FCAU - Fiat Chrysler Automobiles

[PlanMaestro]

You know, I went back and looked at some of my SHLD posts earlier today, and I couldn't help but chuckle when I came across Peter Burke CEO bashing me for my "grand elaborate plan" for SHLD and insisting that ESL buy back SHLD bonds.

 

I liked a lot your views on the possible Lampert's masterplan. My worry is how to have some early indicators to be sure that is working, and not just fall on the fallacy: Lampert is a smart guy –> so he surely has a great plan –> therefore, he will succeed. That is what I've been thinking about. Maybe to follow where he is opening the SHOS stores and where they are closing closing mall stores and check if there is a match.

 

Well, that is something to discuss on the SHLD thread.

[PlanMaestro]

Posted in the board a while back.

 

Marchionne to Change Chrysler Board by Month's End

August 4, 2011

By JEFF BENNETT

 

http://online.wsj.com/article/SB10001424053111903454504576485920161518138.html?mod=ITP_marketplace_1

 

Chrysler Group LLC and Fiat SpA Chief Executive Sergio Marchionne said he will change Chrysler's board by month's end and said he could retire sometime after 2015.

 

"There is going to be a guy after me, I guarantee you," he said. "Don't focus on the date, I would focus on the process."

 

"This large management team, where we have 22 people representing nine nationalities, is designed to be a proving ground for people to sit and manage," he said. "It's more than likely my successor will come from that structure."

 

Mr. Marchionne last week said he formed a Group Executive Council that will be responsible for running day-to-day business and for setting a unified, long-term strategy for Fiat and Chrysler. Until then, Mr. Marchionne had a team of about two dozen Chrysler executives reporting to him, and a similar situation at Fiat.

 

(…)

 

Regarding China, auto makers there currently "produce almost entirely for the enormous domestic market, but their future plans for the export market are significant," he said. "Even assuming China were to export only 10% of what it produces, the risk we face in our home markets is enormous."

 

Western auto makers "cannot afford to be unprepared for the ascent of China" and "need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming," he said.

 

Western auto makers also can't count on dramatic growth in Asia to drive prosperity so must make their North American and European operations more competitive, he said.

[plato1976]

This NYT post is interesting:

 

http://www.nytimes.com/2012/11/02/business/global/skepticism-abounds-as-fiat-seeks-upmarket-strategy.html?pagewanted=all&_r=0

 

Fiat is an interesting enough stock and looks really cheap.

However, the question really boils down to, can FIAT europe survive by it own ? I think this is the market 's major concern at this time. Fiat 's current strategy is to use the spare capacity in Italy to produce upscale models and then export. But many question if Fiat has powerful enough distribution channel and dealer network to sell sth like alfa romeo. Also, Fiat is losing less than GM in Europe b/c it reduced its investment in new models.

 

I think in the worst case, Fiat can engineer a quick acquisition of Chrysler 's remaining shares , and then gain full flexibility to use its cash flow and do other synergies. But to gain a quick share appreciation in the near future, we need a stabilization of its EUR market, otherwise things will be quite ugly and we will see more downside, IMHO

 

 

 

 

Posted in the board a while back.

 

Marchionne to Change Chrysler Board by Month's End

August 4, 2011

By JEFF BENNETT

 

http://online.wsj.com/article/SB10001424053111903454504576485920161518138.html?mod=ITP_marketplace_1

 

Chrysler Group LLC and Fiat SpA Chief Executive Sergio Marchionne said he will change Chrysler's board by month's end and said he could retire sometime after 2015.

 

"There is going to be a guy after me, I guarantee you," he said. "Don't focus on the date, I would focus on the process."

 

"This large management team, where we have 22 people representing nine nationalities, is designed to be a proving ground for people to sit and manage," he said. "It's more than likely my successor will come from that structure."

