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Is your team's owner a Nepo Baby? An Analysis of Current NFL Head Coach Searches
With Sean McDermot getting fired from the Buffalo Bills yesterday, the NFL will now see 10 novel head coaches-team pairings in the 2026 season. Four of the head coach openings have been filled as of this post (NY Giants - John Harbaugh, Atlanta Falcons - Kevin Stefanski, Miami Dolphins - Jeff Hafley, Tennessee Titans - Robert Saleh). Journalism concerning coaching searches leads us to believe that the owners of NFL teams almost always play a significant role in the process, and their personal preferences for candidates may override those of the personnel that spearhead their organizations’ administration of the search. Moreover, head coaches’ roles go well beyond X’s and O’s: they are managers of players, coaches, communications, non-football personnel, etc., it seems useful then to critically look at whether the owners of NFL teams wield the necessary resume to evaluate employees such as Head Coaches. In this sense, evaluating the backgrounds of the owners themselves is a worthy enterprise, at the very least to determine whether their professional background lends themselves to choosing high-level managers. Owners are the highest-authority decision makers for their organizations, and it is informative to know how they obtained this authority as well as whether their previous professional experiences contribute to them being able to effectively evaluate management personnel like head coaches. An underlying premise of such a study is that while the owners’ billions of dollars of assets allows them power over their franchises, many of them earned this power in different ways. (None of the above implies that the owners are dumb - their different education profiles vary greatly and are worthy of attention beyond this Reddit post, ideally by someone else more interested in the topic). Understanding how individual owners acquired their power may also lend insight into their willingness to risk investing financial resources on coaching staff (again, there are caveats to this assumption - Mark Davis gave Chip Kelley the highest salary for any Offensive coordinator last year, for example, thanks to a surge of recent outside financial investment in the Raiders organization). The below analysis serves as a general comparison of the 32 different owners, specifically as to how they managed to become owners. They are divided into 3 categories that correspond to how they obtained final authority over decisions about their respective franchises: NOT A NEPO BABY: These owners amassed the financial capital necessary to own an NFL team from relatively modest means in which they did not inherit massive wealth. For example, starting a company with limited outside investment. NEPO BABY: These owners inherited the massive financial capital necessary to own an NFL team. NFL NEPO BABY: These owners inherited the NFL teams from their parents who previously served as owner. The biographies of each owner are pulled from Wikipedia - mostly copied and pasted, with some minor changes to make the prose more legible. The lengths of the biographies differ according to the relevance of their categorization; they are consequently longer for “NOT A NEPO BABY” versus “NFL NEPO BABY”, since the latter category is relatively easy to explain (that is to say, I imposed a necessary amount of editorial discretion with the biographies). [If you see some important context that may be missing, let me know in the comments - I will try to edit any issues as I see them.] Final Results: NOT A NEPO BABY: 11 owners NEPO BABY: 7 owners NFL NEPO BABY: 14 owners AFC EAST: Buffalo Bills: After working for a time for Getty Oil and Felmont Oil Co., Terry Pegula founded East Resources, a natural gas drilling company, with $7,500 from family and friends in 1983. It profited heavily upon discovery of deep layers of natural gas in the Marcellus Formation and application of the hydraulic fracturing ("fracking") recovery process. Analysis: NOT A NEPO BABY New England Patriots: Robert Kraft began his professional career with the Rand-Whitney Group, a Worcester-based packaging company run by his father-in-law Jacob Hiatt. In 1968, he gained control of the company through a leveraged buyout, In 1988, Kraft had amassed enough capital to outbid several competitors to buy the stadium out of bankruptcy court from Sullivan for $22 million. In 1994, Kraft launched what amounted to a hostile takeover, offering $172 million for an outright purchase. Analysis: NOT A NEPO BABY (Even though he inherited his first job from family at the beginning of his professional career). Miami Dolphins: Stephen Ross began his career as a tax attorney at Coopers & Lybrand in Detroit. In 1968, he moved to New York City and accepted a position as an assistant vice president in the real estate subsidiary of Laird Inc., then worked in the corporate finance department of Bear Stearns. In 1972, he was fired from that company after clashing with a superior; living off $10,000 ($67,000 in 2021 dollars) lent to him by his mother, he utilized his federal tax law knowledge to organize deals for wealthy