Mike writes: I have a question regarding Ford Stock—-I see you
purchased Ford Stock years ago—-what is you take on the future of Ford?
Mike
Dear Mike:
I haven't really owned Ford common shares (F – $6.70) directly except for a quick trade. I do own and have owned Ford Convertible Preferred (F-PRS -$32.74).
In general, I think that Ford motor company is in trouble because they lack innovation. They rejected building and researching hybrids and will further continue to reject building cars with alternate energy sources unless led and forced by the more innovative German, Japanese and, maybe now, Chinese manufacturers. By owning the preferred stock, which I think of as a really risky subordinated high yield bond, I profit and Ford survives, but I do not need them to lead.
I would prefer to bet on the long term survival of Ford (either as a subsidiary of another company or because of a government bailout) than the long term success of Ford. This is not to say that the knock down to $6.70 a share might not represent an opportunity for a short term trade on the bounce back after the year end tax sellers are done.
Disclosure: I do not own Ford Motor (F). I do own Ford Motor Capital Preferred Trust II (F-PS). I have traded Ford and options on Ford in the past year.