 

Mr. Marchionne last week said he formed a Group Executive Council that will be responsible for running day-to-day business and for setting a unified, long-term strategy for Fiat and Chrysler. Until then, Mr. Marchionne had a team of about two dozen Chrysler executives reporting to him, and a similar situation at Fiat.

 

(…)

 

Regarding China, auto makers there currently "produce almost entirely for the enormous domestic market, but their future plans for the export market are significant," he said. "Even assuming China were to export only 10% of what it produces, the risk we face in our home markets is enormous."

 

Western auto makers "cannot afford to be unprepared for the ascent of China" and "need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming," he said.

 

Western auto makers also can't count on dramatic growth in Asia to drive prosperity so must make their North American and European operations more competitive, he said.

[plato1976]

btw: I have a weird feeling that fiat is Pabrai 's secret 40x holding, as some suspected ...

Guess I will build a tiny position in this pullback and then study more - the europe market is a real headache

 

This NYT post is interesting:

 

http://www.nytimes.com/2012/11/02/business/global/skepticism-abounds-as-fiat-seeks-upmarket-strategy.html?pagewanted=all&_r=0

 

Fiat is an interesting enough stock and looks really cheap.

However, the question really boils down to, can FIAT europe survive by it own ? I think this is the market 's major concern at this time. Fiat 's current strategy is to use the spare capacity in Italy to produce upscale models and then export. But many question if Fiat has powerful enough distribution channel and dealer network to sell sth like alfa romeo. Also, Fiat is losing less than GM in Europe b/c it reduced its investment in new models.

 

I think in the worst case, Fiat can engineer a quick acquisition of Chrysler 's remaining shares , and then gain full flexibility to use its cash flow and do other synergies. But to gain a quick share appreciation in the near future, we need a stabilization of its EUR market, otherwise things will be quite ugly and we will see more downside, IMHO

 

 

 

 

Posted in the board a while back.

 

Marchionne to Change Chrysler Board by Month's End

August 4, 2011

By JEFF BENNETT

 

http://online.wsj.com/article/SB10001424053111903454504576485920161518138.html?mod=ITP_marketplace_1

 

Chrysler Group LLC and Fiat SpA Chief Executive Sergio Marchionne said he will change Chrysler's board by month's end and said he could retire sometime after 2015.

 

"There is going to be a guy after me, I guarantee you," he said. "Don't focus on the date, I would focus on the process."

 

"This large management team, where we have 22 people representing nine nationalities, is designed to be a proving ground for people to sit and manage," he said. "It's more than likely my successor will come from that structure."

 

Mr. Marchionne last week said he formed a Group Executive Council that will be responsible for running day-to-day business and for setting a unified, long-term strategy for Fiat and Chrysler. Until then, Mr. Marchionne had a team of about two dozen Chrysler executives reporting to him, and a similar situation at Fiat.

 

(…)

 

Regarding China, auto makers there currently "produce almost entirely for the enormous domestic market, but their future plans for the export market are significant," he said. "Even assuming China were to export only 10% of what it produces, the risk we face in our home markets is enormous."

 

Western auto makers "cannot afford to be unprepared for the ascent of China" and "need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming," he said.

 

Western auto makers also can't count on dramatic growth in Asia to drive prosperity so must make their North American and European operations more competitive, he said.

[PlanMaestro]

Reinventing Fiat in Europe will be a tough challenge

http://www.autonews.com/article/20121225/COPY01/312259982#ixzz2GlTLW2mZ

 

To improve Fiat's products and brands Altavilla can count on some magic from Olivier Francois, the energetic Frenchman who serves as Fiat-Chrysler's chief marketing officer, as well as Fiat brand's global boss.

 

But Altavilla must also make some tough industrial decisions to tackle excess capacity Fiat's four Italian plants that currently run below 40 percent utilization.

 

Here, there is little room for magic. Marchionne has promised the Italian government and unions that Fiat won't close any Italian vehicle assembly factories. The Cassino, Melfi, Mirafiori and Pomigliano plants have an installed capacity of about 1 million units, but are expected to build about 400,000 units this year.

