FCAU - Fiat Chrysler Automobiles

[karthikpm]

Thoughts heading into earnings tomorrow? Debating whether to add before, or wait

 

The market basically did not react to the earnings report.. Rust Belt, are you buying more?

[Rust Belt Capital]

Probably not for a while. My biggest fear was that there Sergio would give some sort of concrete info on the Ferrari transaction and that the stock would pop on that.  But from my quick scan of the call transcript he left it kind of open ended, and I think as long as there remains an element of uncertainty on that deal there will be an opportunity at some point to add at a lower price.

 

FWIW I think there is very very little risk of the deal not going through, but I've gotten the sense the market has some doubts.  Going to have to take some time to read the filing and the call more closely before I do anything though

 

Anyone who has examined today's releases have any more detailed thoughts?

[compounding]

Probably not for a while. My biggest fear was that there Sergio would give some sort of concrete info on the Ferrari transaction and that the stock would pop on that.  But from my quick scan of the call transcript he left it kind of open ended, and I think as long as there remains an element of uncertainty on that deal there will be an opportunity at some point to add at a lower price.

 

FWIW I think there is very very little risk of the deal not going through, but I've gotten the sense the market has some doubts.  Going to have to take some time to read the filing and the call more closely before I do anything though

 

Anyone who has examined today's releases have any more detailed thoughts?

 

Re Ferrari he said: "if it doesn't happen in H1 it will be due to regulatory reasons, otherwise it will be Q3."

 

 

[karthikpm]

http://www.wsj.com/articles/fiat-chrysler-fourth-quarter-net-profit-falls-1422453110

 

Turning the corner in Europe

[LC]

Thanks for posting. They shrunk the business, turned a profit, and are now in a position to add capacity as Marchionne sees fit.

[brker_guy]

Nice FCA article.  It has Ford and even Tesla in the article...

 

The Jeep Renegade Is Going To Make Fiat Chrysler So Stupid Rich

 

http://jalopnik.com/the-jeep-renegade-is-going-to-make-fiat-chrysler-so-stu-1682519413

[Kiltacular]

Anyone know where I can find a transcript of the Q4 call or have one they want to share ??...seeking alpha hasn't posted one but has almost all previous ones.

 

Thanks

[phil_Buffett]

iam so sure that the spinoff will trade at a large premium. ferrari one of the best brands.

 

everyday nice to see things like this here

 

http://www.autoblog.com/2015/02/03/ferrari-488-gtb-official/#image-5

[Guest notorious546]

Anyone know where I can find a transcript of the Q4 call or have one they want to share ??...seeking alpha hasn't posted one but has almost all previous ones.

 

Thanks

 

attached

FCAU-Transcript-2015-01-28T14_001.pdf

[Kiltacular]

Thanks notorious

[phil_Buffett]

http://www.bloomberg.com/news/articles/2015-02-10/marchionne-says-beauty-contest-for-ferrari-ipo-is-under-way

 

It won’t be a difficult placement,” Marchionne said Tuesday in an interview. “I wish they were all like this. The execution of this is going to be very short. We just need to be very focused on which investor base we’re going after and once we do that, you could probably sell it by the time you and I have a bagel in the morning.”

 

Fiat Chrysler is holding a “beauty contest” to select the underwriters and will decide in March or April, Marchionne said. An IPO of the maker of the exotic sports-cars is possible by July and the process should be quick, he said

[wbr]

Pabrai 13F is out. Turns out Fiat Chrysler is 30% of his 13F portfolio.

[hyten1]

dataroma is not completely accurate, i know he owns a bunch of gm warrants which is not included there

 

[compounding]

dataroma is not completely accurate, i know he owns a bunch of gm warrants which is not included there

 

And Hyundai and some other stuff, he said in an interview recently FCAU was 25% of his portfolio. Mind you, the stock has gone up a bit since then.

[Guest notorious546]

dataroma is not completely accurate, i know he owns a bunch of gm warrants which is not included there

 

nice catch

[dabuff]

I believe he and Guy were interviewed a couple months back (I believe it was with John Mihaljevic) and he gave a brief thesis on the Fiat. I can't seem to find the link though. Does anyone have the link to that? Spier explains his thesis here:

 

http://www8.gsb.columbia.edu/rtfiles/Heilbrunn/Graham%20%26%20Doddsville%20-%20Issue%2019%20-%20Fall%202013%20-%20Final.pdf

[LC]

I trimmed this position by about 30% today...it has just grown too big a % of my invested portfolio (as I hold cash too). At some point I knew I would have to make a decision whether I wanted a large, leveraged company in an industry with historically poor economics as a core holding. Looking forward to feeling the pangs of opportunity cost!

[wbr]

I trimmed this position by about 30% today...it has just grown too big a % of my invested portfolio (as I hold cash too). At some point I knew I would have to make a decision whether I wanted a large, leveraged company in an industry with historically poor economics as a core holding. Looking forward to feeling the pangs of opportunity cost!

