I was recently listening to Barry’s Ritholtz’s Masters in Business podcast interview with Darren Palmer, the VP of Ford’s Global EV Program, and he discusses the development of Ford’s first three all electric vehicles, including the Mustang Mach-E and the Ford F-150 Lightening truck. It was a fascinating interview and provided insights into how Ford plans to position the company for an electrified future by splitting the company into an electric division called the Model E and the legacy business continuing on as Ford Blue. While GM (NYSE:GM) had a significant head start on Ford (NYSE:F) with electric vehicles like the Volt and Bolt and upcoming vehicles like the Hummer EV and the stunning Cadillac LYRIQ, it looks like Ford has a big hit on its hands with the Mustang Mach-E, which was selected by Consumer Reports as its top electric vehicle pick.
Executive Chair Bill Ford picked up $4.5 million worth of Ford stock on the open market last week and this follows his $8.5 million purchase in December. Both purchases were indirect purchases through a trust. We wrote the following on December 18, 2021 about Ford after his previous purchase,
When looking the investment landscape early last year when the COVID-19 pandemic started unfolding around us and even earlier this year, little did I anticipate that some of the biggest gainers this year would be auto stocks. I was more focused on companies like Berkshire Hathaway (BRK.A) that were positioned to do well if we saw sector or style rotation as discussed in this Twitter thread. Auto manufacturers have had a great year, benefiting from a combination of,
increased demand from consumers flush with cash, as you can see from the following M2 money supply chart
higher prices for both used and new cars
historically low interest rates and lax lending standards
The biggest beneficiary of these trends this year has been Ford (F), which has seen its stock shoot up nearly 125% this year as you can see from the chart below. The company’s all electric Ford Mach-E has been a big hit and is benefiting from the fact that Ford electric vehicles are still eligible for the $7,500 federal tax credit. When I was considering a second electric vehicle earlier this year to replace an old gas guzzler, the Mach-E was near the top of my list and the wait time then was more than 3 months. It looks like the wait time has now increased to 20+ weeks and the Premium and GT models now have a wait time of 28+ weeks. This increase in wait time is interesting considering the company indicated during its third quarter 2021 earnings call that it has seen a significant increase in semiconductor availability. The much anticipated electric F-150 truck is expected to launch in Spring 2022.
The company saw a big increase in its operating cash flow in Q3 to $7.7 billion, reinstated its quarterly dividend at 10 cents a share and raised its full year guidance to between $10.5 billion and $11.5 billion in operating earnings. The stock trades at a forward 2022 P/E of 10 and a forward EV/EBITDA of 15. Investors that may get turned off by the large net debt on Ford’s balance sheet should consider that a majority of it is from its financing arm. The company’s financing division has $122.52 billion of debt and liabilities partially offset by $106.37 billions of loans and leases. Ford has $25.62 billion in other debt that is more than offset by $31.42 billion of cash and short-term investments. The quality of the underwriting in its financing division is a key risk given the size of their liabilities.
Ford, GM, Tesla and Ferrari YTD Stock Chart (Yahoo Finance)
Ford, GM, Tesla and Ferrari YTD Stock Chart (source: Yahoo Finance)
Another interesting purchase last week was at an automotive part manufacturer LCI Industries (LCII), which saw a cluster of three insiders purchase shares. As an OEM manufacturer that supplies the RV industry among others, it is benefiting from strong RV and automotive sales. Margins are low as expected but growth in both the top line and the bottom line have been impressive with the company reporting record sales of $4.5 billion for 2021, up 60% year-over-year. Net income increased even more, up 82% from 2020. When the company reported results in February, they indicated they had strong January sales and estimates for Q1 and Q2 2022 are both every high. It make sense that the insiders are buying ahead of an earnings related blackout period.
Insider buying decreased last week with insiders purchasing $54.4 million of stock compared to $71.35 million in the week prior. Selling on the other hand increased to $1.42 billion compared to $879.41 billion in the week prior.