 

Marchionne's strategy is to build more upscale models in the factories and to boost exports from Italy to global markets. Building higher value Fiats Alfas as well as a new small Jeep in Italy will bring bigger margins that will offset the high costs of producing in the country.

 

Analysts warn that Marchionne's plan is extremely challenging. UBS wrote in a note to investors: "Fiat did not quantify export targets, but we find it difficult to imagine more than 150,000 to 200,000 units a year at best. This means that Fiat will need to address capacity at some point in the near future." Barclays Capital said: "The majority of Fiat's competitors are pursuing the opposite strategy of trying to localize production wherever possible to hedge against currency risk." Barclays added: "Competitors have tried on numerous occasions but failed to push upscale, with the notable exception of Audi."

 

Last but not least, Altavilla won't have the crucial Italian market on his side. Fiat still dominates Italy with a market share of about 30 percent, but the country's car sales have been plunging since a 2.5 million unit peak in 2007. Next year, new-car sales are expected to shrink to 1.3 million from a forecast 1.4 million this year.

[PlanMaestro]

Fiat moves to boost stake in Chrysler to 65.2 percent

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA-Fiat-moves-to-boost-stake-in-Chrysler-to-65-2-percent-15735188/

 

Italian carmaker Fiat said on Thursday it planned to exercise a call option to buy around 3.3 percent of Chrysler from the VEBA trust fund, boosting its stake in the U.S. peer to 65.17 percent.

 

In July Fiat exercised its option for a first tranche of around 3.3 percent of Chrysler from the VEBA fund.

 

Fiat said it estimated the net amount to be paid for the purchase of this second tranche is $198 million.

 

The group said the Chancery Court of Delaware is expected to decide over the price for the transaction in the next months.

[PlanMaestro]

December and 2012 sales numbers by group and brand.

 

http://www.autonews.com/apps/pbcs.dll/article?AID=/20130103/RETAIL01/130109991/chrysler-sales-rise-10-on-strong-fiat-car-volume#godown

[PlanMaestro]

Fiat beats annual production and sales records in Brazil.

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA-Fiat-beats-annual-production-and-sales-records-in-Brazil-with-more-than-838-000-vehicles-15735025/

 

Full-year sales of cars and light commercial vehicles totaled 838,219 units, representing an 11.1% increase over the prior year (754,276 units) and a 10.2% increase over the previous sales record of 760,495 units set in 2010.

 

Leader for the past 11 years, Fiat outperformed the Brazilian market where sales of passenger cars and light commercial vehicles increased 6.1% in 2012 to 3,634,510 units (3,426,290 units sold in 2011). As a consequence, Fiat increased its share to 23.1% from 22% in 2011.

[mhdousa]

Fiat beats annual production and sales records in Brazil.

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA-Fiat-beats-annual-production-and-sales-records-in-Brazil-with-more-than-838-000-vehicles-15735025/

 

Full-year sales of cars and light commercial vehicles totaled 838,219 units, representing an 11.1% increase over the prior year (754,276 units) and a 10.2% increase over the previous sales record of 760,495 units set in 2010.

 

Leader for the past 11 years, Fiat outperformed the Brazilian market where sales of passenger cars and light commercial vehicles increased 6.1% in 2012 to 3,634,510 units (3,426,290 units sold in 2011). As a consequence, Fiat increased its share to 23.1% from 22% in 2011.

 

Plan, just curious how big of a relative position have you established in FIATY?

 

[PlanMaestro]

Plan, just curious how big of a relative position have you established in FIATY?

 

Just tracking for the moment … if I eventually buy, it will be big.

[txitxo]

December and 2012 sales numbers by group and brand.

 

http://www.autonews.com/apps/pbcs.dll/article?AID=/20130103/RETAIL01/130109991/chrysler-sales-rise-10-on-strong-fiat-car-volume#godown

 

I've just seen that EXOR is showing up in one of my screens. I'll have to buy it now...

