FCAU - Fiat Chrysler Automobiles

[gokou3]

Reminds me of Softbank/Yahoo during the Alibaba IPO regarding how crowded the event driven guys are in this.

 

So it looks like YHOO moves in lockstep with BABA since the IPO:

http://finance.yahoo.com/echarts?s=YHOO+Interactive#{%22showArea%22:false,%22showLine%22:false,%22showOhlc%22:true,%22lineType%22:%22bar%22,%22allowChartStacking%22:true}

 

Can this explain why Sergio wants to hold back the good news, to make sure Ferrari shares do not lose momentum post-IPO which would resonate back to the price movement of FCAU?  After all, 80% of the share will still remain in the hands of FCAU shareholders for a while.  If Ferrari doesn't give shiny prospects, then these FCAU shareholders will sell their Ferrari shares en masse the spin-off is done.  Better keep the momentum to spread the selling over time.

 

 

[LC]

Another thing I don't understand Sergio is, he structured this Ferrari thing to benefit mainly shareholders directly, not FCAU the business. Why? e.g. He could've structured the deal differently to deleverage FCAU more instead of returning capital to sharesholders. That will be my preference.

Why would he do that? He has said he believes the entire industry needs to rationalize. Why de-leverage in that kind of environment and put your capital at risk?

[portfolio14]

Another thing I don't understand Sergio is, he structured this Ferrari thing to benefit mainly shareholders directly, not FCAU the business. Why? e.g. He could've structured the deal differently to deleverage FCAU more instead of returning capital to sharesholders. That will be my preference.

Why would he do that? He has said he believes the entire industry needs to rationalize. Why de-leverage in that kind of environment and put your capital at risk?

 

To rationalise the industry, doesn't Sergio need capital to takeover, say, VW?

[LC]

Another thing I don't understand Sergio is, he structured this Ferrari thing to benefit mainly shareholders directly, not FCAU the business. Why? e.g. He could've structured the deal differently to deleverage FCAU more instead of returning capital to sharesholders. That will be my preference.

Why would he do that? He has said he believes the entire industry needs to rationalize. Why de-leverage in that kind of environment and put your capital at risk?

 

To rationalise the industry, doesn't Sergio need capital to takeover, say, VW?

Or VW needs capital to takeover FCAU. I think he wants to sell and get himself and the Agnelli's out of this business. Remember, he wanted to retire but was convinced to stay on. The guy has bee n wearing the exact same outfit to work every day. He is a machine, but eventually the pace wears out and you need a break. 

 

Keep the gem (Ferrari) and let a long-term operator handle the rest. Spell out the roadmap (as he has done during investor calls) for whomever that operator is.

[kranthi_vic]

My concern is that fcau shareholders will not see the pop in share price like Ferrari because of the valuation multiple, debt, UAW etc etc.. Is that even possible?

 

And by the time we get the Ferrari shares they might be ~20% lower from their post IPO peak...

 

Are these fears unfounded??

[phil_Buffett]

my take on this is:

 

after the ipo Sergio will hopefully provide red bull in F1 with Motors.

 

then maybe a dividend from ferrari and potential more Motor sales to alfa and maserati. if alfa is running with the new cars, ferrari will make more Revenue from them.

 

for fiat i think he will early next year unload magnetti marelli. for the right Price. $4-5billion.

[nikhil25]

The guy has been wearing the exact same outfit to work every day.

 

Here's a potential reason for that :)

http://www.cnn.com/2015/10/09/world/gallery/decision-fatigue-same-clothes/index.html

"Decision fatigue" -- being mentally worn out by making menial choices -- is a real phenomenon. Some famous figures have chosen to wear similar clothes each day to reduce the decisions they have to make in the morning, enabling them to get on with the real work.

[bizaro86]

The guy has been wearing the exact same outfit to work every day.

 

Here's a potential reason for that :)

http://www.cnn.com/2015/10/09/world/gallery/decision-fatigue-same-clothes/index.html

"Decision fatigue" -- being mentally worn out by making menial choices -- is a real phenomenon. Some famous figures have chosen to wear similar clothes each day to reduce the decisions they have to make in the morning, enabling them to get on with the real work.

