It was almost embarrassing, really.
When a Fool editor asked me for an article about my top two stock holdings, I had to log into my brokerage account and look to see which ones they were.
While I closely follow the companies I own, I pay less attention to the moment-to-moment value of my holdings, which go up and down over time. I really didn't know for sure which stocks would top the list until I looked.
I bought them both for good reasons. But would I buy them again now?
Ford has been a very good buy...
I've had my current position in Ford for about four years, dating back to the dark days of early 2009. Those were the days when the market seemed to be getting crazier by the day, following the "Autumn of the Massive Collective Pants-Soiling." The voices on CNBC were getting shriller by the hour as that winter unfolded, and I decided to heed Warren Buffett's maxim and get ready to be greedy when others were at their most fearful.
I made up a list of stocks to buy. Most were big, high-quality dividend stocks that I hoped to own for years, companies like Diageo (NYSE: DEO ) and Abbott Labs (NYSE: ABT ) , both of which I still own. But I also slipped a sentimental favorite onto the list, a company I'd owned on and off at several points in the past: Ford.
I wrote an article at the time that explained what I was thinking. While GM and Chrysler were clearly headed for bankruptcy or worse, Ford – which had borrowed all it could back in 2006 in a last-ditch attempt to fund a turnaround, and had over $30 billion of debt at that moment – was showing signs of life, even in those dark days.
Ford's latest cars were very good, its turnaround plan appeared to be on track, and CEO Alan Mulally's strategy – called "One Ford" -- inspired great confidence. If the company survived the economic crisis without going bankrupt – and I thought it had a very good chance of doing so – then its stock was a steal, I wrote at the time.
I made the buy not long after I wrote that article, in early March. As we now know, that turned out to be a clear-cut great move... unlike my investment in GM, where the jury is definitely still out.
...but the jury is still out on General Motors
I took a position in GM at around $33 not long after its November 2010 IPO, and bought more at around $23 the following summer. Taken as a whole, my GM investment is up about 4% at the moment.
But as I said, the jury is still out on whether buying GM was a good move or not. My thesis was pretty simple: If GM followed in Ford's footsteps by improving quality, reducing costs, and streamlining its global model lineup, it had massive potential upside.
Unfortunately for my investment, GM's renaissance has been less convincing than Ford's – at least, so far. While the "One Ford" approach has made Ford's North American division tremendously profitable, and is being used as a template to restructure its European branch, GM's approach has been more muddled, and its profits less impressive.
That said, GM is in the midst of a major product-line overhaul that could well lead to big gains. Some of its latest models, like the Cadillac ATS sedan, are seriously good vehicles – though others, like its new pickups, are still arguably too conservative. Still, as GM rationalizes its global product line and rolls out more fresh products over the next few years, its competitiveness – and margins -- should see significant improvement.
So would I buy either of them now?
I absolutely think that Ford is still a buy. As strong as its North American business has been in recent quarters, Ford looks set for significant upside as its European restructuring and a major expansion effort in Asia look set to generate substantial bottom-line gains by mid-decade.
GM is likely to be a wilder ride, though I think the potential upside from here may be even greater than Ford's: Simply put, GM is a bigger company, with more things remaining to be fixed. While doubts persist about CEO Dan Akerson, an industry outsider who joined GM's board in the wake of its government-brokered high-speed bankruptcy in 2009, he has a strong executive bench behind him – and as noted above, some of GM's latest products show that the company can compete with anybody.
So to answer the question: Yes, I'd buy GM now. But I think it's an investment that will require patience and close watching, and a willingness to hang on for what could be a bumpy ride over the next couple of years.