[PlanMaestro]

Dodge Dart posts best sales month yet despite Avenger discounts

http://en.wikipedia.org/wiki/Dodge_Dart_(2013)

http://www.autonews.com/article/20130103/BLOG06/130109975#ixzz2GxOrnFbX

 

Chrysler Group’s new Fiat-based compact sedan posted its best-ever sales month in December, more than a half-year after the 2013 Dodge Dart began showing up on dealer lots. The 6,105 Darts that dealers sold last month came as the four-door made the final cut on several Car of the Year lists and boosted its total U.S. sales for 2012 to 25,303 units.

 

That’s not a bad start for an all-new entry in one of the United States’ most competitive market segments. It’s even more notable because the Dart hit those numbers despite not having a customer cash incentive until late November and with a performance R/T version that has yet to arrive in showrooms.

 

But I would argue that it’s not yet quite fair to compare monthly Dart sales with segment competitors like the Ford Focus, Chevy Cruze and Honda Civic. Several Chrysler dealers in recent months have told me that one of the prime factors holding down potential Dart sales is in their own showrooms -- a deeply discounted Dodge Avenger.

 

RR: Marchionne has so far confirmed that the Avenger would get a second generation by 2014, however it will be based on the upcoming Alfa Romeo 169 mid-size sedan with features deriving from both Fiat and the current generation model. It might keep the "Avenger" nameplate, which so far remains unconfirmed.

 

http://en.wikipedia.org/wiki/Alfa_Romeo_169

[muscleman]

Fiat moves to boost stake in Chrysler to 65.2 percent

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA-Fiat-moves-to-boost-stake-in-Chrysler-to-65-2-percent-15735188/

 

Italian carmaker Fiat said on Thursday it planned to exercise a call option to buy around 3.3 percent of Chrysler from the VEBA trust fund, boosting its stake in the U.S. peer to 65.17 percent.

 

In July Fiat exercised its option for a first tranche of around 3.3 percent of Chrysler from the VEBA fund.

 

Fiat said it estimated the net amount to be paid for the purchase of this second tranche is $198 million.

 

The group said the Chancery Court of Delaware is expected to decide over the price for the transaction in the next months.

 

I am confused about this transaction. VEBA is suing Fiat over the price agreement in 2009, but what will they argument be? They agreed with this in 2009 and now they can retract that?

 

If this is being legally challenged, then how can Fiat still buy some more 3.3 pct for $198 M without VEBA somehow preventing it to do so? If this is something that is yet up to the court to decide, then if the court rules in favor of VEBA, then will this transaction be reversed?

 

Lastly, if Fiat really has to pay $1.7 Bn for the remaining 16% stake, does it have that liquidity to do so?

It looks to me that it has 20 bn liquidity, so probably in the worst case, it can just pay $1.7 bn and complete the merger?

 

[muscleman]

Why is everyone so concerned with Fiat's Europe operations, when it is actually less exposed than GM and Ford?

[PlanMaestro]

Fiat SpA : Chrysler minority owner pushes first step toward IPO

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA-Chrysler-minority-owner-pushes-first-step-toward-IPO-15764248/

 

The minority owner of Chrysler Group LLC on Wednesday pushed the U.S. automaker to take the first step toward becoming a public company again by demanding that Chrysler register shares with U.S. regulators.

 

The minority owner, a United Auto Workers union retiree healthcare trust, demanded that Chrysler register 16.6 percent of company shares with the U.S. Securities and Exchange Commission. The trust has the right to make the demand because of the 2009 agreement that brought Chrysler out of bankruptcy and left Fiat SpA as part-owner.

 

The Italian automaker now owns 58.5 percent of Chrysler and the healthcare trust, a voluntary employee beneficiary association (VEBA), owns 41.5 percent.

[…]

 

 

London-based UBS analyst Philippe Houchois said the move by the VEBA to force Chrysler to register shares is a ploy in a separate battle over the value of Chrysler shares, and that there will not be an IPO.

