetch their bags and went home, without ever seeing their rooms.
Finally realizing that sort of gambling didn't pay off, he says, "I shortened the play."
He decides his betting limit and if he loses it, even after only five minutes, he walks away. His casinos would go broke if all gamblers took this approach.
"I never know when to stop," says Las Vegas developer Irwin Molasky. "I'm like most gamblers. Kirk knows when to stop. He has a plan, always."
There's only one other person who flew planes and owned an airline, a Hollywood studio and Vegas hotels and casinos: Howard Hughes, of course.
Kerkorian, one of the few people still around who met Hughes in person, loved Martin Scorsese's biopic "The Aviator." He compares himself to Hughes, but only to point out his own insignificance. "This guy broke real speed records. He designed airplanes. He was a great engineer. He did huge things."
But for 20 years, until his death in 1976, Hughes was a genuine recluse, lost in obsessive-compulsive disorders and other phobias. That period is what's remembered in the popular imagination, not his achievements.
It's a tragedy, Kerkorian says. "He had some of the worst [airplane] crackups you ever saw. He got really stuck on drugs. It was too bad there was nobody strong enough around him to say, 'You've got to clean up.' He didn't have dear friends like I do."
Kerkorian has always been loyal to his friends, and they've always been loyal to him. When young Kirk was sent to reform school, his best friend, Norman Hungerford, intentionally misbehaved so he would be sent there too. After 80 years, the two still keep up.
If his friends help keep his life in balance, tennis is what gives Kerkorian energy. He was a late convert to the game, not picking up a racket until he was 50. Now he plays several times a week, often in a doubles competition with buddies affectionately named "the grudge match." They play, eat lunch, play again.
"We used to have such fun teasing each other about it," says Joe Sugerman, one of the players. "It was a terrific escape from all the pressures of the week."
Sugerman is speaking in the past tense because some of the fun has gone. Kerkorian's regular partner was ICM agent Mort Viner. During a game two years ago, the players were changing sides when Viner fainted. A heart attack killed him. In his memory, at lunch the players keep his chair vacant.
Recently, Kerkorian has been playing in senior tournaments for those 85 and up. The U.S. Tennis Assn. ranked him and his doubles partner, 88-year-old Irving Converse, 11th in their age category.
"Some old guys get pretty upset about losing. Kirk's not like that," Converse says. "He enjoys the game, win or lose. Of course, the more he wins, the better."