General Motors approved another share buyback, adding to our frustration that the portfolio name Ford has not yet embarked on its own buyback program. GM announced a new $6 billion buyback on Tuesday – weeks before its $10 billion buyback authorization is set to close in November. “I'm very angry with Ford,” Jim Cramer said during the morning meeting for club members. “Just buy back those damn shares.” It is one of the cheapest on the market, he pointed out. “It's humiliating.” Ford shares trade at 6.4 times forward earnings. GM is even cheaper: 5.1 times. By comparison, the S&P 500 trades almost 21 times. “GM is proving once again that it knows how to move a stock,” he previously said on CNBC's “Squawk on the Street” shortly after the news. CEO Mary Barra “won't stop” until it's dramatically higher, he added. GM is up 65% since the close on Nov. 28, the day before announcing last year's buyback. During that same period, Ford shares rose just 17.5%, about in line with the market. F GM 1Y Berg Ford vs. GM 1 year In response to a question about GM's buyback, Ford told CNBC it remains committed to returning 40% to 50% of adjusted free cash flow to shareholders, as it has done in recent years. At a Deutsche Bank auto conference Tuesday, Ford CFO John Lawler said if the company doesn't see “opportunities for growth and investment,” it will try to return more money to shareholders. He alluded to management's focus on disciplined capital allocation. Ford has focused capital returns to shareholders on dividends rather than buybacks – evidenced by its 4.9% annual yield compared to GM's 1% dividend yield. In 2023, Ford spent $5.33 billion on dividends and buybacks, with only about 6.3% of that on buybacks. GM spent $11.7 billion on dividends and buybacks last year, of which only 5% was on dividends. After announcing the buyback Tuesday, GM lowered its 2024 forecast for sales and production of all-electric vehicles — reflecting the industry-wide slowdown in electric vehicles. Ford has addressed declining demand for electric vehicles by moving away from its money-losing all-electric vehicles and pouring more resources into its high-margin hybrids. While encouraged by Ford's successful change of direction, we believe a sizeable share buyback would be a catalyst for Ford stock, just as it has been for GM. (Jim Cramer's Charitable Trust is long F. See here for a full list of the stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charity's portfolio. If Jim has talked about a stock on CNBC TV, he will wait 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. No fiduciary obligation or duty exists nor is it created by your receipt of any information provided in connection with the Investment Club. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A Ford Mustang on display at the New York International Auto Show on March 28, 2024.
Danielle De Vries | CNBC
General engines approved another share buyback, adding to our frustration by the name of the portfolio Ford has yet to embark on its own buyback program.