investors, allowing them to shelter income with the generous incentives granted by the federal government to promote the construction of federally subsidized affordable housing. Ross was very successful, earning $150,000 in his first year, and he was soon arranging more complicated transactions. In February 2008, Ross bought 50% of the Miami Dolphins franchise, Dolphin Stadium (now known as Hard Rock Stadium), and surrounding land from then-owner Wayne Huizenga for $550 million, with an agreement to later become the Dolphins' managing general partner. On January 20, 2009, Ross closed on the purchase of an additional 45% of the team from Huizenga. The total value of the deal was $1.1 billion. Analysis: Received extraordinary financial help from family at the beginning of his professional career, but ultimately NOT A NEPO BABY. New York Jets: Robert Wood Johnson was born in New Brunswick, New Jersey, the son of Betty Johnson and Robert Wood Johnson III, and the great-grandson of Robert Wood Johnson I, who founded the Johnson & Johnson pharmaceutical company, along with his brothers James Wood Johnson and Edward Mead Johnson. In January 2000, Woody Johnson purchased the New York Jets from the estate of Leon Hess for $635 million. Analysis: NEPO BABY AFC NORTH Baltimore Ravens: Steve Bisciotti was born on April 10, 1960, in Philadelphia, Pennsylvania, the youngest of three children in a middle class Italian-American family. In 1961, his parents, Bernard and Patricia Bisciotti, moved the family to Severna Park, Maryland, a suburb of Baltimore, for his father's job as a construction sales executive. In 1983, he and his cousin Jim Davis started Aerotek, a staffing company in the aerospace and technology sectors. Running the company out of a basement office with secondhand equipment, Bisciotti and Davis produced $1.5 million in sales in the first year. Aerotek grew into the Allegis Group, which is now the largest privately held staffing firm in the world. Analysis: NOT A NEPO BABY Cincinnati Bengals: Mike Brown is the only living son of Paul Brown, who co-founded the team in 1968. Analysis: NFL NEPO BABY Cleveland Browns: James Arthur Haslam III’s father Jim Haslam founded the Pilot Corporation in 1958 as the Pilot Oil Corporation. Haslam began his career at Pilot Corporation in 1976. In 1980, Haslam was named vice president of sales, development and operations. In 2012, he reached an agreement with Browns owner Randy Lerner to purchase the franchise for $1 billion. Analysis: NEPO BABY Pittsburgh Steelers: The Steelers, whose history may be traced to a regional pro team that was established in the early 1920s, joined the NFL as the Pittsburgh Pirates on July 8, 1933. The team was owned by Art Rooney and took its original name from the baseball team of the same name, as was common practice for NFL teams at the time. To distinguish them from the baseball team, local media took to calling the football team the Rooneymen, an unofficial nickname that persisted for decades after the team had adopted its current nickname. The ownership of the Steelers has remained within the Rooney family since the organization's founding. Art Rooney's son, Dan Rooney, owned the team from 1988 until his death in 2017. Much control of the franchise has been given to Dan Rooney's son, Art Rooney II. Analysis: NFL NEPO BABY AFC SOUTH Houston Texans: Cal McNair was born in Houston, Texas, on October 24, 1961, to Bob McNair and Janice McNair. After Bob McNair died in November 2018, Janice succeeded her husband as principal owner, while Cal took over the franchise's day-to-day operations. He was officially made chief executive officer in January 2019.On March 26, 2024, McNair succeeded his mother as principal owner of the Texans. Analysis: NFL NEPO BABY Indianapolis Colts: Carlie Irsay-Gordon first worked for the Colts in the ticket office and was subsequently involved in the marketing department and the strategies used by the sales team and ticket office. Irsay-Gordon has represented the team at ownership meetings since 2004, and inherited ownership of the Colts from her father Jim Irsay in 2024. Analysis: NFL NEPO BABY Tennessee Titans: Amy Adams Strunk is the daughter of the late owner Bud Adams. Before Strunk took over as controlling owner in 2015, the role belonged to her sister, Susie Adams Smith, whose husband Tommy Smith was team president and CEO. Analysis: NFL NEPO BABY Jacksonville Jaguars: Shahid Rafiq Khan was born on July 18, 1950 in Lahore, Punjab, Pakistan, to a middle-class Punjabi Muslim family involved in the construction industry. His father, Rafiq Khan, owned a shop that sold survey and drawing equipment, while his mother Zakia Khan was a professor of mathematics. Khan moved to the United States in 1967 at age 16 to study at the University of Illinois at Urbana–Champaign. Khan worked at the automotive manufacturing company Flex-N-Gate Corporation while attending the University of Illinois. When he graduated, Khan was hired as the engineering director for the company. In 1978, he started Bumper Works, which made car bumpers for customized pickup trucks and body shop repairs. In 1980, Khan bought Flex-N-Gate from his former employer Charles Gleason