 

This is pretty off topic, but I found that I was being affected by decision fatigue. One thing I've done to reduce is two bars of clothes in my closet, one for dress shirts, one for dress pants. Every day I take the shirt/pants off the end and when I hang my clothes they go on the other end. No decisions required. It helps that my wardrobe is pretty limited from a colour palette point of view...

[fareastwarriors]

Let the RACE begin.

 

http://www.bloomberg.com/news/articles/2015-10-09/ferrari-to-be-valued-at-up-to-9-82-billion-in-ipo

 

The shares will trade on the New York Stock Exchange under the symbol “RACE.”

[TwoCitiesCapital]

Let the RACE begin.

 

http://www.bloomberg.com/news/articles/2015-10-09/ferrari-to-be-valued-at-up-to-9-82-billion-in-ipo

 

The shares will trade on the New York Stock Exchange under the symbol “RACE.”

 

Haha. I like the tickr. Am a little disappointed with the valuation coming in significantly lower than the $11-12B that was rumored yesterday, but that's alright...

 

I'm sure we'll get better estimates once the actually IPO prices and etc, but it looks like right now that shareholders will get about 0.13 Ferrari shares per share of FCAU when the spin-off does occur later.

[merkhet]

Let the RACE begin.

 

http://www.bloomberg.com/news/articles/2015-10-09/ferrari-to-be-valued-at-up-to-9-82-billion-in-ipo

 

The shares will trade on the New York Stock Exchange under the symbol “RACE.”

 

Haha. I like the tickr. Am a little disappointed with the valuation coming in significantly lower than the $11-12B that was rumored yesterday, but that's alright...

 

I'm sure we'll get better estimates once the actually IPO prices and etc, but it looks like right now that shareholders will get about 0.13 Ferrari shares per share of FCAU when the spin-off does occur later.

 

I believe the $12 billion was an EV number. It makes sense if you add in the $2.8 billion of debt they're taking on from Fiat, and if you cancel out the $2.1 billion of outside debt based on that being left as cash on their balance sheet.

[muscleman]

We should spin off a RACE thread to discuss Ferrari shares.  :)

It is expensive but the moat is much stronger than most of Bill Ackman's companies. Bill Ackman likes to buy expensive moat companies and fix problems to push up earnings. Will he go activate on RACE and demand a production increase to 12k plus price increase of 20%?

 

[gokou3]

EU Expected to Rule That Starbucks, Fiat Benefited from Illegal Tax Deals Next Week

http://www.wsj.com/articles/eu-expected-to-rule-that-starbucks-fiat-benefited-from-illegal-tax-deals-next-week-1444902968

 

No negative price movement today on this?  Is it because it's old news or that Fiat didn't earn much money over recent years so there's not much back taxes regardless?

 

[racemize]

EU Expected to Rule That Starbucks, Fiat Benefited from Illegal Tax Deals Next Week

http://www.wsj.com/articles/eu-expected-to-rule-that-starbucks-fiat-benefited-from-illegal-tax-deals-next-week-1444902968

 

No negative price movement today on this?  Is it because it's old news or that Fiat didn't earn much money over recent years so there's not much back taxes regardless?

 

I believe they already said it would be negligible for them.

[Phaceliacapital]

http://www.calciomercato.com/en/news/fassoni-marchionne-would-torch-juventus-if-he-could-262851

 

if he could, Sergio Marchionne would torch Juventus.

 

I’m sorry, did you say Marchionne?

 

I did. When the club had its latest capital injection (of €120 million) in Autumn 2011, Exor took on 70% of that, and Marchionne was furious. I’m, well informed. He told Agnelli and the Elkann brothers that they should be ashamed to have wasted so much money over football. I wouldn’t want to be in their shoes now that the club has to pay all this money back.

[Phaceliacapital]

In interview with La Stampa:

 

• S&P doesn't understand GM/Fiat merger
  
• Confident on price range
  
• Originally wanted RED as ticker but was already taken
  

[TwoCitiesCapital]

Interesting day. Ferrari is up 9% and Fiat, owning the remaining 81% of Ferrari is down 2.50%.

 

Incredible how much Fiat is hated. At these prices, about $8.7B of Fiat's market cap is Ferrari, or about 44%. So if 44% of your market cap is up by 10%, the remaining 57% would have to have fallen by 7.5% to end up with a -2.50% as the end product.

 

To put a number on it, Fiat is being valued at ~$850M less today then it was worth yesterday...

