By Adam Lass, Senior Editor, Taipan Publishing Group

This American company has gained 777% the old-fashioned way: selling junk in backroom deals.

As regular readers know, I am a Ford man.

Back when I was a kid, you had to make three really important choices. First, you had to pick a political party. Didn’t matter how well you knew the candidates – you picked a party and that’s what you were.

We are talking Democrat or Republican here. Libertarians weren’t much discussed, and backing the Socialists could get your parents blackballed at work. And if you wanted peace around the dinner table, you just went with the same side your folks did.

Second, you had to choose “your” baseball, basketball and football teams. We didn’t have rotisserie leagues back then, so there was no “à la carte.” You picked your guys, and you defended their every move in the schoolyard and on the stoop – with fists if need be.

Prudent Choices

To this day, I still follow the Mets and the Knicks over the Orioles and Wizards. I am making an exception for the Baltimore Ravens, as I now live down the street from their headquarters. Call me a coward, but I am not going to talk up the New York Jets while standing in line at the local donut shop – surrounded by half the Ravens’ defensive line.

“Just not prudent,” as Bush senior used to say.

Finally, you had state your alliance to one of the big three American automakers. American Motors did not count. You had to decide between Ford, Chevy or Mopar power. Didn’t matter if you’d only ridden in the back seat. You picked your allegiance, and from that point on, that’s what you were.

A 777% Payoff

Now, being a Ford man has not blinded me to some of the truly awful cars they have trotted out in their day. I don’t much care if the Escort was the best-selling car in Asia 10 years running – it was no Mustang. And the Aspire? Don’t get me started.

Lately I’ve been talking up the stock, bragging as to how Ford made all the right moves a couple years back, ditched the deadwood, patched up relationships, rededicated themselves to making cars folks wanted, yadda, yadda, yadda. I was especially proud of the fact that Ford didn’t need to beg capital from the Feds, or declare bankruptcy.

And I have been pretty much dead-on in my assessment. Ford shares have climbed more than 777% over the past 10 months.

Not Quite “Self-Made” After All

But I have to confess to a few minor errors in my theory. Yes, they did indeed climb out of their hole in the most magnificent fashion. What’s more, they look to my eye to be a continued buy for some time to come (I’ll tell you why in just a moment).

But Ford is not quite the “hauled ourselves up by our own American bootstraps” story I have been making it out to be. When you dig a little, it appears that they have been getting more than a little help – and some of it did indeed come from Washington and Wall Street, albeit through back channels.

Let me walk you through some of these backroom maneuvers – connect the dots a bit – and I think you’ll see why Ford shares are still a long-term buy.

Follow the Money: Washington to Wall Street…

Let’s start with dot number one: Goldman Sachs (GS:NYSE).

Back during the bad old days of 2008, when we thought the whole world was going to collapse, all of Wall Street’s major players were brought into a meeting room in Washington and told that they were going to take many billions of dollars in TARP bailout funds. Didn’t matter if you were solvent or not – this was an offer you couldn’t refuse.

Now as you know, Goldman came through the crisis looking like pure gold. And in all fairness, GS has already repaid its $10 billion – something to do with not being able to pay out massive bonuses while stuck under the government’s thumb. But somewhere in the midst of this roundelay, they managed to slip some $250 million out the door to acquire a stake in the parent company of mid-tier Chinese automaker Geely.

Wall Street to China…

Geely wants to expand its way out of the pack to become a major international player, in much the same fashion as Indian carmaker Tata has managed to distinguish itself. So they have taken a page out of Tata’s playbook, and are looking to relieve Ford of their ailing Volvo division for some $2.59 billion (Hong Kong dollars).

Is this really wise? For Geely, perhaps not so much. Tata bought Land Rover and Jaguar off Ford just before the whole luxury market tanked, and the $8 billion in debt has been weighing down their books ever since.

But for Ford, it will be a relief and a source of string-free capital just when they want it most… because Ford wants to send the money right back into China. By 2012 or so, they plan to partner with Chongqing Changan Automobile to open a new manufacturing plant to sell directly into the burgeoning Chinese market.

…And China to Detroit

Follow the dots: Washington to Wall Street… Wall Street to Hong Kong… Hong Kong to Detroit… Detroit back to Shanghai…

A dizzying, twisted path, but in the end, American taxpayers did sort-a-kind-a help Ford out. But at least they did it the honest way – good old-fashioned backroom deals – instead of via socialist handouts and bankruptcy.

Okay, now I am starting to sound like a homer, defending “my” team in the schoolyard. Still, I have to point out (yet again) that Ford is one of the few companies that has come through the crisis with capital intact and a reasonably bright future ahead.

A (Very) Long-Term Buy

Ford currently has some 2% of the Chinese market. Now, we are all expecting that overheated market to sag just a tad. Apparently, Ford sees this sag as a chance to do in China what they did here in the States: acquire market share just when everyone else is overextended.

As for the short term? Heck, I don’t really know. In point of fact, I have already advised readers of my own WaveStrength Options Weekly column to take their Ford call option gains off the table. But long term, it certainly appears that the guys in the corner office in Dearborn have cornered the market on strategic planning.

Follow the Money: Washington to Wall Street…

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