Butzow, bringing Bumper Works into the fold. The company grew under him, so that it supplied bumpers for the Big Three automakers. On November 29, 2011, Khan agreed to purchase the Jacksonville Jaguars from Wayne Weaver and his ownership group. The sale was finalized on January 4, 2012, making Khan the first member of an ethnic minority to own an NFL team. Analysis: NOT A NEPO BABY AFC WEST: Denver Broncos: Samuel Robson "Rob" Walton is an American billionaire heir to the fortune of Walmart. On June 7, 2022, an ownership group led by Walton entered into an agreement to purchase the Denver Broncos from the estate of Pat Bowlen for $4.65 billion. Analysis: NEPO BABY Kansas City Chiefs: Clark Hunt is the son of Chiefs founder Lamar Hunt and his second wife Norma Hunt, and is the grandson of oil tycoon H. L. Hunt. Analysis: NFL NEPO BABY Las Vegas Raiders: Mark Davis’s father, Al Davis, was the principal owner of the Raiders from 1972 until his death in 2011. Upon his father's death, Davis and his mother, Carol, inherited ownership of the Raiders, with Mark taking over as operating head of the franchise. Analysis: NFL NEPO BABY Los Angeles Chargers: Dean Spanos is the son of Alex Spanos, who purchased majority interest in the team in 1984. Spanos took over daily operations from his father in 1994, becoming president and CEO, until he passed operations to his own sons in 2015. Analysis: NFL NEPO BABY NFC NORTH Minnesota Vikings: Zygmunt "Zygi" Wilf (born April 22, 1950) is an American billionaire businessman and real estate developer. He is the chairman and co-owner of the NFL's Minnesota Vikings. After working as an attorney, Wilf joined the family business and became head of one of the company's affiliates, Garden Commercial Properties. Wilf has grown the company from four shopping centers in Northern New Jersey to over a hundred properties, including several large malls. In addition to the commercial properties, the Garden companies also own and manage 90,000 apartment units around the country. Analysis: NEPO BABY Green Bay Packers: The Packers are the only NFL club that is a publicly owned corporation, the only major professional sports franchise in the United States that is a nonprofit entity, and one of only a few such teams that are not privately held. Rather than being the property of an individual, partnership, or corporate entity, they are held as of 2025 by 538,967 stockholders. No one is allowed to hold more than 200,000 shares, which represents approximately four percent of the 5,204,625 shares currently outstanding. Edward Policy is the best approximation of an “Owner”, since he currently functions as both the President and CEO of the Packers. Policy was born on October 6, 1970, in Youngstown, Ohio. His father, Carmen Policy, was an American football executive for the San Francisco 49ers and Cleveland Browns for over 20 years. As an executive, the elder Policy rose to be the president of the 49ers, and then the president and CEO of the Browns. Policy began working for the Arena Football League (AFL) in 2001. During his time with the AFL, he served as deputy commissioner, executive vice president, and chief operating officer (COO) before being elevated to president, CEO, and Commissioner of the league…Policy resigned in April 2009, noting that his position was no longer relevant in the new league format recently developed. Shortly thereafter, the AFL went into bankruptcy. In 2012 the Green Bay Packers hired Policy to serve as vice president and general counsel after the departure of Jason Weid. He was promoted to COO and general counsel in January 2018, with the Packers noting that he would be involved in more business operations for the team. In June 2024, the Packers announced Policy would replace Mark Murphy as the team's president and chief executive officer on July 13, 2025. Analysis: NOT A NEPO BABY, but also kind of an NFL Nepo Baby. Detroit Lions: Sheila Firestone Ford was born to William Clay Ford Sr. (son of Edsel Ford and grandson of Henry Ford) and Martha Firestone Ford, of the Firestone Tire and Rubber Company fortune, in 1951. Hamp has been involved in the management of the Detroit Lions since her mother took over the team in 2014. On June 23, 2020, Hamp took over from her mother as principal owner and chairwoman. Analysis: NFL NEPO BABY Chicago Bears: George Halas McCaskey replaced his brother Michael McCaskey as chairman in 2011. He is the son of Virginia Halas McCaskey and grandson of team founder George Halas. Analysis: NFL NEPO BABY NFC EAST New York Giants: John Mara is the eldest son of late Giants owner Wellington Mara. Analysis: NFL NEPO BABY Dallas Cowboys: After graduating from college in 1965, Jerry Jones borrowed a million dollars from Jimmy Hoffa's Teamsters union to open up a string of Shakey's Pizza Parlor restaurants in Missouri. When that venture failed, Jones was given a job at his father's insurance company, Modern Security Life of Springfield, Missouri. He received his master's degree in business in 1970. After several other unsuccessful business ventures (including an attempt, again using Teamsters money, to purchase the American Football League's San Diego Chargers in 1966), he began