Investment Thesis on Exor SpA (EXO IM) & Fiat (F IM): The Italians Are Coming ~ market folly

Monday, August 5, 2013

Investment Thesis on Exor SpA (EXO IM) & Fiat (F IM): The Italians Are Coming

Late last year, we noted that Children's Investment Fund was short Fiat and Jim Chanos' Kynikos Associates has been short as well.  Today, we present somewhat of an opposing view via a bull case on the holding company that owns Fiat and Fiat Industrial: Exor SpA (EXO IM).

The following is a guest post from Steven Wood, CFA of Greenwood Investors entitled "The Italians Are Coming" that was originally published on his site here.

Investment Thesis on Exor SpA / Fiat (F IM)

Simply put, Greenwood's case is based on undervaluation relative to peers, industry-leading growth trajectories, and numerous catalysts ahead.  They like that Exor has been buying back shares at a 33-44% discount to NAV.

Their favorite investment of Exor's is Fiat SpA (F IM).  They think Fiat is a double as cost savings are realized.  Fiat has the Fiat brand, as well as Maserati and Alfa Romeo.  They also own a 90% stake in Ferrari as well as a 58.5% stake in Chrysler.  Greenwood posted an update on Fiat individually back in May here.

Fiat Industrial is the other main asset of Exor SpA and is comprised of 3 major businesses: Case New Holland, Iveco Trucks, and Fiat Powertrain.

Greenwood likes the portfolio of Exor's assets that you can acquire at a discount with upside via improvements in operations at both key companies.  Read on for the full in-depth breakdown of their thesis.

Embedded below is Greenwood Investors' pitch on Exor SpA:

You can download a .pdf copy here.

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