[phil_Buffett]

this share Price from fiat is a joke. iam out of words right now. it is amazing!!!!  >:( >:( >:( >:(

[karthikpm]

Interesting day. Ferrari is up 9% and Fiat, owning the remaining 81% of Ferrari is down 2.50%.

 

Incredible how much Fiat is hated. At these prices, about $8.7B of Fiat's market cap is Ferrari, or about 44%. So if 44% of your market cap is up by 10%, the remaining 57% would have to have fallen by 7.5% to end up with a -2.50% as the end product.

 

To put a number on it, Fiat is being valued at ~$850M less today then it was worth yesterday...

 

+1. I was just thinking about the same thing.  What happens to the price of Fiat when the shareholders get RACE shares?

[muscleman]

this share Price from fiat is a joke. iam out of words right now. it is amazing!!!!  >:( >:( >:( >:(

 

But when RACE is spun off from FCAU, it will be totally different. All short sellers of FCAU will automatically be shorting RACE, which is something they don't want to do.  ;D

[TwoCitiesCapital]

Interesting day. Ferrari is up 9% and Fiat, owning the remaining 81% of Ferrari is down 2.50%.

 

Incredible how much Fiat is hated. At these prices, about $8.7B of Fiat's market cap is Ferrari, or about 44%. So if 44% of your market cap is up by 10%, the remaining 57% would have to have fallen by 7.5% to end up with a -2.50% as the end product.

 

To put a number on it, Fiat is being valued at ~$850M less today then it was worth yesterday...

 

+1. I was just thinking about the same thing.  What happens to the price of Fiat when the shareholders get RACE shares?

 

No idea. My guess is that it initially drops. I think that a lot of people who bought fiat to get exposure to Ferrari can now sell Fiat and buy Ferrari shares directly. Many may be doing that despite the fact that you're probably getting a much, much better deal by buying Fiat and waiting for the spin-off.

[fareastwarriors]

I added more FCAU shares today.

[hunterny]

Does anyone know when the shares of RACE will appear in the accounts of those of us who already own FCAU presently?

 

I estimate the FCAU "stub" (excl RACE) is trading at a 5.7x multiple of TTM EBIT at these levels (USD21.5B net TEV/ est. USD3.8B TTM EBIT excl Ferrari EBIT).  This is worse than Peugeot, and nearly half of GM.  Does anyone else view this as an attractive entry point for FCAU? 

 

-Lowly levered (net debt/EBITDA of 1.2x) with other high end assets like Maserati

-Highly incentivized and value-oriented CEO

-TEV/EBIT around half of the median (13x) for the other 10 large automakers.

[Guest Grey512]

The problem with viewing FCAU as a vanilla investment is the fact that it's a massively cyclical business that alternates between generating negative and positive cash-flows. We are in the negative phase until 2017/2018. And over a full business cycle, car OEMs earn unattractive returns on capital.

 

The FCAU trade is close to played out on Ferrari. The remaining catalysts are significantly less visible and harder to 'touch' - the completion of Sergio's 2014-2018 turnaround programme (cessation of capex, hopefully higher operating margins), and/or accretive M&A.

 

So I would safely ignore the EV/EBITDA, EV/EBIT, and all those metrics unless you fully believe that the 2014-2018 turnaround programme will work and magically make FCAU cash-generative and capable of de-levering fast.

 

Not one to 'invest' in, IMO, but possibly one to 'trade'.

[rohitc99]

Does anyone know when the shares of RACE will appear in the accounts of those of us who already own FCAU presently?

 

I estimate the FCAU "stub" (excl RACE) is trading at a 5.7x multiple of TTM EBIT at these levels (USD21.5B net TEV/ est. USD3.8B TTM EBIT excl Ferrari EBIT).  This is worse than Peugeot, and nearly half of GM.  Does anyone else view this as an attractive entry point for FCAU? 

 

-Lowly levered (net debt/EBITDA of 1.2x) with other high end assets like Maserati

-Highly incentivized and value-oriented CEO

-TEV/EBIT around half of the median (13x) for the other 10 large automakers.

 

will you not adjust around 3-4 Bn of cash which FCAU will get from the IPO and ferrari before the spin off. will that not lower the TEV still further ? maybe just proves your point even more :)