an oil and gas exploration business in Arkansas, Jones Oil and Land Lease, which became successful. His privately held company currently does natural resource prospecting. On February 25, 1989, Jones purchased the Cowboys from H. R. "Bum" Bright for $140 million (equivalent to $310 million in 2024). Analysis: NOT A NEPO BABY (Will read Reddit comments to verify if I lack info on Jerruh) Philadelphia Eagles: Richard Smith, the uncle of now-owner Jeffrey Lurie, and his sister Nancy Lurie Marks (i.e., Jeffrey Lurie’s mom) provided collateral for a $185 million loan enabling Jeff to purchase the Philadelphia Eagles. Lurie bought the Philadelphia Eagles on May 6, 1994, from Norman Braman for $195 million (equivalent to $414 million in 2024). Analysis: NEPO BABY Washington Commanders: In 1990, Josh Harris worked two months at Blackstone before leaving to establish the private equity firm Apollo Global Management with former Drexel partners Leon Black and Marc Rowan. In 2008, Harris led a $2 billion investment into the multinational chemical company LyondellBasell, which he sold in November 2013 for a profit of $9.6 billion, one of the largest gains in private equity history. In June 2023, Harris and a 20-member group including Danaher and Glenstone founder Mitchell Rales, Hall of Fame basketball player and entrepreneur Magic Johnson, and venture capitalist Mark Ein as limited partners, acquired the NFL's Washington Commanders and Northwest Stadium from Daniel Snyder for $6.05 billion, the highest price paid for a sports team at the time. Analysis: NOT A NEPO BABY NFC SOUTH: Atlanta Falcons: After graduating from Babson Institute in 1963, Arthur Blank was hired by Arthur Young and Company, where he was a senior accountant. He later joined the Daylin corporation, where he rose to become president of Elliott's Drug Stores/Stripe Discount Stores, a division of Daylin. When Daylin decided to sell off that division, Blank moved to another division, Handy Dan Home Improvement Centers. Bernard Marcus was CEO of Handy Dan and Blank was vice president of finance when both were fired in 1978, as part of an internal power struggle. In 1978, Blank co-founded Home Depot with Marcus. New York investment banker Ken Langone assembled the initial group of investors and merchandising expert Patrick Farrah helped founders realize their vision of one-stop shopping for the do-it-yourselfer. The first two stores opened on June 22, 1979 in Atlanta. The stores revolutionized the home improvement business with its warehouse concept and Blank and Marcus became billionaires as a result. Blank spent 19 years as the company's president before succeeding Marcus as CEO. Blank retired from the company in 2001 as co-chairman. Analysis: NOT A NEPO BABY Carolina Panthers: In 1985, David Tepper was recruited by Goldman Sachs as a credit analyst, which was forming its high yield group in New York City. Within six months he became its head trader, remaining at Goldman for eight years. His primary focus was bankruptcies and special situations. In December 1992, after being passed over for partner at Goldman Sachs twice in two years, Tepper quit. He began operating from a desk in the offices of mutual-fund manager and Goldman client Michael Price, aggressively trading his personal account in hopes of raising enough money to start his own fund. He created Appaloosa Management in early 1993. In 2001, he generated a 61% return by focusing on distressed bonds, and in the fourth quarter of 2005 he pursued what he saw as better opportunities in Standard & Poor's 500 stocks. Tepper “keeps the market on edge”. and makes significant gains year after year by investing in the “diciest of companies,” such as MCI and Mirant. Investments in Conseco and Marconi also led to huge hedge fund profits for the company. In 2009, Tepper's hedge fund earned about $7 billion by buying distressed financial stocks in February and March (including Bank of America common stock at $3 per share), and then profiting from their recovery that year. $4 billion of those profits went to Tepper's personal wealth, making him the top-earning hedge fund manager of 2009 according to The New York Times. Analysis: NOT A NEPO BABY New Orleans Saints: Gayle Benson became the principal owner of the Saints and Pelicans following the death of her husband, Tom Benson, in 2018. Benson began her career in receptionist and secretarial positions while doing interior design before buying and renovating businesses with her second husband, Thomas "T-Bird" Bird. Following their divorce, Benson continued an interior decorating business called Gayle Bird Interiors, Ltd. In the first ten years, Gayle and her then-husband Thomas Bird, renovated one hundred properties. Tom Benson went to enlist in the US Navy at the end of World War II in 1945. After the war ended, he went to study accounting at Loyola University New Orleans before dropping out in 1948. He then went to work as a car salesman at Cathey Chevrolet in New Orleans. In 1956, he moved to San Antonio to try and revive a poorly performing dealership; he was granted a 25 percent interest in the dealership for his efforts. In 1962, he became full owner of Tom Benson Chevrolet. He