FCAU - Fiat Chrysler Automobiles

[Phaceliacapital]

Anyone who knows whether it are days or business days?

 

edit: What are the profitable hedge fund trades?

 

- Going short before the AGM (which apparently happened as BB gave increased short interest) and leaking rumors that the mergers conditions will not be met, decreasing share price, covering shorts and winning.

- Going long before the AGM, voting against the merger and exercising cash rights for a quick "riskless" 8-10% yield.

- ... ?

 

Is there anything they can do after the AGM in terms of trades? What is the effect of a much lower share price for the average investor? Will it incentivize people who voted against the merger to change their mind and exercise their cash rights (if they weren't planning to in the beginning) ?

 

What a load of bullcrap.

[phil_Buffett]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25€. this stock was at 9€ few months ago. it is such a joke!

[ZenaidaMacroura]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25€. this stock was at 9€ few months ago. it is such a joke!

Surely part of it has to do with this?

 

http://www.ft.com/intl/cms/s/0/7b649a7a-1d49-11e4-b927-00144feabdc0.html#axzz39bzoGvp4

[phil_Buffett]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25. this stock was at 9 few months ago. it is such a joke!

Surely part of it has to do with this?

 

http://www.ft.com/intl/cms/s/0/7b649a7a-1d49-11e4-b927-00144feabdc0.html#axzz39bzoGvp4

 

yeah sure. then the China Investigation and the Exit rights. the media argues every day that the Exit rights will fail the Merger. fiat made yesterday a Statement, but the media again writes about it. sure the market is not good the last weeks because of fear with russia and so on. but the Price Action in fiat is more than a joke. the drop like a rock

[Phaceliacapital]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25€. this stock was at 9€ few months ago. it is such a joke!

Surely part of it has to do with this?

 

http://www.ft.com/intl/cms/s/0/7b649a7a-1d49-11e4-b927-00144feabdc0.html#axzz39bzoGvp4

 

Do you know the % revenue Fiat gets from Italy??

[ZenaidaMacroura]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25€. this stock was at 9€ few months ago. it is such a joke!

Surely part of it has to do with this?

 

http://www.ft.com/intl/cms/s/0/7b649a7a-1d49-11e4-b927-00144feabdc0.html#axzz39bzoGvp4

 

Do you know the % revenue Fiat gets from Italy??

Well if a rumor can cause adverse price action then the perception of being an Italian equity may have some effect. 

[hillfronter83]

this stock Price Action is a big joke and a shame. down another 8% in european markets. at 6,25€. this stock was at 9€ few months ago. it is such a joke!

Surely part of it has to do with this?

 

http://www.ft.com/intl/cms/s/0/7b649a7a-1d49-11e4-b927-00144feabdc0.html#axzz39bzoGvp4

 

Do you know the % revenue Fiat gets from Italy??

Well if a rumor can cause adverse price action then the perception of being an Italian equity may have some effect.

 

Here is the revenue shares from AR:

2013 Rev 2012 Rev

Italy 6,937 8.0% 7,275 8.7%

EU (ex It) 13,038 15.0% 12,999 15.5%

N. A. 47,738 55.0% 45,348 54.0%

S. A. 10,501 12.1% 11,805 14.1%

Other 8,602 9.9% 6,530 7.8%

Total 86,816 100.0% 83,957 100.0%

 

[karthikpm]

Does anyone know what % of float is short the stock?

[muscleman]

"The more the stock falls, the more appealing the cash exit right price of 7.727 euros per share becomes, increasing the likelihood that more shareholders sell out."

 

http://www.foxbusiness.com/industries/2014/08/06/fiat-falls-85-percent-traders-cite-chrysler-merger-concerns/

 

This is an interesting game for people who wants to exercise the cash exit rights. If the price drops too much, too many people may want to sell, making the merger fail, and no one could sell. So if it continues to drop, these guys may get scared and just sell at market.

So people who really wants to sell want to keep the price STABLE.

It is the manipulators who wants to push the price down, so they can short it to make a profit and then go long to make another profit.

I suspect that the "VW wants to acquire Fiat" rumor was made by the same guys, so they could short it at a higher price.

 

Why aren't SEC or FBI equivalent in Italy looking for these manipulators? Perhaps the regulation is much looser in Italy?

[compounding]

Chrysler just reported $1B free cash flow for the quarter if anyone still cares about fundamentals!

[karthikpm]

Impressive quarter .Also considering that italy is only 8% of its revenue  shares are at a big discount .

How long till we know about cash exits? 15 days to file but will we know soon about merger or will they wait the 180 days ?