 

I was thinking about the same thing over the weekend. In Euro it's up 100%+ since 01/2014 and 50% since the capital raise late last year. Since I bought some dips along the way the position is now pretty huge. Also one could argue that the valuation is "challenging" given the risk. If Sergio's plan succeeds it might be another double over 3 years, but if it fails it could get really bad really quickly. I think it is an appropriate time to take some chips off the table.

 

Might sound speculative, but I think a lot of money is flowing into FCA to get Ferrari pre-IPO. What happens when Ferrari is gone? I think a lot of people will sell their FCA which could bring down the share price significantly. At that point it might once again be a more compelling risk/reward opportunity.

[fareastwarriors]

I'm looking forward to Ferrari  IPO.

[TwoCitiesCapital]

I trimmed this position by about 30% today...it has just grown too big a % of my invested portfolio (as I hold cash too). At some point I knew I would have to make a decision whether I wanted a large, leveraged company in an industry with historically poor economics as a core holding. Looking forward to feeling the pangs of opportunity cost!

 

I was thinking about the same thing over the weekend. In Euro it's up 100%+ since 01/2014 and 50% since the capital raise late last year. Since I bought some dips along the way the position is now pretty huge. Also one could argue that the valuation is "challenging" given the risk. If Sergio's plan succeeds it might be another double over 3 years, but if it fails it could get really bad really quickly. I think it is an appropriate time to take some chips off the table.

 

Might sound speculative, but I think a lot of money is flowing into FCA to get Ferrari pre-IPO. What happens when Ferrari is gone? I think a lot of people will sell their FCA which could bring down the share price significantly. At that point it might once again be a more compelling risk/reward opportunity.

 

I have been concerned as well, though I haven't let the position go yet. I've recently started selling covered calls against the position to reduce my risk/margin some and to slowly sell shares as the price continues to appreciate. I'm waiting for the Ferrari IPO to sell any shares outright - my expectation matches WBRs is that the Ferrari IPO will perform strongly while there is a great likelihood that Fiat will languish. I'm actually hoping that this will be the case so that I can then exchange my Ferrari shares for more Fiat without having to put down anymore capital in the position.

 

I do have a question for the board though - Ferrari would be the only luxury automaker that is freestanding. This seems strange to me. What are the chances it gets bought out in the near term (less than a year after it's IPO) by another car company?

 

 

[merkhet]

There is an arcane tax rule for tax-free spinoffs that could make a near-term Ferrari buyout somewhat difficult.

 

A tax-free spinoff only maintains its tax-free characteristics if (A) there is no change of control for two years OR (B) there is a way to show that for two years prior to the change of control, inclusive of when the spinoff was in the original entity, there was no "substantial negotiations" concerning the addressed transaction.

 

Most companies wait the two years post-spinoff because it's harder to show (B). Additionally, I suppose if someone wanted Ferrari bad enough, they could offer to pay enough to make the economic decision a wash for the spinoff holders -- but then there's the pesky business of Agnelli owning 30% of the company.

[zizou]

Marchionne also explained the reasoning behind adding the iconic Alfa Romeo badge to the livery of this year's Ferrari.

"I was at the Ferrari museum," he said, "and you can see the story with a great closeness to Alfa Romeo."

Asked if the association between F1 and Alfa Romeo might be developed in the future, Marchionne added: "Maybe. Who knows. Anything is possible."

 

[bizaro86]

Is there likely to be any forced selling of Ferrari after the spinoff?  I'm thinking mainly of indexes that would own FCA but not Ferrari, which might potentially offset some of the post IPO strength

[krazeenyc]

I think the Agnelli family has ~0 interest in selling Ferrari. Seriously.... they're already very  wealthy -- I'd be shocked if they wanted to let go of control of Ferrari. Seriously if your family controlled Ferrari, would you want to give it up for money -- when you're already extremely wealthy?  What I think is more likely is that FCA may merge or partner with another auto company to create greater scale improve R&D efficiency.

 

I love Ferrari, and am waiting for the IPO also. But the stock has run up so much -- even taking into account some derisking of the business, nice one time events, as well as great sales momentum . FCAU has been my largest position for sometime (I pared once in the spring of 2014) and pared again recently.  I've definitely struggled recently to come up with a good selling strategy.  I expect Ferrari to trade at a huge premium to every automaker not named Tesla.

[TwoCitiesCapital]

Is there likely to be any forced selling of Ferrari after the spinoff?  I'm thinking mainly of indexes that would own FCA but not Ferrari, which might potentially offset some of the post IPO strength

 

This is always a risk with spin-offs. Land's End traded down right after it's spin-off but subsequently rallyied much, much higher than it's initial spin-off price (and what most board members anticipated). I expect we'll see some early weakness in Ferrari due to known selling pressures. Early rallies will be cut short by opportunistic sellers, but I'm willing to bet that over the course of 3 months or so that the price would likely be higher than it was at the spin-off.

 

That being said - none of us know how rich the 10% IPO will price which will greatly affect the spin-off performance - it could be that all the gains are had on the front end with a rich IPO and that selling upon receipt, even into weakness, might be the best strategy.