On December 1, 2008 I acquired Ford shares at $2.95. The primary reason for my purchase then was due to Alan Mulally. Mulally became Ford’s President and CEO in September 2006 after spending 37 years at Boeing. Any investor with an understanding of the automotive industry could have recognized how adeptly Mulally understood the challenges facing Ford. Investors could have observed how he began implementing strategies not only to insure the company’s survival through The Great Recession, but also a way for Ford to thrive as the economy began to thrive after The Great Recession ended. Many investors (the consensus) assumed Ford would face the same eventual bankruptcy fate as its two Detroit rivals, General Motors and Chrysler.
If you want to be above average, you must depart from consensus as an investor, Howard Marks
Howard Marks, co-founder and co-chairman of Oaktree Capital Management, once described investing using second level thinking as a process of recognizing what others are missing. It is an ability to have insights that others do not see. It is a willingness to depart from consensus. If you want above average investment returns, logically one must depart from consensus thinking. The consensus on December 1, 2008 was that Ford was not much different than General Motors and Chrysler. The consensus then was an example of what Marks would define as first level thinking - simplistic and superficial.
So how did my 2008 investment in Ford perform? I acquired more Ford shares on January 28, 2010 at $11.88. Alan Mulally retired four years later on July 1, 2014. When I completely eliminated my position in Ford on September 28, 2017 the total return on my Ford investment (including dividends) was 139%. The compound annual growth rate on this investment (CAGR) was 12.3% per year.
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