Does Ford CEO Mulally Have What "It" Takes?
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“I would not join any club that would have someone like me for a member.” –Groucho Marx
Progress Report: Ford Motor Company (NYSE: F), alas, the first crush of 2012 has been sliding of late, mentioned 12/30/11 at $10.76 per share, coming in a little flat at a shade under $11 (intraday, 5/3/12).
Trust works both ways. The definition says nothing about good or bad, positive or negative. “Assured reliance on the character, ability, strength, or truth of someone or something.” That’s from good old Webster.
For example, I trust that Chesapeake Energy (NYSE: CHK), CEO, Aubrey McClendon is not working in the best interests of the company or its shareholders. Why do we own shares with one of the largest natural gas producers when the company is run by a riverboat gambler who ran his own hedge fund from 2004 to 2008? The latest findings are not his first dalliance tip-toeing the grey lines of business ethics. The day he buys back my shares at the price I paid, plus pain and suffering, I will gladly cease and desist from sharing my opinions of the person that is, for some reason, still CEO. Until then, I will practice blogging proctology on his soft spots, from time to time.
A much different example, Ford CEO, Alan Mulally appears to be a corporate leader I can trust to complete the turnaround of one of the most historical companies that helped define what made this country great.
I have owned long positions with both companies for a healthy amount of time (Chesapeake since 2008, Ford since 2010). Both companies pay a dividend (Ford recently reinstituted their payout for the first time since 2006), which gets reinvested, buying more shares each quarter. I haven’t sold one single share of either. I don’t recommend that anyone invest the way I choose to do it.
Now I understand there are definitions of trust that sprinkle some sort of positivity to the word, but most of those will be found on websites putting their own “creative” spin on something that’s been defined satisfactorily for centuries. I also understand CEOs only make up a certain amount of entire companies. Some succeed in spite of them; some sadly fail even though the CEO is/was an upstanding individual.
There are several traits that make up a CEO and subsequently whether or not we are able to place trust (good or bad), in that person’s hands by investing hard-earned dollars with their companies. Some traits are definable (charisma, honesty, intelligence, awareness, great sense of humility), and some characteristics are not so easily identifiable. You’ve heard of the “it” factor, I’m certain. That fleeting unicorn of praise that is quite simply, “it.”
It has been a long, tough road for Ford, since 2006 when former CEO Bill Ford, Jr. essentially fired himself and replaced himself with Mulally. Restructuring, plant closures, global workforce layoffs, and it isn’t as though the path won’t have a few twists and turns in the near future. Mulally answers questions with refreshing honesty, for example, when asked about Europe, quite succinctly, “I don’t know about Europe.” Anyone that tells you they know when Europe will bottom out and retrench should receive a quizzical look normally reserved for a bearded lady.
I know the stock has been under some pressure, even with the recent credit upgrade from Fitch (another upgrade would be sublime, S&P? Moody’s? Bueller?). I realize there are challenges across the pond, and those are being addressed by way of cutting shifts, capacity and with that strategy, losses will be cut, as well. Don’t get me wrong, this is by no means a G. Gordon Liddy “candle trick” for me. I do mind. As I have stated on several occasions, I detest losing, but this is a long-term investment for me, patience is key. I am not necessarily a “trader” when it comes to companies like Ford. This may turn out to be a bumpy ride in a recalled vehicle, but as long as Mulally is driving, I have trust in the potential outcome. He just does “it” for me.
kmet312 owns shares of Chesapeake Energy and Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.