was the owner of several automobile dealerships in the Greater New Orleans and San Antonio areas. Benson became wealthy by investing profits from his automobile dealerships in local banks. He eventually purchased several small Southern banks and formed Benson Financial, which he sold to Norwest Corporation in 1996. On December 27, 2014, Tom Benson wrote an e-mail to his daughter and two grandchildren stating he wanted "no further contact with any of you." Gayle Benson was named his heir. Tom Benson's daughter and grandchildren filed lawsuits challenging his decision to name Gayle his heir, questioning his mental competency. Tom Benson was determined to be mentally competent and was allowed to change his will to leave ownership of the New Orleans Saints and the New Orleans Pelicans to his wife. Analysis: NOT A NEPO BABY. Gayle Benson doesn’t neatly fit into the three categories, since she inherited the wealth from her husband. According to the Wikipedia article about her, however, she does not seem to have inherited family wealth either. Tom Benson’s refusal to name his children his heirs to the Saints helps place Gayle Benson into the first. Tampa Bay Buccaneers: The only team that doesn’t have a Wikipedia page devoted to the owners!!! The owners are cited as the Glazer Family. Malcom Glazer purchased the Tampa Bay Buccaneers National Football League (NFL) franchise on January 16, 1995, following the death of former owner Hugh Culverhouse. He paid $192 million, a league record at that time. He passed away in 2014, however. An article by PFF from 2021 states that “Upon his death, ownership of the team transferred to his six children. Bryan, Joel, and Edward Glazer have taken over the day-to-day operations of the team.” Analysis: NFL NEPO BABIES NFC WEST Arizona Cardinals: Michael Bidwill inherited the team from his father, Bill Bidwill, who was at least part-owner from 1962 until his death in 2019. Analysis: NFL NEPO BABY Los Angeles Rams: Stan Kroenke grew up in Mora, Missouri, an unincorporated community with a population of approximately two dozen, where his father owned Mora Lumber Company. On a ski trip to Aspen, Colorado, Kroenke met his future wife, Ann Walton, daughter of Bud Walton, who co-founded Walmart with his brother Sam. As an heiress to the Walmart fortune, Ann is worth $9.1 billion as of 2023. They married in 1974. Kroenke was already wealthy in his own right, but became even more so when Ann inherited a stake in Walmart upon the death of her father, Walmart cofounder Bud Walton, who died on March 21, 1995. On April 13, 1995, Stan Kroenke helped Georgia Frontiere move the National Football League's Los Angeles Rams from Anaheim to St. Louis by purchasing a 30% share of the team. In 2010, two years after Frontiere's death, Kroenke exercised his right of first refusal to purchase the remaining interest in the Rams from her estate. On August 25, 2010, he became full owner of the Rams by unanimous consent of the NFL. Analysis: NEPO BABY. Not a perfect fit into the three categories. However, Kroenke was the son of a Lumber CEO and married into inherited wealth. This latter arrangement no doubt contributed to his eventual takeover of the Rams. San Francisco 49ers: Jed York is the son of 49ers co-chairs Denise DeBartolo York and John York, nephew of former 49ers owner Edward J. DeBartolo Jr. York has been the 49ers' CEO since 2008, and acquired enough of his mother's shares to become the team's principal owner in 2024. Analysis: NFL NEPO BABY Seattle Seahawks: Jody Allen’s older brother Paul went on to become co-founder of Microsoft Corporation. Following the death of her brother in October 2018, Allen was named executor and trustee of his estate, pursuant to his instructions, giving her responsibility for overseeing the execution of his will and settling his affairs with tax authorities and parties with an interest in his projects. Among some of the properties she took control of upon his death were the Seattle Seahawks of the National Football League (NFL). Analysis: NFL NEPO BABY. Again not a clean fit, because Jody Allen inherited the team from her brother [EDIT: was written incorrectly as husband before] and not her parents. She nevertheless inherited the team, thus marking her ownership as a product of nepotism. EDIT: Fixed the first sentence from Jim to John Harbaugh. EDIT: u/GotMoFans made a good point that Jody Allen and Gayle Benson's inheritance of the teams are very similar but marked differently, neither really fitting well into the categories (Benson is labeled as NOT A NEPO BABY while Jody Allen is labeled as NFL NEPO BABY). I have not changed the original labels: what is important to note is that they both ultimately inherited responsibility over the franchises due to their kinship with the previous team owners. submitted by /u/bassnbrats to r/nfl [link] [comments]
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Jan 20, 2026 |
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Ford ($F) - Ugly Duckling to Golden Goose
