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General Motors (GM) is up and Ford (F) down at Goldman Sachs, which raises GM to Conviction Buy...

General Motors (GM) is up and Ford (F) down at Goldman Sachs, which raises GM to Conviction Buy from Buy with $55 price target. One noted catalyst is the potential of a dividend announcement by year-end. Ford is cut to Buy from Conviction Buy as a nice run in the shares has the team cautious on valuation. The price target is nevertheless upped to $20 from $17. Ford is off 0.7%, GM up 1.1% premarket.
Comments (22)
  • rijensen
    , contributor
    Comments (292) | Send Message
     
    GS proves how valuable it's advice is again. After Ford crosses 17, it raises guidance to $20 and downgrades. WOW, really? My 13 yr old knows that if a valuations crosses your target.. raise it. Well done GS! This call is as good as Cramer's (F) Jan 2013 "Sell,Sell,Sell".
    16 Jul 2013, 07:17 AM Reply Like
  • JoseV
    , contributor
    Comments (397) | Send Message
     
    Well, you can't say GS is not consistent. That also goes for Ford, everytime there is good news F goes down immediately then rebounds.
    16 Jul 2013, 07:27 AM Reply Like
  • mitchjl
    , contributor
    Comments (259) | Send Message
     
    GS must be short Ford.That is the only reason I believe.
    16 Jul 2013, 07:38 AM Reply Like
  • renog
    , contributor
    Comments (15) | Send Message
     
    Hey GS, which brand has 3 segment leading models in the top 10? Name one dog in the fleet? The facts are clear! Ford has a one or more year model change jump on GM! Watch for the new Taurus model and high roof Transit vans being launched now!
    Kudos to Mulally for leadership and to the Ford folks that execute!
    I think a stock buy back is next!
    16 Jul 2013, 07:45 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Not too unexpected. Ford is up about 90% from the $9 lows last August, which may induce short term profit-taking over the next few weeks, especially after the ex-Div date (July 31) passes by for the Sept 3 dividend.

     

    Meanwhile, that $20 price target is probably meant to be for 6-12 months out.

     

    GM's "dividend" should first go to the Taxpayers, who are still out some $25B cash in the GM "haicut and quick rinse" bankruptcy that was perpetrated by the Obama Regime in shoplifting the Taxpayers' wallets. How GM could be handed over $50B free cash over 6 months during 2009, and then to only be required to pay back less than half of it (mostly in shares of stock), and getting off scott-free for the remainder, and still paying no taxes on current profits (having inherited and booked the tax "refunds" on losses from Old GM in the income averaging formula) is simply inexplicable.
    16 Jul 2013, 08:14 AM Reply Like
  • rijensen
    , contributor
    Comments (292) | Send Message
     
    I'm betting a week from now it is back and the GS call will be shown to be the tail wagging the dog (at least for today). I think Ford is posed to double in price in the next 2 years. The line-up is great, sales are through the roof and costs are good and even Europe is slowly recovering. India will be a big help also. My largest holding by far.
    16 Jul 2013, 08:24 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Jensen - Ford shares could certainly rise over the next week or so, in anticipation of 2Q earnings. Ford shares tend to rise a few percent in the anticipation of earnings beats, and then they tend to fall back a few more percent after the actual numbers have been dissected and digested. Those 2Q numbers come out in a week (July 23)

     

    A second factor though is Ford's 3Q ex-Dive date, which is the last day investors can buy shares and receive the 10-cent dividend on them in September. That cutoff day is July 31.
    16 Jul 2013, 08:38 AM Reply Like
  • rijensen
    , contributor
    Comments (292) | Send Message
     
    I'm an investor. Started buying F in March 2009 and am planning on picking up more in the coming weeks. Really looking forward to a .20 dividend and eventually a full .30 dividend. Fair price somewhere in the mid 20's (right now).
    16 Jul 2013, 08:54 AM Reply Like
  • Stanramidon
    , contributor
    Comment (1) | Send Message
     
    How much do you have
    17 Jul 2013, 09:53 AM Reply Like
  • Felice2012
    , contributor
    Comments (10) | Send Message
     
    Rijensen,
    If you like Ford, have a look at the French Montupet, for whom Ford is one of the 2 top customers. Montupet's factories in Bulgaria and Ireland are working very well, and 2013 profits will be even better than in 2012. Mind you, MON is a small cap. But the discount compared to US suppliers is huge.
    17 Jul 2013, 12:03 PM Reply Like
  • bibol11
    , contributor
    Comments (57) | Send Message
     
    I am in the long haul with Ford. GM went bankrupt. There went my investment. The Ford family is committed to keep Ford alive. GM if it starts to make lots of money. With no government control. Somebody will try to make to have a big payout. So when the next downturn comes. It will have no money in reserve.
    16 Jul 2013, 08:31 AM Reply Like
  • wiseone123
    , contributor
    Comments (180) | Send Message
     
    As for GS analysts, you have to understand their employees'marching orders. If Ford misses earnings in a quarter by even one cent and the GS analyst failed to adjust the recommendation to Hold or Sell he or she is regarded as the office basket case and may fail to earn his or her multimillion dollar bonus. If he or she is wrong, after his or her downgrade, all is forgiven with no recrimination.

     

    Retail investors should pay no attention to these individuals once they have learned how the game is played. Institutional Investors(who still own more than 50% of all Ford shares outstanding) are used to their games and do not take them seriously unless the forecast calls for major deterioration, plant explosions, executive kidnappings etc. Turning around the domestic auto companies is a long term proposition and "retail investors" in the words of Bob Shanks CFO, who commented at the Company's 2013 Annual meeting, will see the results in a few more years.
    16 Jul 2013, 01:38 PM Reply Like
  • surfmaniac
    , contributor
    Comments (12) | Send Message
     
    Who do you think is on the other side of this trade? F is blowing GM away on product cadence, financials and by other metric (not to mention that GM wouldn't even exist if they hadn't raped the American taxpayer.) Also, look for F to rebound in Europe (their only trouble spot around the globe) and to gain some serious traction in Asia over the next 2 to 3 years. This call is a joke... buy F big into any weakness, you'll see 25 within a year.
    16 Jul 2013, 01:49 PM Reply Like
  • wiseone123
    , contributor
    Comments (180) | Send Message
     
    Dear Surfmaniac,

     

    You are correct but why does Toyota trade for $129 per share, GM for $35 per share while Ford struggles to reach $18.00? The answer is IN PART as follows: 1) Because Institutional Investors own such large percentages of the auto companies' stock, they inform the major brokerages on Wall Street what they want to see improved in order to further support the stock price. For Ford, it includes 1) more pay down of automotive debt. The Credit Company debt levels are fine, 2) additional contributions to the worldwide pension plans to bring total pension assets equal to pension liabilities, 3) European $2.0 billion losses reduced to at least break even, 4) smooth transition of the CEO from Alan M. to his successor, and 5) fewer outstanding shares. Ford has 4.0 billion shares outstanding, way more than Toyota, GM, or Honda.
    THIS LIST IS NOT EXCLUSIVE BUT IS INDICATIVE OF WHAT DRIVES STOCK PRICES. Wall Street loves large manufacturers (ie Caterpillar, Deere) provided cash flow coverage is extremely strong, cash/marketable securities positions are excellent, and there is NO CONTINUING NEGATIVE NEWS.
    Patience will be required
    16 Jul 2013, 02:20 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Wise - as you say - Ford has nearly 4 billion shares outstanding, at a Market Cap of $65B for the price (now) at $16.60

     

    GM's Market Cap is under $50B, for a $36.20 price on 1.375 billion shares.

     

    Ford has 3 times GM's dilution. If Ford were to match GM's dilution, the share price would be closer to $48.

     

    Meanwhile, Toyota has a Market Cap of $204B on 1.584B shares. Toyota is The undisputed Dominant Power when it comes to Global Automotive manufacturing. This demands a high share price and market cap.

     

    Ford is still a middle-of-the-pack Automaker, from the Global persective, leading in some countries, but nearly invisible in otheres. Toyota dominates virtually everywhere it goes. Ford is barely able to sniff at Toyota's tailpipe when it comes to Generating Profits.
    16 Jul 2013, 04:01 PM Reply Like
  • tcbracing
    , contributor
    Comments (255) | Send Message
     
    Agree with you Tdot, except for the Generating Profits part.

     

    Ford - http://bit.ly/xwKHpj

     

    and

     

    Toyota - http://bit.ly/12JZT9A

     

    are actually really close when it comes to Gross Profit Margin. Toyota is advantage is being in every single market in the world, but the vehicles they sell are actually pretty low in terms of profit.
    17 Jul 2013, 08:19 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    TC - did you have comparable charts for Net profit margins (after overhead and such)?

     

    Those gross margins only reflect the unit cost to actually build the car (labor, materials, purchased parts, etc.) at the factory. But it does not include the product development costs, engineering and management overhead, and so forth. The Gross margin numbers may show the costs of production may be comparable between TM and F, but that has little to do with the Net Cash Flow and Net Cash - which is far more interesting in comparing the health and value of the companies.

     

    F: http://bit.ly/18kPV4j

     

    TM: http://bit.ly/18kPVkJ
    17 Jul 2013, 08:48 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Also, interestingly, Ford's Net operating Cash is at $7.2B on $65.3B in Market Capitalization (or ~11%), while Toyota has $26B cash on $204 Market Cap (~13%).

