fox5

Kirk Kerkorian and Ford Motor Co. are snuggling up to one another like a couple of big furry cats on a chilly day.

Sure, one could turn and try to tear up the other if things go badly down the road, but for now they are purring contentedly in each other’s company.

Kerkorian’s Tracinda Corp. revealed today that the Las Vegas billionaire had purchased 20.8 million more shares of Ford stock this past week to raise his stake in the Dearborn automaker from 5.5% to nearly 6.5% or 140.8 million shares altogether. The disclosure came just two days after Ford Chairman Bill Ford Jr. and CEO Alan Mulally met with Tracinda officials in Las Vegas.

This is tremendous news for Ford Motor Co., coming as it does during an alarming drop in U.S. sales car and truck sales, which is punishing Ford, General Motors Corp. and Chrysler LLC severely because of their reliance on pickup trucks and SUVs just as consumers are flocking to small fuel-efficient cars.

What Ford desperately needs right now is cash and time – cash to survive probably two more years of heavy losses in North America, and time to retool its product lineup to bring more attractive cars to the U.S. market based on product platforms that have yielded strong lineups of fuel-efficient cars in Europe and other markets around the world.

Kerkorian has piles and piles of cash, and has professed a willingness to use it to support Ford’s turnaround with more capital if necessary.

“Kerkorian is already acting like a quasi-private-equity investor at Ford,” said Tim Leuliette, former CEO of auto supplier Metaldyne, in an interview Wednesday after he spoke to a Society Automotive Analysts meeting in Troy.

Leuliette, now running his own investment firm Leuliette Partners LLC, said the key to Ford and GM surviving the U.S. auto industry crunch of 2008-2009 “will be the speed with which they can integrate their attractive vehicle platforms around the world and change their product mix in the U.S.” He said he expects the U.S. automotive market to get worse in the second half of 2008 and remain rocky next year.

That said, the automakers and suppliers who survive the current shakeout will be extremely attractive to investors because their valuations have been pummeled so badly for so long.

Stock prices of GM, Ford are now so low that the combined market value of all three Detroit auto companies is a mere $25 billion or so. That’s less than one-sixth the value of Toyota Motor Corp. alone, and less than half the value of Caterpillar Inc., an Illinois-based manufacturing company with a UAW work force that’s only 20% the size of GM in total sales.

The story is much the same among U.S. auto suppliers. They are regarded so poorly by Wall Street that their market values are much lower than Japanese or European suppliers with similar global geographic business models.

Automotive companies with enough liquidity to survive the immediate crunch, Leuliette predicted, could see their values triple or quadruple over the next five to six years.

Kerkorian, 91, obviously sees the same scenario around Ford, which has been trading around $6 a share lately. Tracinda proceeded with an earlier tender offer to buy 20 million Ford shares at $8.50 a share, even though the stock price had dipped substantially below that price before the offer expired June 6. And then Kerkorian doubled down by buying another 20.8 million shares this past week.

Presumably, Kerkorian envisions Ford stock at $12 or $15 or even $20 a share as the auto market rebounds and Mulally’s turnaround plan kicks in with help from UAW contract provisions that lift the drag of retiree health care costs from Ford’s books in 2010.

Kerkorian doesn’t need a controlling interest in Ford, which he couldn’t accomplish anyway without consent of the Ford family, which still controls 40% of the automaker’s voting stock.

And while he could still ruffle feathers by pushing for changes at Ford such as selling Volvo or killing the Mercury brand — not unlike similar steps that his adviser Jerry York advocated at GM two years ago — that’s something that the Ford brass seem willing to live with.

No matter how much Kerkorian may be dissed in Detroit for his previous run-ins with investment plays at both GM and Chrysler, he’s a very valuable guy to have in Ford’s corner right now.