 

Fiat and the VEBA are fighting over the value of a 3.3 percent share of Chrysler. The same 2009 agreement that allows the trust to demand that Chrysler register to sell shares to the public allows Fiat to make periodic purchases of Chrysler shares from the VEBA.

 

Last July, Fiat filed for the first 3.3 percent tranche of VEBA-owned Chrysler shares. The VEBA balked at the price Fiat offered, $139.7 million, saying it was too low. Fiat in September filed suit against the VEBA to force the healthcare trust to sell the shares.

 

The issue is now being considered by a Delaware court.

 

"Fiat is trying to buy Chrysler on the cheap," said Houchois. "VEBA's only pressure it can put on Fiat is to list the shares in an IPO to get a higher price. It's a recognition that VEBA's case is weak. I don't think there will be an IPO."

[jch548]

Fiat needs 80% ownership in Chrysler to pull cash out.

[PlanMaestro]

Italy's sales decline takes us back to 1979

http://europe.autonews.com/article/20130110/BLOG15/301109995/italys-sales-decline-takes-us-back-to-1979

 

Italy car sales last year fell 20 percent to 1.4 million units, the country's worst result in 33 years. Back then, domestic automakers had a dominating 61.7 percent share of the market, in 2012 they controlled just 29.7 percent.

 

In 1979, Fiat brand sold 641,967 cars in Italy and had a 46 percent share of the market. Last year Fiat sold 294,778 cars and its share was 21 percent.

 

Wonder why Alfa Romeo is in so much trouble? Consider this: The Fiat-owned brand sold 106,074 cars in Italy in 1979. It's unlikely Alfa sold that many cars globally in 2012. In Italy, the brand's 2012 total was 42,174 sales.

 

Where did all those Alfa buyers go? To Audi, BMW and Mercedes-Benz. Last year, the German trio sold a combined 135,840 vehicles compared with just 35,806 in 1979.

 

Thirty-three years ago Asian automakers controlled a tiny piece of the Italian car market as Korean brands were not exporting to Europe and the Japanese faced an import quota. In 2012, Asian brands had a 17.1 percent share in Italy. Toyota was Italy's No. 1 Asian brand with 55,178 units sold, while Hyundai-Kia was the country's biggest Asian auto group with a combined 70,478 sales.

 

In 1979, Renault was Italy's top-selling non-Italian brand, followed by Citroen and Volkswagen. Last year, VW was the No. 1 foreign brand, ahead of Ford and Citroen, with Renault slipping to sixth place.

 

 

 

[muscleman]

You also might want to consider Exor (www.exor.com). They hold 30% of Fiat and 30% of Fiat industrial + some other investments. The Mackenzie Cundill funds own it, and Bestinver also owns it.

 

I myself am long exor. They seem to actively manage value, f.e. by separating Industrial from Fiat group and the Chrysler deal seems to have been on very good terms.

 

Because they hold other assets and are levered on the liability side of the balance sheet as well, any upwards movement by Fiat will translate into similar nav gains as holding fiat directly. Also, the exor stock is trading at significant discount to nav (historically they trade with a conglomerate discount, just not that severe), so you get and undervalued stock within an undervalued holding company.

 

http://sportgamma.files.wordpress.com/2012/01/simplemaths.jpg

 

There is a heap of reports on the borsa italia website: http://www.borsaitaliana.it

 

Exor

- http://www.borsaitaliana.it/mediasource/star/db/pdf/87267.pdf

 

- http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=149&sender=null&docDate=&day=&month=&year=&numDoc=

 

Fiat

http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=125&sender=null&docDate=&day=&month=&year=&numDoc=

 

Fiat Industrial

- http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=1188&sender=null&docDate=&day=&month=&year=&numDoc=

 

Do you know if EXOR guarantees any of the subsidiary's debt? I couldn't find that info anywhere.

EXOR's Fiat industrial's value is about twice that of Fiat. So if we want to long EXOR, we need to make sure Fiat industrial also look good, right?

