FCAU - Fiat Chrysler Automobiles

[phil_Buffett]

Add more?

 

i would buy more, but have no Money left  >:( and already 30% in fiat.

 

cant understand why the Price Drops so much the last time.

[luck]

agree with you phil.  given cheapness (ev/ebitda), marchionne, catalysts, etc. = price movement in fiat is a bit bewildering.  however, even with pullback to $7.50, stock is still up 45+% on the year - so this might be normal price action from that angle.

 

also, there are some significant short players involved in the stocks (or at least were) - odey, chanos, and perhaps chris hohn of childrens if he hasn't covered.  i think some of their trades are pair trades, but there appears to be some conviction on the short side.  right now, looking into the bear case a bit more.  i might be guilty of focusing on confirming evidence, but chrysler seems to be doing quite well.

 

i have a 10% position in this and i'm also done buying (average cost mid-5), but wish i had not added in the 8's, so i could buy now.    :)

[plato1976]

The price movement may not be bewildering

The market may simply fears that VEBA will be unreasonable and the IPO will happen

 

agree with you phil.  given cheapness (ev/ebitda), marchionne, catalysts, etc. = price movement in fiat is a bit bewildering.  however, even with pullback to $7.50, stock is still up 45+% on the year - so this might be normal price action from that angle.

 

also, there are some significant short players involved in the stocks (or at least were) - odey, chanos, and perhaps chris hohn of childrens if he hasn't covered.  i think some of their trades are pair trades, but there appears to be some conviction on the short side.  right now, looking into the bear case a bit more.  i might be guilty of focusing on confirming evidence, but chrysler seems to be doing quite well.

 

i have a 10% position in this and i'm also done buying (average cost mid-5), but wish i had not added in the 8's, so i could buy now.    :)

[LC]

IMHO it is due to uncertainty regarding Chrysler.

[krazeenyc]

Imagine if the market were always logical -- you'd make almost no money at all -- unless you were the genius who saw it first.

[phil_Buffett]

IMHO it is due to uncertainty regarding Chrysler.

 

thats right LC. but i think it is too much. the Price drop is too much. the stock is down from 6,5€ to 5,43€ in a very short time. the movement with the VEBA is definetly going into fiats favor so this Price down movement is too much for my opinion.

[merkhet]

 

Imagine if the market were always logical -- you'd make almost no money at all -- unless you were the genius who saw it first.

 

 

+1

[hardincap]

 

Imagine if the market were always logical -- you'd make almost no money at all -- unless you were the genius who saw it first.

 

 

+1

 

i was thinking of posting exact same response, and you beat me to it.

[muscleman]

Add more?

 

i would buy more, but have no Money left  >:( and already 30% in fiat.

 

cant understand why the Price Drops so much the last time.

 

 

I think it is because of short sellers. My shares sit in my account in IB until 12/2 when it started to get all lent out.

[hardcorevalue]

This is a big position for me. I keep running through my thesis as the stock is tanking. I see the biggest risk as not closing the chrysler deal, but believe it gets done fairly soon, in Fiat's favour. I'm concerned about Alfa Romeo's plans in North America, the brand is completely unknown here and will consume a lot of capex just to get going. Sergio has struggled with Alfa for years as the above article showed.

 

But overall this looks very cheap to me. I'm running my valuation on an adjusted EV/EBTIDA basis against GM and Ford. Because of the leverage, its not hard to imagine the equity increasing significantly from these levels as the stock becomes more understandable to investors, Guy Spiers has talked about this 'misunderstood' aspect before regarding Fiat. And there's always the chance Sergio brings Fiat-Chrysler to an industry leader based on simplified architecture across their global brands and improved capacity usage in their factories.

 

Wait and see i Guess!

 

Cheers

[buylowersellhigh]

Can you explain, "Because of the leverage, its not hard to imagine the equity increasing significantly from these levels..."

 

What has Guy Spiers said about this?

 

TIA

[hardcorevalue]

Can you explain, "Because of the leverage, its not hard to imagine the equity increasing significantly from these levels..."

 

What has Guy Spiers said about this?

 

TIA

 

Guy hasn't talked about the leverage but just the perception of the company.

 

When a leveraged company gets reweighted to a higher EV/EBITDA multiple, the equity will increase by a greater rate. Of course the opposite will be true if it falls apart. The equity is magnified by the high debt levels.

[claphands22]

Anyone who took a significant position -- I wonder how you got comfortable with the dilution risk.  Both Chris Hohn and Jim Chanos have publicly said Fiat was a short idea due to dilution risk. Smart guys who probably have smart analysts working under them. Other than Marchionne saying he won't dilute -- what was your analysis that Fiat will not dilute or at least the fears of dilution are too excessive?

 

Assuming they are short just because it is a pair trade seems to light on analysis.

 

[phil_Buffett]

Anyone who took a significant position -- I wonder how you got comfortable with the dilution risk.  Both Chris Hohn and Jim Chanos have publicly said Fiat was a short idea due to dilution risk. Smart guys who probably have smart analysts working under them. Other than Marchionne saying he won't dilute -- what was your analysis that Fiat will not dilute or at least the fears of dilution are too excessive?