Overview For much of its’ history, Ford ($F) has been a boring dividend stock, yielding between 5% and 10% per year and generally languishing between $5 and $15 a share. Not exactly an inspiring story of growth or innovation. In a sector that hosts charismatic CEOs, exciting newcomers, and glossy new entrants to the industry, selling people on Ford’s potential certainly seems like an uphill battle. I mean… just look at their all-time chart, Ford hasn’t had meaningful sustained price movement since 00-01, and that was in the wrong direction. I would like you to forget what you think you know about Ford and begin to look at them in a new light. Ford is no longer the ugly girl at the dance or the fat kid in gym class, but rather Ryan Reynolds in Just Friends or Laney Boggs in She’s All That. To understand why I think Ford is the most compelling value opportunity in the auto sector today, we’re going to have to look at its maneuverings over the last 3-4 years. New Leadership, New Vision $11B Restructuring Plan In October of 2020, Ford hired its’ new CEO Jim Farley who had previously held the title of COO within the company. Farley was the architect behind the company’s $11B restructuring plan that it announced in June of 2018, and it has only accelerated its’ pace under his guidance. By most estimates Ford is about halfway through its plan to restructure the company, which primarily involves cuts to unprofitable sectors and refocusing on profitable ones, as well as investment in future technologies. Trimming of Fat Ford has made a few major moves to shore up losses it was incurring in unprofitable arms of the business. The first, and one which you are probably already aware of, is the discontinuation of many of its sedan lineup in North America. In the middle of 2018, Ford announced that it would be eliminating the Taurus, Fiesta, Fusion, C-Max, and Focus sedans from their lineup moving forward. The estimated operating cost savings was $25.5B through 2022, and Ford announced that they would be focusing on their more profitable SUV and pick-up models moving forward. Ford also announced in 2021 that it would be largely exiting the South American market, which hadn’t turned a profit since 2012 and in fact accounted for over $5B in losses during that period. They would continue operating at small-scale producing their popular Ranger pick-up and commercial vans but with the closure of their main manufacturing facility in Brazil, Ford finally cut bait in a difficult market for most traditional automakers. Ford Europe had a major redesign under Farley when he was President of Global Markets, slashing underperforming models from its lineup and refocusing on its highly profitable commercial vehicles as well as increasing imports of its iconic models. They also announced a strong shift toward EVs with the goal of selling only electric vehicles in Europe by 2030. EV Investment Here is the section everyone is interested in, and one which GM rightly received a lot of hype for when they announced a plan to spend $27B on developing EVs and autonomous vehicles by 2025. After that announcement, GM was viewed by many as the front-runner for EVs among traditional automakers. Not to be outdone, Ford announced a $29B investment in EVs and autonomous vehicles to be spent by 2025. To date, that is the third largest investment in EVs in the world, only falling short of the $86B and $87B investments by the mega-conglomerates VW and HMG respectively. Revival of Valuable IP In the last few years, Ford has refocused much of their business on their greatest hits. They’ve cut unpopular IP from their lineup and re-released the Bronco as well as reworked the Mustang into a crossover EV. In my opinion, this demonstrates a greater understanding of their markets and how to capitalize on their most valuable asset, which is their IP. Their most profitable model, the F-150, will be released as an EV in 2022 or 2023, and I expect that the Bronco will also see an EV model in the next few years as well. I believe that Ford has become a leaner and more focused company within the last 3 years and is set to continue their dominance in pick-ups as well as siphon significant market share in the EV and SUV spaces. The Power of Partnerships Ford, VW, and Argo Ford, along with fellow automotive titan Volkswagen Group, have both taken large stakes in a company dedicated to autonomous driving software called Argo AI. Partnering with a company with considerable resources like VW takes some of the pressure off of Ford to develop this technology solo. While there haven’t been too many details released about this partnership or the progress being made by Argo AI, it is reassuring to know that Ford is actively invested in developing autonomous driving along with another industry leader in VW. Ford and Google In February of 2021, Ford and Google announced a partnership to place Google’s software and technology in all of Ford’s new vehicles beginning in 2023. The operating platform in these new vehicles will be based off of the Android platform and all new vehicles will come equipped with Alphabet products like Google Cloud, Google Maps, Google Assistant, and the Play Store. The addition of a familiar and established operating system like Android will give Ford vehicles a competitive edge over other automakers who try to create and implement their own subpar operating