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The short interest in Ford (NYSE: F), rose 11.3 million shares to 283.1 million. The numbers compare shares sold short on April 30 in contrast to the number on April 15. Ford is now the most shorted company listed on the NYSE.
Ford has made a big deal about its turnaround. Some investors are buying the story. Ford's shares are up 20% this year.
But short sellers have a case, and it's a powerful one. Ford's US sales are still down by double digits most months. Sales of its most profitable cars and trucks, including its flagship F-150 pick-up, are dropping sharply, probably because of the rising cost of gas.
Ford's case is that it can continue to cut costs in the US and that its international sales are good. It is an argument that does not hold water. Ford has about 15% of the domestic market. How far can that fall? US sales need to support the company's factory and management costs on top of product development and design.
Ford can't count on all of those dollars coming from overseas.
Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.
There's also the bullish case: Ford (F): A bullish case for a turnaround
Reader Comments (Page 1 of 1)
1. It's not uncommon for a company that has risen over 60% in one month's time to garner above average short interest. And to be honest these short sellers may very well profit from this approach in the short term. I too expect a dip within the next month or two due to horrible condition of the overall retail market. However, when one looks at the long-term analysis it paints a picture of Ford being the company to beat. They have the product coming out, they have superior quality compared to most competitors, and they are being run like a business, not like an auto enthusiast club. GM fails on most if not all of the items just mentioned. Toyota's luster is fading more and more as each month goes by. Chrysler is irrelevant. Honda is the only real competition in the short term due to strong lineup of fuel efficient models, but only so many people will settle for a Fit of outclassed Civic. The Accord has gone up in size just as fuel prices are taking off. Same can be said for the soon to be released Pilot. MPG goes down on this new model just as fuel spikes. The Fiesta will be the best selling vehicle in the U.S. in a year and a half if Ford can find enough capacity to produce the 40,000 a month that it could sale. So the short sellers better buy on the the next dip to cover their positions cause it will be 5 years before Ford offers a correction that will allow a well timed short position to be profitable again.
Posted at 9:37AM on May 12th 2008 by Micro1234