Sell/Buy Ratio:
The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 26.03. In other words, insiders sold more than 26 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 12.33.
Notable Insider Buys: 1. TMC the metals company Inc. (NASDAQ:TMC): $2.45
Shares of this battery-grade metals explorer were acquired by 4 insiders:
Director Andrei Karkar acquired 2,085,000 shares, paying $2.40 per share for a total amount of $5.01 million. These shares were purchased indirectly by ERAS Capital LLC.
Director Andrew Hall acquired 28,000 shares, paying $2.13 per share for a total amount of $59,713.
Chief Executive Officer Gerard Barron acquired 23,000 shares, paying $2.19 per share for a total amount of $50,370. Mr. Barron increased his stake by 0.15% to 15,291,809 shares with this purchase.
Chief Financial Officer Craig Shesky acquired 15,000 shares, paying $1.80 per share for a total amount of $26,979. Mr. Shesky increased his stake by 2.26% to 678,316 shares with this purchase.
P/E: N/A Forward P/E: -7.66 Industry P/E: N/A P/S: N/A Price/Book: 5.96 EV/EBITDA: -3.5 Market Cap: $555.61M Avg. Daily Volume: 5,456,012 52 Week Range: $1.15 – $15.39 2. Ford Motor Company (NYSE:F): $16.65
Executive Chairman William Clay Ford acquired 267,697 shares of Ford Motor Company, paying $16.81 per share for a total amount of $4.49 million.
Shares of this manufacturer of engineered products for transportation and recreational vehicles were acquired by 3 insiders:
Director James Gero acquired 10,000 shares, paying $105.52 per share for a total amount of $1.06 million. Mr. Gero increased his stake by 3.29% to 314,192 shares with this purchase.
President & CEO Jason Lippert acquired 9,265 shares, paying $108.00 per share for a total amount of $1 million. Mr. Lippert increased his stake by 3.20% to 298,992 shares with this purchase.
Group President – Aftermarket Jamie Schnur acquired 3,250 shares, paying $107.79 per share for a total amount of $350,318. Mr. Schnur increased his stake by 19.19% to 20,182 shares with this purchase.
President and CEO Vicki A. Hollub acquired 14,191 shares of this oil and gas properties exploration and production company, paying $56.24 per share for a total amount of $798,102. Mr. Hollub increased his stake by 3.13% to 467,282 shares with this purchase.
Shares of this biotech company were acquired by 2 insiders:
Director Grant Verstandig acquired 190,600 shares, paying $3.94 per share for a total amount of $750,274. Mr. Verstandig increased his stake by 26.66% to 905,495 shares with this purchase.
President and CEO Kristi Jones acquired 10,000 shares, paying $3.74 per share for a total amount of $37,400. Mr. Jones increased his stake by 15.85% to 73,078 shares with this purchase.
Shares of this medical technology company were sold by 2 insiders:
CEO and President Timothy P. Herbert sold 130,000 shares for $250.52, generating $32.57 million from the sale. 130,000 of these shares were sold indirectly through a trust.
Director Marilyn C. Nelson sold 15,000 shares for $255.01, generating $3.83 million from the sale. These shares were sold indirectly by GDN Holdings, LLC.
Director Tench Coxe sold 100,000 shares of this semiconductor company for $274.06, generating $27.41 million from the sale. These shares were sold indirectly by a trust.
Shares of this asset management company were sold by 3 insiders:
Chairman and CEO James M. Cracchiolo sold 56,622 shares for $314.16, generating $17.79 million from the sale.
Executive VP AND CFO Walter Stanley Berman sold 8,711 shares for $312.01, generating $2.72 million from the sale.
President – Insurance & Annuities Gumer Alvero sold 2,044 shares for $314.30, generating $642,425 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
Director William P. Foley II sold 1,535,429 shares of this cloud-based provider of integrated digital human capital and business solutions worldwide for $10.30, generating $15.82 million from the sale. 515,449 of these shares were sold indirectly by Bilcar FT, LLC.
