Author Topic: FCAU - Fiat Chrysler Automobiles  (Read 881830 times)

John Hjorth

  • Hero Member
  • *****
  • Posts: 2308
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2870 on: February 08, 2019, 02:22:12 AM »
Please see Gísli's [Sportgamma's] post in the EXOR topic from December 13th 2018 and the nice spreadsheet set up by Gísli, plus the discussion in the following posts in the EXOR topic. EXOR is so to say "double" cheap [both discount on FCAU and a conglomerate discount on EXOR]. So I consider it somehow a no-brainer what Mr. Elkann has done with the proceeds. It's somehow from the Capital Allocation ABC.

The concentration argument has merit though, so it somehow also depends on who you are and where you want to go.

This post just to elaborate a bit on my question about "low hanging fruit" earlier.
« Last Edit: February 08, 2019, 05:34:17 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai


compounding

  • Full Member
  • ***
  • Posts: 158
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2871 on: February 08, 2019, 02:54:46 AM »
Please see Gísli's [Sportsgamma's] post in the EXOR topic from December 13th 2018 and the nice spreadsheet set up by Gísli, plus the discussion in the following posts in the EXOR topic. EXOR is so to say "double" cheap [both discount on FCAU and a conglomerate discount on EXOR]. So I consider it somehow a no-brainer what Mr. Elkann has done with the proceeds. It's somehow from the Capital Allocation ABC.

The concentration argument has merit though, so it somehow also depends on who you are and where you want to go.

This post just to elaborate a bit on my question about "low hanging fruit" earlier.

Exor also has: a reinsurance company that is currently breaking even and they may have overpaid for, Ferrari valued at 26x earnings, a newspaper and a football club. Exor might be a cheap stock, but it isn't a pure, cheap derivative of Fiat-Chrysler.
« Last Edit: February 08, 2019, 02:57:07 AM by compounding »
@JohanHjortsson

Sportgamma

  • Sr. Member
  • ****
  • Posts: 450
    • Fundamental Finance Playbook
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2872 on: February 08, 2019, 05:11:42 AM »
Exor also has: a reinsurance company that is currently breaking even and they may have overpaid for, Ferrari valued at 26x earnings, a newspaper and a football club. Exor might be a cheap stock, but it isn't a pure, cheap derivative of Fiat-Chrysler.

Absolutely. Exor will give you exposure to FCU, but to a larger extent, exposure to something else. Also, one should not expect that the Exor conglomerate discount will go away. You can expect Elkann to act opportunistically and aggressively buying back Exor when the discount is wide (as is the case now).

Since becoming the capo of the Agnellis, Elkann has shown willingness to be very flexible in terms of capital allocation. Elkann & co are definitely not agnostic to buybacks and still, they opt for a dividend at FCU. There must be a reason for that. I posit that they are building currency. They have gone through the 5-year plan, they fixed the balance sheet, next move is to pursue a merger.

benchmark

  • Sr. Member
  • ****
  • Posts: 320
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2873 on: February 11, 2019, 09:07:41 AM »
Down 10%" I get that there will be a macro environment that may or may not come, but Fiat explained the case where if SAAR decreased to almost 2008 level, they still break even or make a profit. Also the pending special dividend, sale of robotic arm division with the initiation of a regular dividend still makes this cheap.

is there a timeline for the dividend?

valueinvestor

  • Jr. Member
  • **
  • Posts: 74
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2874 on: February 11, 2019, 09:46:12 AM »
Down 10%" I get that there will be a macro environment that may or may not come, but Fiat explained the case where if SAAR decreased to almost 2008 level, they still break even or make a profit. Also the pending special dividend, sale of robotic arm division with the initiation of a regular dividend still makes this cheap.

is there a timeline for the dividend?

I am not aware of one yet, but I think it will happen after the magnetti marelli sale closes, which is expected to happen during the first half of 2019.

Bluedevilvalue

  • Newbie
  • *
  • Posts: 9
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2875 on: February 14, 2019, 10:57:31 AM »
Anybody dig into earnings? At first glance, Maserati sales cratering and capex guidance increases this late in a cycle are concerning. However, I haven't seen anything that would nullify my bull thesis.

Given the challenging macro environment, the continued robustness of the overall business is compelling. With the special dividend coming up and ongoing strategic sales, I'm still bullish. Although, if you're looking at a SOTP, the value of maserati may have to be ratcheted down. With that being said, I think the maserati brand is still strong. They've just made some product / selling missteps.

LC

  • Hero Member
  • *****
  • Posts: 3012
Re: FCAU - Fiat Chrysler Automobiles
« Reply #2876 on: February 14, 2019, 12:04:40 PM »
I personally would not hang my hat on the Maserati brand. Especially not compared to Jeep for example. Not surprising sales are volatile - they are a nouveau riche brand.

The move is to conservatively value Alfa & Maserati. If FACU is still undervalued with these conservative estimates, you can win two ways: 1) general re-valuation and 2) upside surprises to these conservative estimates.

Obviously there are other factors at work which I am leaving out.

I'm speaking in generalities because I am out of the auto space (too entrenched, too much "national industry" biases - all lead to lack of common sense) - but that would be my approach if I were to invest here.
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
brk.b | irm | mo | nlsn | pm | tap | tfsl | vz