An update on the original thesis. I no longer have a position in Renault, but I find the whole saga fascinating.
It all played out rather well until 2019, when Carlos Ghosn was ousted under very unusual circumstances. This is quite an amazing story by itself.
https://foreignpolicy.com/2020/02/13/carlos-ghosn-explainer/Subsequently both Nissan and Renault had a horrible time with profitability, and the stocks of both companies dropped hard. Partially due to a leadership vacuum, and partially due to market weakness.
Looking at pricing, Renault trades around EUR 9B with its Nissan stake valued at EUR 7.5B. Market conditions are probably temporary, however the lack of leadership is troubling. In theory, Renault is a company capable of generating EUR 2B$ after tax, with EUR 2B more from its share in the profit of Nissan. Hence a P/E of 2.2, someday.
Question is, when will that be and what happens until then. In my opinion, it is limbo until further notice. I might get interested if the price of Renault is closer to EUR 5B, the value of its auto finance arm. But until credible management is in place I am probably going to stay out of this.
Originally I expected Ghosn to make a smooth transition, and he had a few underlings in place that were on track to replace him eventually. Most are gone by now considering the brutal behavior of the Japanese legal system.
Still following the situation.
