By on January 28, 2009

I reckon it’s a little early to name the worst stock of ’09—given how many choices are bound to surface as the U.S. economy tanks. But, well, there it is: The Motley Fool names Ford (F) the worst stock you can buy. “The trouble with Ford’s stock is that it may be very tempting to some investors who look at the $1.94 price tag and think that it’s a nice, cheap price for a great American car maker. The trap door with Ford is the company’s debt—all $157 billion of it. Looking at Ford on the basis of its total enterprise value (equity value plus net debt), the company is still valued near or above the better-positioned automakers… The dealio at Ford comes down to the fact that debt holders are really the ones who own the company at this point. At the end of the third quarter, the company had a shareholder deficit of nearly $2 billion, which basically means that there are more non-equity claims against assets than there are assets. That’s bad news for shareholders because debt holders have rights and protections that will let them flick away equity holders like a paper football, if push comes to shove.” As our Ken Elias pointed out this morning, as MarketWatch points out tonight, the shove is here.

Get the latest TTAC e-Newsletter!

17 Comments on “Motley Fool: Ford Is The Worst Stock of ’09...”


  • avatar
    postjosh

    so, they are saying that ford has negative equity. is that supposed to be a surprise?

  • avatar
    maniceightball

    I actually bought Ford stock recently, but I was fully aware of the depth of feces they’re wading in. I think folks like me bought it knowing it was a high risk — I consider the money “gone” for all intents and purposes. But, I did it largely because there’s a small chance that they’ll rebound in, say, 5 years, at which time I’m betting on them recovering and paying off their debts. Worst of 2009? Possibly. But in the longer term, I think there’s a decent chance they’ll become profitable again.

  • avatar

    Funny isn’t that stocks are the only thing people don’t like to buy when they are “on sale”.

    –chuck

  • avatar
    Rix

    Ford stock is a suckers game. Debt is a different story; I bought some Ford debt and have made money.

  • avatar
    Patrickj

    @Rix

    With the Ford family’s special class of stock, the regular stock provides no real voting interest in the company.

    The ultimate sucker’s game in my book.

  • avatar

    I have four thousand shares. It’s more an expression of support in the company than anything else.

    With all respect to the Motley Fool et al, the fact is that virtually nobody ever seriously outperforms the market. Picking stocks is something best done by a chicken pecking at the Wall Street Journal.

    In the long term, there has to be an American automaker left standing. Which one is it most likely to be?

  • avatar
    Dimwit

    The scary thing is that this is the healthy auto company from Detroit.

    Still, the old adage “buy low, sell high” means that unless it’s an IPO, you’re buying what everyone else is either selling or not buying. If you have the money to lose, I’d say this was a great play.

  • avatar
    obbop

    $1.94 for one share of Ford.

    Ask for the share and offer it at eBay as a collectible when Ford receives a horde of news coverage for whatever news story garners that news coverage.

    Perhaps the final Ford death throes.

    Watch the bidding give the seller an end-value far exceeding the cost.

    You may wish you had bought a few hundred shares for selling at various venues.

    Just commence the selling quickly before the imitators wade in, diluting the market.

    For the doubters within the herd, I wonder how many of thee are aware that SOME 8-track tape cartridges can bring the seller a hundred to several hundred dollars?

    Some, not all.

    This message was brought to you by the Disgruntled Old Coot hidden within the Obbop entity, star of neither stage nor screen but ready to weather any economic catastrophe ensconced within the covered bed of his long-bed Chevy pick-up that suffered at the hands of a non-caring Chevy dealer network and corporate GMC in regards to having warranty work performed in a manner to repair numerous defects.

  • avatar
    ZoomZoom

    Hey, Obbop, at least you got the warranty work completed by those Chevy dealerships.

    All I ever got was “it’s working as designed”, but only after they had initially agreed that there was in fact a defect, then kept the car for many days and finally decided that they could not fix the problem.

  • avatar
    romanjetfighter

    I invested my entire life savings (a 3 digit number) in Ford stock a month ago and made 11-12% return in a week or so? I had a hernia almost every day because it went up and down like crazy, though.

    These are the stocks you pop in and out of, in matter of days… or minutes.

  • avatar
    RedStapler

    I actually made a bit of a killing back in Nov with Ford. I bought a week before the bailout was announced and then sold a few weeks after. I’m back to the relatively safety of owning BP now.

  • avatar
    rkeep820

    Motley Stupid also named 10+ other stocks “the worst of 2009”. Stock is up 10% this morning to $2.20.

  • avatar

    @obbop: You know it costs like, $30 per fancy stock certificate to get it printed up, right?

  • avatar
    RetardedSparks

    Can’t argue with the financials, but how on earth can the stock of a company likely to succeed be a worse buy than that of GM?

    BTW, screamin’ Jim Cramer had an interesting take on dollar stocks a few weeks ago. Roughly paraphrased: “A $100 stock goes down 50 cents, how much did you lose? A $1.00 stock goes down 50 cents, how much did you lose?”

  • avatar
    kken71

    I’m a fan of the Motley Fool. In fact, I learned about TTAC in a Motley Fool article about GM a few years ago. I haven’t read the Ford/Worst Stock of 2009 article, but I know MF looks at stocks as long term investments. Right now, all stocks are “on sale” and, in this economy, the best traits to look for in a business are lots of cash, little debt, recession resistant businesses, non dependence on the availability of consumer credit, and industry leadership. Those are the businesses that will come back strong. Ford does not fit the bill. I would think that GM is worse, though.

  • avatar
    Bunter1

    I can’t see how Ford could be worse than GimMe stock.
    GimMe (GM) will go BK and that stock will be a total loss.

    Bunter

  • avatar
    Landcrusher

    The theory is sound, but how is the overall record on MF stock picks? I can’t believe there is no site with records on all the touters.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • dal20402: I have an easier time seeing a DS in the front than the rear. If I try not to see a J30 when I look at the...
  • dusterdude: Overalll I don’t mind the exterior design – very bold for sure
  • tonycd: Anybody who sees a J30 in this simply isn’t old enough to remember its true progenitor, the Citroen...
  • DenverMike: No they’re just getting better at having them die as they cross the warranty “finish line”. Most will...
  • thegamper: I absolutely love this car. It’s true some of the lustful design elements of the concept are gone,...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber