Ford to Wall Street: Drop Dead
At a Detroit Economic Club event held last night in the Motor City, Blue Oval Chairman Bill Ford opined that Ford Motor Co. may have been too forthcoming with Wall Street in past years.
“In the past, maybe we said too much,” Ford said Tuesday.
In a report from Bloomberg, Mr. Ford is quoted as saying the company with his name on the building is trying to provide clarity without tipping their hand in key competitive areas. “The key is providing clarity when we’re ready [emphasis mine] so that investors can make an informed decision.”
This brusque assessment of Wall Street comes on the heels of analysts downgrading their rating of Ford stock just days after new CEO Jim Hackett told investors it’ll take time to for him to turn around the company. According to Bloomberg, which tracks recommendations of certain analysts, five moneymakers suggest buying Ford shares, while nineteen rate them a hold. Two advise selling. Perhaps they were affected by the door latch recall.
Bill Ford went on to say, “This is a very competitive world we’re in. You want to give Wall Street enough information, but you also don’t want to telegraph exactly where you’re going. And I think that’s a balance that we are going to continue to work on.”
Alrighty then. Safe to say the Glass House won’t be sending any cards or brightly wrapped gifts to Wall Street this December.
This new tight-lipped policy is undoubtedly a response to the market’s persistent pessimism of Ford, despite the Blue Oval beating analysts’ earnings expectations every quarter so far this year. This is without mentioning the roughly $40 billion in cash Ford is reported to have lying around.
How has Wall Street rewarded Ford’s good performance? With a stock price mired in the $12 range, down 2.5 percent, year-to-date. Meanwhile, GM is up nearly 20 percent in the same timeframe. Tesla continues to mystify by reaching stratospheric stock market heights, despite its current inability to turn a profit making cars.
Sure, Ford could stand to do a few things in a speedier manner, such as bringing the Ranger and Bronco to market in order to tap hot segments. Ford is not exactly in turmoil, though, so Mr. Ford’s annoyance at Wall Street is largely justified, in this author’s opinion.
Investors seem to buy into the narratives they want to hear, and whatever they’re hearing right now about Ford, they don’t seem to like — despite Ford being profitable for ages and having enough resources to walk its own path. Perhaps Mr. Ford could take a page from Sgt Dignam in The Departed who, when asked about disclosure, opined, “Treat them like mushrooms. Feed ‘em shit and keep ‘em in the dark.”
[Image: Ford Motor Company]
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So I should spend my money on Ford stock so they can put it in the bank with the rest of the $40B in STA? I can do that all by myself. These car companies should go back to the strong emphasis on dividends, and let the market price adjust around that.