Being an investor in Ford Motor (F) or General Motors (GM) over the last two years has probably been a ride as wild as Six Flags (SIX) New Jersey’s famous Kingda Ka roller coaster. Towards the end of 2005, I picked up Ford for my personal portfolio and also decided to feature it in the January 2006 edition of my investment newsletter, which was based on the Dogs of The Dow theory.
I picked Ford as a contrarian bet given the extreme negative sentiment surrounding the company and because I felt that there was a lot to like about the company at that point. Sales of the redesigned Mustang were very strong, the coveted GT supercar was launched to great acclaim, sales of the midsize Fusion were encouraging and Ford had a stable (pun intended) of premium brands like Aston Martin, Jaguar, Land Rover and Volvo. Apart from sitting on a sizeable cash position of $17 billion, Ford also had stakes in Mazda and car rental company Hertz. Ford’s international operations were growing in Europe, India and China and their finance arm was profitable. The expectation was that Ford would eventually return to profitability through its “way forward” restructuring program and I did not mind collecting a 5.1% dividend while I waited for Ford to achieve said profitability.