software (*cough* Toyota *cough*). Ford and Rivian Ford made headlines in April 2019 when they invested in Rivian for an undisclosed stake. What is clear from statements made by both CEO’s at the time is that the investment was both for equity as well as a strategic partnership. A planned vehicle by Ford, which has yet to be announced, will be built on Rivian’s unique “skateboard” platform. This platform consists of “a flat frame that contains the batteries, suspension, motors and braking” on which the cab rests, and theoretically cuts costs in the manufacturing of EVs due to fewer overall parts in assembly. I suspect that this may be the platform used in the inevitable Bronco EV release, due to the striking similarities in the size and styling of the Bronco and the Rivian R1S. It is also possible that Ford may release an entirely new model on the platform, but that is just my hunch. The equity stake in Rivian was undisclosed, but I expect that that stake may be worth between $2B and $5B based on the valuation of Rivian at time of investment (~$5B-7B) and now (~$30B-$50B). This equity stake and strategic partnership will serve Ford well in their future development in the EV market. Financials and Valuation Financial Overview 2020 was a tough year for many industries and the auto sector was no exception. Ford had 4 consecutive quarters of negative EPS, their YOY revenue fell by almost 20% when compared to 2019, and they had to eliminate their dividend in March 2020 for the first time since 2009 when it was eliminated during the Great Recession, before being reinstated in 2012. So where does this leave Ford now? Despite the blow to revenue in 2020, Ford is emerging leaner and better equipped to dominate the market in 2021 and beyond. Revenue decreased 20% in 2020, and Ford had to take on significant new debt to continue financing operations. However that appears to be true for most other major automakers during the pandemic, so I don’t expect this to be a major factor in determining which automakers will be most successful in the future. I expect that 2021 will be a blockbuster year for Ford as revenues increase to pre-pandemic levels (I expect higher earnings in Q3 and Q4), and they continue to develop the most profitable arms of their business. Dividend Reinstatement GM and Ford both eliminated their dividends to survive the pandemic in March 2020, however there is widespread expectation that they will reinstate them sometime this year as revenue begins to pick back up. I personally view this as an incentive to buy Ford before the announcement. If they reinstate their .60 yearly dividend, it would amount to a ~5% annual yield based on the current stock price of 13.37. I expect that the return of their dividend will also attract the return of investors who value dividend stocks which may push the price up further all on its own. I believe this is a mini-catalyst for short term price movement for Ford, and collecting on the dividend won’t hurt either. Comparison to Other Traditional Automakers Generally, I like to look at 4 different ratios to quickly judge the valuation of a company compared to their peers in the same industry. Lets compare Ford’s numbers to their closest 5 competitors (Toyota, Honda, VW, GM, Daimler) to get a sense of how fairly they are currently valued. I’m avoiding comparing Ford to newcomers like TSLA, NIO, etc. because frankly the numbers aren’t comparable. Financial data was gathered from Finviz and Yahoo Finance. Quick definitions of the ratios, with respect to current valuation: P/S = Share price/Sales per Share (Lower is better) Forward P/E = Share price/(Estimated net profit for next year/# of outstanding shares) (Lower is better) Debt-to-Equity = Total debt/shareholder equity (Lower is better) Current Ratio = Current assets/Current liabilities over the next year (Higher is better) Price to Book = Share price/Book value per share (Lower is better) Ratio Ford Toyota Honda VW GM Daimler P/S 0.39 0.99 0.45 0.53 0.66 0.50 Forward PE 8.64 12.92 9.24 10.67 9.49 8.87 Debt/Equity 5.27 1.10 0.97 1.71 2.44 2.60 Current Ratio 1.20 1.10 1.30 1.12 1.00 1.15 P/B 1.73 1.05 0.67 0.80 1.89 1.27 As you can see, Ford has noticeable strengths and weaknesses when it comes to valuation. Strictly looking at revenue metrics like P/S and P/E, Ford is the most undervalued company on this list. They do however carry the largest debt burden of all of the listed companies, so that is something to keep in mind. I’m not particularly worried about their debt situation, as their Current Ratio at 1.20 indicates that they are in no present danger of being crushed by their debt, and I expect that strong future revenue will allow them to dig themselves out of that hole. Compared to GM, who I believe to be their closest competitor, they are trading at a much lower revenue multiple (0.39 vs 0.66). Even accounting for Ford’s higher debt burden, I believe they should be trading closer to a 0.50 multiple, which puts them more in line with other traditional automakers. My personal price target: $17.14/share 2021 Outlook Massive Demand Ford’s most recent releases the 2021 F-150, the 2021 Bronco Sport, and the 2021 Mustang Mach-E are all flying off dealer’s lots at record pace. The auto industry quantifies demand with a specific metric called Time to Turn. This is a measure of how long a vehicle sits on the lot before it is purchased. The industry average Time to Turn is somewhere around 60 or 70 days for new vehicles. Anything under 20 days generally indicates that a specific model is in very high demand. I’ll list the Time to Turn for Ford’s three new models in 2021 below: 2021 Ford F-150: 9 days 2021 Bronco Sport: 13 days 2021 Mustang Mach-E: 4 days (!!!) As you can see Ford’s recent releases have been massive successes so far, and I expect that as the economy continues to recover from the pandemic that demand will only continue to rise for these models. 