The Week That Was: Ford, GM, Honda, Chesapeake Energy and Wal-Mart
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Even as investors rummage through the earnings data from last week – let alone a couple of less-than-flattering stories about corporate snafus – others are bracing themselves for a week of economic data that is sure to impact the markets and keep folks buzzing.
On tap in the next several days are a slew of key reports, ending with Friday’s employment results that’ll put a capper on what is sure to be a wild week ... as if last week didn’t offer investors and shareholders enough intrigue.
Chesapeake Energy and Wal-Mart
Chesapeake Energy (NYSE: CHK) and Wal-Mart (NYSE: WMT) aren’t usually going to find themselves in the same sentence. One – Chesapeake – is a leader in all things natural gas, the other – Wal-Mart – the undisputed king of retail. The issues that brought the two together last week has both companies - and their shareholders - wishing to just put it all behind them. Unfortunately, it's not going to be quite that easy.
For Chesapeake Energy it was a continuation of the problems announced a couple of weeks ago relating to CEO Aubrey McClendon’s use of his dubious compensation package. The problems arose when it was learned the CEO used his 2.5% piece of the new-well-pie as leverage to borrow as much as $1.1 billion – from the same folks who had helped the company finance hundreds of millions. Hmm. Unfortunately – as described in more detail from last week – that’s not the end of the story by any means.
Wal-Mart on the other hand is no stranger to controversy. Seems every time the company discusses breaking ground for a new store folks come out of the woodwork to protest the coming of the 3-headed beast. Of course over the years the retail giant has brought much of this negativity on themselves – and there are a slew of people who’d love nothing better than to see the company squirm. And then along came the news out of Mexico of a series of alleged bribes totaling as much as $24 million to government officials. Supposedly the money was used to help grease the skids as Wal-Mart continues aggressively growing in what is already the company’s second largest market.
Again nothing new for investors or shareholders, but the question asked in last week’s article was and is – will it matter? The share price has eased some, but remains fairly steady in the $59 range, only slightly off its 52-week high. A bit ho-hum right now but senior Mexican officials have promised to thoroughly investigate – as have folks here in the U.S. Again, does anybody really care – outside of the company haters, that is?
Ford, GM and Honda
Almost as interesting as the (fairly) positive results announced last week from both Ford (NYSE: F) and GM (NYSE: GM) were the reactions of readers. With every easing of share price, Ford improves its position as one of the best investment values on the planet. As for GM, even though the company is coming off a historic 2011 - and have continued their winning ways in Q1 – investors remain disgruntled. The result of the government bailout of GM (the Treasury still owns 30% of the automaker) and what many believe to be the death grip the UAW has on domestic auto manufacturers has some investors looking overseas for opportunities. Though Honda (NYSE: HMC) remains a sound choice – and isn’t the subject of investor angst – it may not be the best of what is a sector chock full of investment options.
The investment opinions included are just that, opinions. Investing involves risk, as you well know, so consider your decisions wisely. Tim holds no position in the securities mentioned in this article.