 

Assuming they are short just because it is a pair trade seems to light on analysis.

 

 

for me there would be a big Dilution risk, if fiat have to pay a big premium to the veba. but i think the last Actions and what we hear from Banks and so on, let me assume that fiat will be paying a lot less than anticipated. and with a lower Price all the risks are very low. for me all this is short term volatility. nothing more. stock Price down another 2% today. it is more Panic than reasoned.

[Sportgamma]

Anyone who took a significant position -- I wonder how you got comfortable with the dilution risk.  Both Chris Hohn and Jim Chanos have publicly said Fiat was a short idea due to dilution risk. Smart guys who probably have smart analysts working under them. Other than Marchionne saying he won't dilute -- what was your analysis that Fiat will not dilute or at least the fears of dilution are too excessive?

 

Assuming they are short just because it is a pair trade seems to light on analysis.

 

 

for me there would be a big Dilution risk, if fiat have to pay a big premium to the veba. but i think the last Actions and what we hear from Banks and so on, let me assume that fiat will be paying a lot less than anticipated. and with a lower Price all the risks are very low. for me all this is short term volatility. nothing more. stock Price down another 2% today. it is more Panic than reasoned.

 

If they decide to raise money with new equity, it will most likely be done by a rights offering to existing shareholders, f.e. like Exor did with Juventus.

[jay21]

One of the biggest success stories in exports has been Chrysler’s rugged line of Jeep sport utility vehicles.

 

On any given day, the assembly line at Chrysler’s Jefferson North assembly plant in Detroit churns out Jeep Grand Cherokees destined for sale in more than 120 countries.

 

Global sales of Jeep vehicles increased 19 percent in 2012 over the year earlier, according to Commerce Department statistics. And Chrysler is investing $500 million in its Toledo, Ohio, plant for the new Jeep Cherokee — partly to accommodate the expected demand for the vehicles outside the United States.

 

http://www.nytimes.com/2013/12/06/business/on-the-worlds-roads-more-american-wheels.html?pagewanted=1&_r=0&partner=yahoofinance

[merkhet]

I think the big risk people are worried about is a combination of the following:

 

(1) Fiat doesn't find a way to buy the rest of Chrysler

(2) Fiat's situation in Europe gets worse

 

I think that this is unlikely, but it's probably the cause for the pullback in the last few months.

[PLynchJr]

Nice.  Every 1.4 million dollar LaFerrari sold out. 

 

http://www.autoblog.com/2013/12/09/laferrari-sold-out-report/

[phil_Buffett]

Nice.  Every 1.4 million dollar LaFerrari sold out. 

 

http://www.autoblog.com/2013/12/09/laferrari-sold-out-report/

 

thanks for the link. amazing!! so almost 700mio $ Revenue with this few cars  :o

[txlaw]

Fiat said to invest $12 billion to help end Europe losses, revive Italian plants:

 

http://www.autonews.com/article/20131209/COPY01/312099904/fiat-said-to-invest-12-billion-to-help-end-europe-losses-revive

[frommi]

Perhaps i am stupid, but why don`t they kill the old business and focus on Ferrari/Maserati/Chrysler?

They have lost vs. Volkswagen/KIA and should simply agree this fact and act accordingly.

Rename the stock after that to Ferrari or spin the good parts off would be great for stockholders in my eyes.

 

But its possible that i have simply no clue.  ;D

 

 

 

[buylowersellhigh]

Fiat said to invest $12 billion to help end Europe losses, revive Italian plants:

 

http://www.autonews.com/article/20131209/COPY01/312099904/fiat-said-to-invest-12-billion-to-help-end-europe-losses-revive

 

Wasn't the whole point of investment thesis is this isn't really an European-centric play?  Now they will have to deal with the Italian government and unions.  What has really changed?  Couldn't the same production be done in Brazil?

 

[fareastwarriors]

http://www.businessweek.com/articles/2013-12-09/fiat-looks-to-maseratis-jeeps-and-the-cute-little-500-for-a-jumpstart#r=nav-r-story

 

Fiat Looks to Maseratis, Jeeps, and the Cute Little 500 for a Jump-Start

[jch548]

Six months ago Sergio was threatening to move Fiat's HQ to Detroit. Now it seems he doesn't want to close any capacity in Italy something about who ever closes capacity first will lose market share. Fiat has the most excess capacity of any of Europe's auto makers by a long shot. I don't understand the argument. One of the French companies announced last month they are closing some capacity. How do you lose market share or get under cut when unused capacity goes away and your fixed costs drop?

[hardcorevalue]

Six months ago Sergio was threatening to move Fiat's HQ to Detroit. Now it seems he doesn't want to close any capacity in Italy something about who ever closes capacity first will lose market share. Fiat has the most excess capacity of any of Europe's auto makers by a long shot. I don't understand the argument. One of the French companies announced last month they are closing some capacity. How do you lose market share or get under cut when unused capacity goes away and your fixed costs drop?

 

I think the argument is the first one to blink, loses the upside on the operating leverage. I see your point though, Sergio has seemed to double down on Italy recently.