7500 tax credit availability Remember that $7500 federal tax credit that everyone was all excited about when EVs first went to market in the U.S.? Me neither. The reason you may not have heard about this tax credit in awhile is probably due to the fact that the biggest seller of EVs (Tesla) is no longer eligible to receive the credit for purchases of their vehicles. The second biggest seller (GM) is about to lose eligibility at the end of this month. The way this program works is that an auto manufacturer is eligible for the credit for their first 200,000 vehicles sold in the U.S. After that, they are only eligible for state-level tax credits which tend to be much smaller if they exist at all. To date, Ford has only sold a measly 10,000 EVs total in the U.S with around 5,000 of their largely unsuccessful Focus EV and 5,000 of their new 2021 Mach-E. That means they have an enormous 190,000 vehicles left for which their purchasers can be incentivized by the tax credit. In my opinion this gives Ford a massive advantage over their closest competitors (GM and Tesla), and in fact, we are already seeing Ford stealing market share directly from Tesla as it appears that nearly 100% of Tesla’s recent loss in market share is attributable to Ford. Bear Case Chip Shortage As I’m sure you’ve heard by now, semiconductor shortages are projected to be a massive problem for the auto industry as a whole. Recent estimates put nearly1 million new vehicles affected by the shortage in Q1 2021 alone across the entire auto sector. Ford has already had to cut shifts at some of their manufacturing plants because they cannot secure enough chips to produce as many vehicles as they’d like. A few automakers like Toyota and Hyundai had the foresight to maintain their semiconductor supply, and thus their 2021 production will not be affected. The chip shortage will surely cut Ford’s top-line revenue, and it is not expected to ease until late 2021 at the earliest. Battery Supplier Issues In February 2021, the U.S. International Trade Commission ruled against battery supplier SK Innovation in their patent battle with competitor LG Chem. SK Innovation is the contracted supplier for batteries for the planned F-150 EV. This caused reasonable consternation among investors who were worried that the F-150 production timeline could be affected. Buried in the ruling however, was a stipulation that SK Innovation could continue to supply Ford with batteries for the F-150 through 2025, which should give Ford time to shift to a new supplier. There is always a chance that the Biden administration overrules the ITC in favor of securing greater production capability for the U.S. Nevertheless, this represents a hurdle that Ford will have to address in the future. Debt Burden There’s no way to sugar coat it, Ford has a ton of debt. They were a relatively debt heavy company prior to the pandemic, and that has only become worse. If you look at the company comparisons done above you can see the relatively high debt-to-equity ratio that ford carries compared to other automakers. The good news is that much of that debt isn’t due in the near future and Ford’s outlook is due to improve significantly from the disaster that was 2020. New Competition (Tesla, Lucid, Rivian, Etc.) This post has already become obscenely long so I’m not going to go into great detail here. You’ve all heard of these companies and how they intend to disrupt the auto sector, costing traditional automakers market share. There is no doubt that there are more players on the field these days, and Ford and GM will not have a virtual monopoly on the American market anymore. I personally only have high hopes for a few of the newcomers, but they still represent one more obstacle on Ford’s path to success. Closing I believe that Ford is currently undervalued and is ready to succeed as a leader in EVs in the future. This does not mean that investing in Ford is a sure thing; parts shortages, a high debt burden, and emerging competition all represent serious threats to Ford’s core business. Nonetheless, I am confident in Ford’s future prospects and consider them to be a strong buy as a long-term investment. Disclosures: I am long Ford at an average cost basis of $10.30. I am not a financial advisor, always do your own due diligence before investing in the market. submitted by /u/LiftUni to r/investing [link] [comments]
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reddit.com |
LiftUni |
Mar 15, 2021 |
United States