 

 

[plato1976]

Haven't looked into this stock for a while

 

but can anyone educate me why we have to have such a weird cash exit right in the final merging plan? This just sounds weird to me - who designed it?

 

"The more the stock falls, the more appealing the cash exit right price of 7.727 euros per share becomes, increasing the likelihood that more shareholders sell out."

 

http://www.foxbusiness.com/industries/2014/08/06/fiat-falls-85-percent-traders-cite-chrysler-merger-concerns/

 

This is an interesting game for people who wants to exercise the cash exit rights. If the price drops too much, too many people may want to sell, making the merger fail, and no one could sell. So if it continues to drop, these guys may get scared and just sell at market.

So people who really wants to sell want to keep the price STABLE.

It is the manipulators who wants to push the price down, so they can short it to make a profit and then go long to make another profit.

I suspect that the "VW wants to acquire Fiat" rumor was made by the same guys, so they could short it at a higher price.

 

Why aren't SEC or FBI equivalent in Italy looking for these manipulators? Perhaps the regulation is much looser in Italy?

[ZenaidaMacroura]

Haven't looked into this stock for a while

 

but can anyone educate me why we have to have such a weird cash exit right in the final merging plan? This just sounds weird to me - who designed it?

 

"The more the stock falls, the more appealing the cash exit right price of 7.727 euros per share becomes, increasing the likelihood that more shareholders sell out."

 

http://www.foxbusiness.com/industries/2014/08/06/fiat-falls-85-percent-traders-cite-chrysler-merger-concerns/

 

This is an interesting game for people who wants to exercise the cash exit rights. If the price drops too much, too many people may want to sell, making the merger fail, and no one could sell. So if it continues to drop, these guys may get scared and just sell at market.

So people who really wants to sell want to keep the price STABLE.

It is the manipulators who wants to push the price down, so they can short it to make a profit and then go long to make another profit.

I suspect that the "VW wants to acquire Fiat" rumor was made by the same guys, so they could short it at a higher price.

 

Why aren't SEC or FBI equivalent in Italy looking for these manipulators? Perhaps the regulation is much looser in Italy?

 

It's attributed to Italian Securities law.

[yitech]

"The more the stock falls, the more appealing the cash exit right price of 7.727 euros per share becomes, increasing the likelihood that more shareholders sell out."

 

http://www.foxbusiness.com/industries/2014/08/06/fiat-falls-85-percent-traders-cite-chrysler-merger-concerns/

 

This is an interesting game for people who wants to exercise the cash exit rights. If the price drops too much, too many people may want to sell, making the merger fail, and no one could sell. So if it continues to drop, these guys may get scared and just sell at market.

So people who really wants to sell want to keep the price STABLE.

It is the manipulators who wants to push the price down, so they can short it to make a profit and then go long to make another profit.

I suspect that the "VW wants to acquire Fiat" rumor was made by the same guys, so they could short it at a higher price.

 

Why aren't SEC or FBI equivalent in Italy looking for these manipulators? Perhaps the regulation is much looser in Italy?

 

Prisoner's dilemma in play right now.

[investor-man]

Supposing the merger fails, does anyone have any idea how quickly they could do another vote at a lower cash exit price? Does the Italian securities law limit the number of times this can be done a year or can Fiat just do another vote right away?

[karthikpm]

Supposing the merger fails, does anyone have any idea how quickly they could do another vote at a lower cash exit price? Does the Italian securities law limit the number of times this can be done a year or can Fiat just do another vote right away?

 

Won't that lead to another negative spiral of share prices? Unless there is price stability, lower exit price would lower the stock price even further- or I am completely off base? can they increase the $ amount to cover cash exits at the original price?

[negative alpha]

Dumb question: considering the 7.72 cash exit and current price of 6.46 why is this not a riskless arb?

[ZenaidaMacroura]

Dumb question: considering the 7.72 cash exit and current price of 6.46 why is this not a riskless arb?

Not to put anyone on the spot but this thread and the filing should be read thoroughly!

 

The merger has to close for the cash exit to be fulfilled.  Otherwise the prospective arbitrageur who voted against the merger in hopes of securing a cash exit will still be left holding the stock (which may consequently decline further due to the merger not closing).

[merkhet]

Dumb question: considering the 7.72 cash exit and current price of 6.46 why is this not a riskless arb?

Not to put anyone on the spot but this thread and the filing should be read thoroughly!

 

The merger has to close for the cash exit to be fulfilled.  Otherwise the prospective arbitrageur who voted against the merger in hopes of securing a cash exit will still be left holding the stock (which may consequently decline further due to the merger not closing).

 

Also, the current price does not matter since you have to have been a holder since the Extraordinary General Meeting. Again, as Zenaida indicated, it would behoove a number of posters in this thread to read both the thread and the filing.

