In this article, we discuss 5 European stocks billionaire Ray Dalio is shorting. To read our analysis of the economic environment, go directly to Billionaire Ray Dalio is Shorting These 10 European Stocks.
5. BASF SE (OTC:BASFY)
BASF SE (OTC:BASFY) is a German chemical company and the biggest chemical producer globally.
BASF SE (OTC:BASFY) has been heavily impacted by the conflict between Russia and Ukraine as the natural gas prices have increased significantly across Europe. Furthermore, there are concerns related to the possibility of the natural gas supply being restricted by Russia. The rise in natural gas prices will significantly reduce the profit margins of BASF SE (OTC:BASFY). The company claimed that it had to pay an extra $1 billion to buy natural gas for its European plants compared to a year earlier. As a result, BASF SE (OTC:BASFY) observed a 29% decline in net income despite a 19% increase in revenue during Q1 2022.
Tweedy Browne Company shared its stance on BASF SE (OTC:BASFY) in its Q4 2021 investor letter. Here’s what the firm said:
“With respect to ESG issues that arose as a part of our research process during the quarter, two of the Funds’ portfolio holdings took notable steps to address environmental sustainability. In addition, we engaged with two other companies regarding capital allocation. BASF, the large German chemical company, made a decision to carve out a business related to internal combustion engines and began investing significant amounts to develop a battery business. The company also committed to carbon reduction goals of net zero emissions by 2050. The CEO told us of the importance of this battery initiative in helping customers to meet their commitments to electromobility, but indicated the company will only make investments that have a visible return, making the company’s sustainability strategy more flexible and less risky in terms of profitability. In our view, this would appear to be a financially prudent step in reducing the company’s transition risk as the world continues to move toward a lower carbon economy, and should not compromise the compound of the company’s intrinsic value.”