Sea, F is my 3rd largest position at about 18% of my portfolio. I am estimating 2015 EPS of about $2.50. I know that is much higher than analysts estimate, but Mulally has said that Europe would be break even in 2015, which would add $.50 to 2013 EPS. China's sales growth is insane! They are saying ultimately 40% of sales will come from Asia (though not by 2015). Barclay's recently said 2014 auto sales should rise to 16 million, which bodes well for U.S. profit. I think the market looks at the debt and doesn't appreciate that most of the debt is ford's finance division, which is good debt. Worldwide the average age of autos is very high, meaning there is some serious pent up demand. Great long-term pick IMHO.
lol I just modeled your projections and I get the stock should only be worth like $23 today. But I don't know how accurate your projections are since Europe has only lost them 14 cents this share or $810 M pretax
Ya I don't know too much about auto companies. When i valued them in the past I struggled in guessing their growth rates. Since their payout ratios aren't high and they have higher discount rates since its historically been a riskier sector I believe you have to know or be modeling high growth rates to sustain a premium valuation. So let me know what sort of growth u expect.
Also let me add in I would never own Ford because it has dual class shares. I refuse to own stock where some owners get more votes than other owners. In my opinion this inequality in shares makes it hard to value. I believe though that any stock with dual class should trade at a 20-25% discount to a regular stock. This is based on the belief that most takeovers are at a 20-25% premium to market price. So the price paid to get control is a premium because you have say. So the price for having less of a say warrants a discount.
the dual class stock is why I know less about Ford than GM. I have read the GM annual report last year. I didn't buy it since the UAW owned a large portion of the company and I struggled in modeling growth and dividends.
So I stopped valuing GM since its valuation was imprecise and i didn't like the qualitative reasons of their shareholder groups.
I think its up 44% since then but its not like my group of stocks has done worse they have outperformed GM since I read their 2011 annual in 2012. So I have no hard feelings. I have to feel comfortable in the stock I buy. Since I hold very concentrated positions in a few securities like Buffett and most good investors. So when you bet big you have to know you're right.