Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Fiat Chrysler Automobiles NV (FCAU) Is Buy According to Greenhaven Road Capital

Fiat Chrysler Automobiles NV (NYSE:FCAUdelivered a solid performance in 2017, with the company’s stock gaining more than 95%. Greenhaven Road Capital, one of the top performing hedge funds in 2017, remains bullish on Fiat Chrysler, expecting more growth this year. In its Q4 Investor Letter (you can download a copy here), the fund discussed Fiat Chrysler and other companies. In this article, we’re going to focus on the fund’s comments on Fiat Chrysler.

Talking about Fiat Chrysler – its largest position – the Greenhaven said that it still sees a value in FCA shares because “a lot of good news is likely in store for the company this year.” Here is everything that the fund said:

In 2018, it is likely that the company will spin off its parts business, revealing the underlying value, reducing gross debt, and becoming net cash positive. Further, we should see operating leverage as earnings continue to improve after a multi-year period of investment. The company just announced earnings today and provided guidance for 2018. The shares trade for less than €20, yet guided to over €4 of cash flow for the year and ended the year with net cash of more than €2. At current prices we will end the year with a greater than 20% FCF yield, which leaves a lot of room for multiple expansion for a company that will benefit from tax reform, substantially reduce its gross debt, and have new product and product mix tailwinds. Keep in mind, 2018 will be Sergio Marchionne’s last year as CEO and the automobile industry has several negative attributes, including high-capital intensity, cyclicality, high fixed costs, low returns on invested capital, and product obsolescence. It is unlikely that we will be owners forever, but since a lot of good news is likely in store for the company this year, it remains our largest position.

Photo Credit: Fiat Chrysler Automobiles

Photo Credit: Fiat Chrysler Automobiles

Fiat Chrysler Automobiles (NYSE:FCAU) is a giant auto firm that is listed on the New York Stock Exchange (FCAU) and Borsa Italiana in Milan (FCA). Exor S.p.A, an Italian investment group controlled by the Agnelli family, has a 29.19% ownership in the world’s seventh-largest automaker.

Shares of Fiat Chrysler are up more than 25% since the beginning of the year. Over the last 12 months, the share price has surged more than 97%. The stock has a consensus average rating of Overweight and average target price of $20.49 from analysts polled by FactSet. Shares were closed at $22.39 on Friday.

Meanwhile, Fiat Chrysler Automobiles (NYSE:FCAU) isn’t a very popular stock among hedge funds tracked by Insider Monkey. As of the end of September 2017, there were 29 funds in our database holding shares of the automaker, including Mohnish PabraiSRS Investment Management, and Raging Capital Management.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...