Its trailing P/E seems to be around 14, which is not too expensive, but not cheap. There should be some further growth driven by higher Corn and Rice prices all over the world, but do you think this one's potential is as good as Fiat? Maybe this one's a 2 begger, but Fiat's a 8 begger?

So if we take a weighted average on this, it will be about 4 begger? That is not bad at all assuming all of the other EXOR subs are worth zero.

Additional, do you think EXOR is created to benefit shareholders, or it is more like something to enrich the Agnelli family?

[muscleman]

Italy's sales decline takes us back to 1979

http://europe.autonews.com/article/20130110/BLOG15/301109995/italys-sales-decline-takes-us-back-to-1979

 

Italy car sales last year fell 20 percent to 1.4 million units, the country's worst result in 33 years. Back then, domestic automakers had a dominating 61.7 percent share of the market, in 2012 they controlled just 29.7 percent.

 

In 1979, Fiat brand sold 641,967 cars in Italy and had a 46 percent share of the market. Last year Fiat sold 294,778 cars and its share was 21 percent.

 

Wonder why Alfa Romeo is in so much trouble? Consider this: The Fiat-owned brand sold 106,074 cars in Italy in 1979. It's unlikely Alfa sold that many cars globally in 2012. In Italy, the brand's 2012 total was 42,174 sales.

 

Where did all those Alfa buyers go? To Audi, BMW and Mercedes-Benz. Last year, the German trio sold a combined 135,840 vehicles compared with just 35,806 in 1979.

 

Thirty-three years ago Asian automakers controlled a tiny piece of the Italian car market as Korean brands were not exporting to Europe and the Japanese faced an import quota. In 2012, Asian brands had a 17.1 percent share in Italy. Toyota was Italy's No. 1 Asian brand with 55,178 units sold, while Hyundai-Kia was the country's biggest Asian auto group with a combined 70,478 sales.

 

In 1979, Renault was Italy's top-selling non-Italian brand, followed by Citroen and Volkswagen. Last year, VW was the No. 1 foreign brand, ahead of Ford and Citroen, with Renault slipping to sixth place.

 

Plan, have you taken a long position on FIATY yet? I know you have tracked this one for a while now.

[txlaw]

Alfa Romeo 4C spotted in Michigan:

 

http://www.autoweek.com/article/20130111/CARNEWS/130119942

[txlaw]

Fiat/Chrysler to produced Jeep in China:

 

http://www.reuters.com/article/2013/01/13/us-fiat-chrysler-idUSBRE90C06F20130113

[Sportgamma]

Do you know if EXOR guarantees any of the subsidiary's debt? I couldn't find that info anywhere.

EXOR's Fiat industrial's value is about twice that of Fiat. So if we want to long EXOR, we need to make sure Fiat industrial also look good, right?

Its trailing P/E seems to be around 14, which is not too expensive, but not cheap. There should be some further growth driven by higher Corn and Rice prices all over the world, but do you think this one's potential is as good as Fiat? Maybe this one's a 2 begger, but Fiat's a 8 begger?

So if we take a weighted average on this, it will be about 4 begger? That is not bad at all assuming all of the other EXOR subs are worth zero.

Additional, do you think EXOR is created to benefit shareholders, or it is more like something to enrich the Agnelli family?

 

1. Does Exor guarantee any subsidiary debt? I have not found anything in their financial statements indicating that they do. However you might want to ask yourself how they would react if a liquidity issue were to occur. I would consider it probable that Exor would be forced to inject cash if such an event were to take place. I recommend that you read note 27 of the 2011 Annual Report as it covers details on Exor and subsidiary debt (http://www.exor.com/uploads/552033-EXOR%20Annual%20Report%202011%20completo%2030%20maggio.pdf).