 

For the purposes of the exercise of cash exit rights, qualifying shareholders shall be defined as those who did not concur to the approval of the extraordinary general meeting resolution. Such shareholders must have held their shares on a continuous basis from the date of the extraordinary general meeting held to approve the Merger until the date on which the right of cash exit is exercised.

[investor-man]

Supposing the merger fails, does anyone have any idea how quickly they could do another vote at a lower cash exit price? Does the Italian securities law limit the number of times this can be done a year or can Fiat just do another vote right away?

 

Won't that lead to another negative spiral of share prices? Unless there is price stability, lower exit price would lower the stock price even further- or I am completely off base? can they increase the $ amount to cover cash exits at the original price?

 

The current drop in share price is somewhat inexplicable to me as the fundamentals are inline with Fiat's guidance. If they "spiral" further, I'm cool with that because I will buy more  8)

[wachtwoord]

I still haven't heard back from IB about whether they can facilitate me using my cash exit rights on the shares I held before the GM (and voted No on).

 

Meanwhile I bought more shares today.

[karthikpm]

Marchionne commented on earnings call today that cash exit requests have to be sent within 15 days by registered mail and knowing the Italian mail system doubted they will make it in time.

[wachtwoord]

Marchionne commented on earnings call today that cash exit requests have to be sent within 15 days by registered mail and knowing the Italian mail system doubted they will make it in time.

 

Yes, and you need all sorts of documents. This is why I submitted a ticket to IB, hoping they'll do the administrative hassle for me for a (hopefully) reasonable fee. Maybe they won't do it at all, then I think I won't try and won't use my free options. Then the cheap shares I bought today will have to be enough I guess ;)

[Phaceliacapital]

Chrysler's results are really good!

 

Some interesting tidbits from the call:

 

If you were to ask any of the industry analysts about the value of this transaction from a – of the merger from a purely –

from an industrial standpoint, from an operational standpoint, I think we all recognize the value of this deal happening.

We're caught up in a market which I think is trying to find direction. I wouldn't place a lot of weight on hourly

movements in the share price. And certainly anybody who may be selling at this time is not benefiting from the

inherent put right associated with the withdrawal rights [ph] scheme (16:18). So I'd – this is we're paying the price for

an overreaction, which I also actually think it's also based on lack of understanding of what this means.

 

And if that number after the exercise of the pre-emptive rights and after trying to

place the shares in the market is effectively exceeded then I think that the merger is off. We'll just reconvene at the

appropriate time when share conditions are right, and we'll try and get it done again.

 

Timeline:

 

So I make no comments on the speed of the Italian postal system or anybody else's postal system, but you have to add a number of grace days to allow

for the ponies to get off the Pony Express and deliver the mail. So I think realistically we're not going to see anything

until four or five days after the expiry of the 15-day period. So we will not know effectively until four or five days

before the end of the month.

 

Confusion:

 

<Q - Richard John Hilgert>: Right. It seems to me, like from what I've been hearing, the confusion is about the

merger being terminated. The only merger that's terminated is the legal structure that happens between the two

companies being placed into the Dutch holding company. As far as anything else is concerned, whether it's operational,

whether it's integrating, purchasing, engineering, all of those things. None of that changes and that merger is done and

over with.

 

<A - Sergio Marchionne>: That party was over January 1, 2014, the minute that we announced the acquisition and the

minority stake in Chrysler.

 

<Q - Richard John Hilgert>: Right.

 

<A - Sergio Marchionne>: These two entities, Fiat and Chrysler effectively are now part of one single economic

entity. What we're doing now with the merger is effectively create the conditions for this new formed entity to have at a

global stance, to have a positioning in the United States, which it sees now itself as really the whole market, because it

is – does represent more than half of its sales.

And to have access to the capital markets here in the United States, it was the most efficient way to get that

accomplished. And I think people are – again, I think the press has overblown the significance of this maneuver. It is a

desirable thing to do in the medium to long term. Strategically it's the right thing to do. It doesn't impact one iota on the

operational stance of Fiat Chrysler. It doesn't have any impact on our plans. None of the things that we presented on

May the 6th are going to be impacted by it. Even if the merger were not to happen as described, the plan is in place and

life will go on.

 

For those interested I found a clip where you can see the LT shareholders vs the ST yield predators:

 

[tombgrt]

I'm confused. Can't longer term holders exercise their cash exit rights now and simply buy their shares back at this time at the lower prices? How can it be unlikely that the threshold gets exceeded? It seems very likely to me.

 

I'm sorry if this is a stupid question, I haven't been following Fiat closely but am attracted by the sudden drop in share price.