     

    With Toyota having 3.6 times the cash that Ford has, one might expect a comparable Market Cap multiple. It is actually 3.1 times Ford's.
    17 Jul 2013, 09:35 AM Reply Like
  • tcbracing
    , contributor
    Comments (255) | Send Message
     
    Thanks for the correction Tdot. Although I work at GM in the Product Development area, the financials are not entirely clear to me yet.

     

    Toyota does a lot of re-using components on several vehicles which can dramatically reduce development costs, but also hurts them when a problem does arise, especially if it results in a recall.

     

    Also, if you throw GM into the comparison, they are actually making more than F with a bigger portfolio...

     

    GM: http://bit.ly/12ViMr7
    17 Jul 2013, 10:37 AM Reply Like
  • wiseone123
    , contributor
    Comments (180) | Send Message
     
    Dear Tdot,

     

    Am requesting that you provide us with the respective percentages of common stock ownership for Ford, GM, and Toyota held by 1) Institutional Investors (my guess is 50% to 70%), Mutual Funds (another 15 to 20%) and Retail Investors (10% to 20%).

     

    I believe we have a tendency to view Ford from the perspective of the Retail Investor with little emphasis on how and why Institutional Investors evaluate the stock and it future stock price. After the 2008 crash a large percentage of Retail Investors abandoned the market vowing never to go back, and while some have returned, perhaps through their 401k(s) or contributory pension plans, the Institutions have never been more dominant. Once F is evaluated more from the Institutional perspective we can gain a better understanding of how and why F can become more attractive to the Retail Investor.
    17 Jul 2013, 11:10 AM Reply Like
  • wiseone123
    , contributor
    Comments (180) | Send Message
     
    No pop quizzes, tricks, I do not know the answer, and no ill will. I believe that if the readers could explore the Institutions expectations/demands from Ford management, then we may be able to create a forum on how these objectives may or will be achieved.

     

    If you cannot obtain the data, no problem. I participate in these e-mails/ discussions for educational purposes only. If I can learn something new which will induce me to increase my position in Ford stock, then it serves a very beneficial purpose. Am guessing this is true for many other readers.
    17 Jul 2013, 03:50 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Yeah I don't think Ford Management or Executives accept demands or expectations from Shareholders per se, Institutionalized or not. They get their orders from the Board of Directors, which does indeed represent the Shareholders' Interests as a whole, including those Institutional investors, the day traders, individual shareholders, and of course the Ford Family.

     

    The few shareholders that choose to do so (typically a hundred or so) show up and meet once a year to ask questions of The Company Executives and Directors, voting on proposals, and heaping flowery praise and/or withering condemnation on those up on the podium - usually much more of the former and much less of the latter. The meetings are generally uneventful, aside from an occasional nut case with one share who wants The Company to invest in ocean-front real estate on Mars, or use his design of nuclear-tipped windshield wiper blades.

     

    Anyway, the Executive and Management Decisions are not directly beholden to random Shareholder whims, no matter how many shares they might hold. The Executives all have short and long term performance metrics targets in terms of sales, profits, quality, growth, etc. The Board decides executive pay and bonuses, and the shareholder dividends.

     

    Of course The Ford Family, which holds something like 40% of the votes, have some influence over the Board in terms of recommending the general direction of the Company, and Bill Ford the Executive Chairman basically speaks and acts in voting on behalf of The Family as well as The Company and Shareholders, but they mainly just want to see that the Company is profitable, and growing profitably, and working on improving everything.

     

    Now if a big enough percentage of the Shareholders were to get unhappy and sort of revolt, they could try to overthrow the Board of Directors and demand new leadership, but with the Ford Family having essentially veto powers over such things with their controlling interest, that is rather unlikely.

     

    Shareholders can always make Recommendations to The Board by voting on Shareholder Proposals, and The Board can take such proposals under consideration, but if The Board and The Family think it is bad for The Company, and not in the best interest of the Shareholders as a whole, then it ain't happening.

     

    At best (or worst), if there was, for example, a hostile takeover attempt, an outside entity would have to make an offer to buy up some or all of the outstanding common shares at a premium over the current price. If they suceeded in doing so, buying some 4 billion shares for, say, $25 each (for a whopping $100B (!!!) ... they would still own only 60% of the shareholder votes to try to replace the Board of Directors, which ain't enough if the Ford Family does not agree!

     

    Which means, Ford is relatively stable in terms of ownership and leadership, which frankly makes most institutional investors and shareholders perfectly happy. And Not just the ones with their name on the building.
    17 Jul 2013, 05:15 PM Reply Like
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