 

2. Regarding Fiat Industrial. There is not the same upside potential to FI than F but there is also less uncertainty around FI. After the merger with CNH a NewCo will be created, with a more simpler structure and likely a lower cost of capital. There are is also a tax rationale for the merger. I would not expect FI to be a 2xbagger over a short term though...

Here is an equity research by Goldman Sachs: http://www.borsaitaliana.it/documenti/studi.htm?filename=92348.pdf

Updates can be found here: http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=1188&sender=null&docDate=&day=&month=&year=&numDoc&page=2

 

3. Is Exor created for the benefit of the shareholders? Exor was created out of IFI and IFIL in a 2008 reorg. Giovanni Agnelli & Co (representing the Agnelli family) owns more than 50% of Exor and John Elkann is in control of Giovanni Agnelli & Co as he holds majority voting power within GA&Co. I recommend watching his discussion on Exor at the Family Business Network (

). One thing Exor does is provide more liquidity and a more efficient pricing (as opposed to IFI and IFIL) for those Agnelli family members who would want to sell shares, so in that sense it is created for the benefit of shareholders. But as in other owner operator companies, nothing will happen without the approval of the one in control so you either trust them or you don´t. They are trying to simplify the capital structures of Exor and subs, so that should bring more clarity for all shareholders and could be viewed as positive.

[muscleman]

Do you know if EXOR guarantees any of the subsidiary's debt? I couldn't find that info anywhere.

EXOR's Fiat industrial's value is about twice that of Fiat. So if we want to long EXOR, we need to make sure Fiat industrial also look good, right?

Its trailing P/E seems to be around 14, which is not too expensive, but not cheap. There should be some further growth driven by higher Corn and Rice prices all over the world, but do you think this one's potential is as good as Fiat? Maybe this one's a 2 begger, but Fiat's a 8 begger?

So if we take a weighted average on this, it will be about 4 begger? That is not bad at all assuming all of the other EXOR subs are worth zero.

Additional, do you think EXOR is created to benefit shareholders, or it is more like something to enrich the Agnelli family?

 

1. Does Exor guarantee any subsidiary debt? I have not found anything in their financial statements indicating that they do. However you might want to ask yourself how they would react if a liquidity issue were to occur. I would consider it probable that Exor would be forced to inject cash if such an event were to take place. I recommend that you read note 27 of the 2011 Annual Report as it covers details on Exor and subsidiary debt (http://www.exor.com/uploads/552033-EXOR%20Annual%20Report%202011%20completo%2030%20maggio.pdf).

 

2. Regarding Fiat Industrial. There is not the same upside potential to FI than F but there is also less uncertainty around FI. After the merger with CNH a NewCo will be created, with a more simpler structure and likely a lower cost of capital. There are is also a tax rationale for the merger. I would not expect FI to be a 2xbagger over a short term though...

Here is an equity research by Goldman Sachs: http://www.borsaitaliana.it/documenti/studi.htm?filename=92348.pdf

Updates can be found here: http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=1188&sender=null&docDate=&day=&month=&year=&numDoc&page=2

 

3. Is Exor created for the benefit of the shareholders? Exor was created out of IFI and IFIL in a 2008 reorg. Giovanni Agnelli & Co (representing the Agnelli family) owns more than 50% of Exor and John Elkann is in control of Giovanni Agnelli & Co as he holds majority voting power within GA&Co. I recommend watching his discussion on Exor at the Family Business Network (

). One thing Exor does is provide more liquidity and a more efficient pricing (as opposed to IFI and IFIL) for those Agnelli family members who would want to sell shares, so in that sense it is created for the benefit of shareholders. But as in other owner operator companies, nothing will happen without the approval of the one in control so you either trust them or you don´t. They are trying to simplify the capital structures of Exor and subs, so that should bring more clarity for all shareholders and could be viewed as positive.

 

Thank you!

Fiat industrial's upside is much lower than that of Fiat, though there is less risk. Overall, the idea that taking a long in EXOR only gets me 1/3 of exposure to Fiat and 2/3 of exposure to Fiat industrial disturbs me a bit.

