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[Speedjunki]

With the closing of the Pontiac line I think we will see a strong dip Monday morning in the auto supplier sector. So the question is "is this a good time to buy?"

Ford seems to be safe. This is important because it puts the government in a critical position to make sure they help keep them that way without giving them direct funds. I would think Obama understands the importance of keeping Ford healthy with all the trouble in GM and Chrysler.
Ford states that their biggest concern is that the auto suppliers, most shared with GM and Chrysler, will be disrupted in an unorganized BK of either or both of those companies. Ford has stated that it has worked closely with the Government on this issue and has received strong levels of support in that the Obama Administration (OA) will support any necessary actions required to avoid disastrous consequences.
So if the OA has already pledged 5B in auto supplier bailouts. I believe they will likely double or triple that if necessary vs. letting Ford get in trouble and having to bail them out for much much more.
So its seems like good timing Monday to make some Auto Sector buys on the news that GM is shutting down Pontiac. One could make a case that waiting for the BK of Chrysler might create a larger downturn. This will be true only if Obama does not come out with the Auto supplier bailout. If he does then the stocks will rise in spite of the BK’s.
So here are my picks to buy on Monday’s dip:

ARM - Buy
• During fiscal year 2008, AB Volvo accounted for approximately 14% of our total sales. No other customer accounted for 10% or more of our total sales in fiscal year 2008.
• They have been named in the Auto Supplier Bailout.
• They had increased revenues and reduced losses 08 vs 07
2008 7,167,000 / -101,000
2007 6,449,000 / -219,000
• Traded as high as $4.96 in 12/08
• Has traded relatively flat since initial mid march run up.


AXL – Don’t Buy

• 74% of AXL business came from GM in 2008.
• I own 5K shares that I may hold or sell

HAYZ – Buy
First off this was what came out on the newswire 4/17

Hayes Lemmerz International Inc. (HAYZ) said Friday that its auditor
is likely to raise substantial doubt about the company's ability to
continue as a going concern. Hayes Lemmerz made the disclosure in a
filing with the Securities and Exchange Commission in which it
disclosed that it wouldn't be able to file its annual report on time.
Hayes Lemmerz said its senior secured creditors have waived any
default under the company's credit agreement that may result from the
receipt of a going concern qualification. The company also said that
it expects fiscal year ending Jan. 31, 2009, total sales to be $1.9
billion, a decrease of 10.5% from the prior year. The company said
the
decrease is due primarily to lower production volumes in the latter
part of the fiscal year at North American and European vehicle
manufacturers. The company also said it expects to take a $257.3
million non-cash impairment charge in fiscal 2008 to its goodwill and
other intangible assets, and expects fiscal 2008 earnings from
operations and net income to be "substantially below the prior year
loss."

• 4Q is expected by 4/31
• My understanding is less than 8% of HAYZ business is from GM
• The stock was down to .03 in mid march before they adjusted prior year earnings reports.
• Since then it has closed as high as .25 but moved downward over the last two weeks over frustrations regarding the delay in 4Q, the possible BK’s and of course the ominous sounding wire release shown above.
• HAYZ has traded in a band between .17 and .18 for the past week. I watch this stock very closely and watch six figure blocks of support show up around .17 to scoop up shares.
• As a comparative of company losses vs. pps
April 18th, 2007 pps was $5.43
Reported losses for the year end January 07 was $4.36.
Last year they lost $2.23 per share.
• 84% institutionally owned (most prior to the 08 downturn)

I think that the $257M write down is a play for Obama assistance. 10% down seems to be marginal in the last years economy. Lack of information is holding this stock down. I see a medium to strong pop on any good news or 4Q reporting.


That is my take on three of the players. Anyone want to take on the others?


Additional Reading from 4/8
US Treasury: GM, Chrysler Supplier Aid Launched - Economy - Javno

[chuckd]

Speed, I think you may mean AXL rather than AXE

AXL - American Axle & Manufact. Holdings, Inc. - Google Finance

[chuckd]

I have traded AXL HAYZ and DAN in this sector, I dont own any at the moment but will be watching very closely for possible re-entries. One note on DAN, the shareholders recently approved a reverse split if necessary to maintain compliance with listing rules. Could be as much as 20 for 1 but may not happen at all if their pps goes back up.
DAN - Dana Holding Corporation - Google Finance
HAYZ - Hayes Lemmerz International, Inc. - Google Finance

[Speedjunki]

That is what i get for watching tv commercials with hot babes and deoderant sprays while typing

thx

[Miles]

Originally Posted by Speedjunki That is what i get for watching tv commercials with hot babes and deoderant sprays while typing thx

LOL! Smacking you into VIP - that is just freaking funny.

[SeanECE]

Speedjunki, so after GM and Chrysler go under. ARM and HAYZ will be awesome buys? Especially with that sector (probably) plunging?

[Speedjunki]

GM and Chrysler are a small portion of those companies business. Even with that being the case, do you really think that all of GM and Chrysler products are going to just disapear?

Don't confuse BK restructuring with "Closing the Doors". If your looking for opportunities at the bottom of a market, I'm saying I think here are 2. Both of these companies are global players.

[SeanECEPublic]

But still, you don't think the Chap 11's (plural,weird) won't effect the auto parts sector? i am just saying when GM and Chrys go BK, then the parts suppliers will prolly go down in stock price (one would assume) and THIS time would be the ideal time to buy. Correct?

[Speedjunki]

Here is what I said above:

So its seems like good timing Monday to make some Auto Sector buys on the news that GM is shutting down Pontiac. One could make a case that waiting for the BK of Chrysler might create a larger downturn. This will be true only if Obama does not come out with the Auto supplier bailout. If he does then the stocks will rise in spite of the BK’s.

Obama is in a tough spot. He has to protect the auto sector's future by helping it be self sustaining. Chrysler and GM are not capable of that with the current debt loads and outdated / overlapping products. BK (or the real threat of) will give both those companies the ability to clean up their acts both internally and with their contracts / bondholders.

With Ford being the shining prince, they have made it clear to Obama that his administration needs to fund the Suppliers durring this time of restructuring.

IMOA - If I was Obama, I would make a detailed anouncement of how I was going to support the Auto Suppliers BEFORE the Chrysler BK. The domino effect is just to great if he doesn't.

[chuckd]

I agree with you analysis speed, why do you think HAYZ has been stuck in such a tight range?

Market makers perhaps ??