[Sportgamma]

Do you know if EXOR guarantees any of the subsidiary's debt? I couldn't find that info anywhere.

EXOR's Fiat industrial's value is about twice that of Fiat. So if we want to long EXOR, we need to make sure Fiat industrial also look good, right?

Its trailing P/E seems to be around 14, which is not too expensive, but not cheap. There should be some further growth driven by higher Corn and Rice prices all over the world, but do you think this one's potential is as good as Fiat? Maybe this one's a 2 begger, but Fiat's a 8 begger?

So if we take a weighted average on this, it will be about 4 begger? That is not bad at all assuming all of the other EXOR subs are worth zero.

Additional, do you think EXOR is created to benefit shareholders, or it is more like something to enrich the Agnelli family?

 

1. Does Exor guarantee any subsidiary debt? I have not found anything in their financial statements indicating that they do. However you might want to ask yourself how they would react if a liquidity issue were to occur. I would consider it probable that Exor would be forced to inject cash if such an event were to take place. I recommend that you read note 27 of the 2011 Annual Report as it covers details on Exor and subsidiary debt (http://www.exor.com/uploads/552033-EXOR%20Annual%20Report%202011%20completo%2030%20maggio.pdf).

 

2. Regarding Fiat Industrial. There is not the same upside potential to FI than F but there is also less uncertainty around FI. After the merger with CNH a NewCo will be created, with a more simpler structure and likely a lower cost of capital. There are is also a tax rationale for the merger. I would not expect FI to be a 2xbagger over a short term though...

Here is an equity research by Goldman Sachs: http://www.borsaitaliana.it/documenti/studi.htm?filename=92348.pdf

Updates can be found here: http://www.borsaitaliana.it/borsa/azioni/documenti/societa-quotate/studi-e-ricerche.html?search=Y&lang=en&tipology=null&company=1188&sender=null&docDate=&day=&month=&year=&numDoc&page=2

 

3. Is Exor created for the benefit of the shareholders? Exor was created out of IFI and IFIL in a 2008 reorg. Giovanni Agnelli & Co (representing the Agnelli family) owns more than 50% of Exor and John Elkann is in control of Giovanni Agnelli & Co as he holds majority voting power within GA&Co. I recommend watching his discussion on Exor at the Family Business Network (

). One thing Exor does is provide more liquidity and a more efficient pricing (as opposed to IFI and IFIL) for those Agnelli family members who would want to sell shares, so in that sense it is created for the benefit of shareholders. But as in other owner operator companies, nothing will happen without the approval of the one in control so you either trust them or you don´t. They are trying to simplify the capital structures of Exor and subs, so that should bring more clarity for all shareholders and could be viewed as positive.

 

Thank you!

Fiat industrial's upside is much lower than that of Fiat, though there is less risk. Overall, the idea that taking a long in EXOR only gets me 1/3 of exposure to Fiat and 2/3 of exposure to Fiat industrial disturbs me a bit.

 

You're welcome.

 

For your consideration: Exor is more than 1/3 Fiat and 2/3 Fiat Industrial, but if you add SGS and Cushman & Wakefield these four will account for about 80% of the assets. Exor also carries debt, so there is a leverage effect from that, has more cash (+equivalents) then it needs and is trading well under book value.

 

 

[PlanMaestro]

Marchionne says Dart's slow start due to transmission availability

Sales of the 2013 Dodge Dart have been slow because the car didn't launch with the transmission it should have, Chrysler-Fiat CEO Sergio Marchionne said this morning. Speaking to journalists at the Detroit auto show, Marchionne said Dart sales were hampered because only manual transmissions were available at first, with a six-speed automatic sourced from Hyundai serving as a stopgap until a promised nine-speed automatic is available.

 

PS: Muscleman, I don't like much to talk about my portfolio or returns.  Each one has to make his own decisions. This is one reason I am not blogging as much, too much wasted time talking about what and when instead of why and how. There is a lot of info here.