Wednesday, November 13, 2013

Buying FIAT

I opened position in FIAT (OTC:FIATY) today. There are a lot of reasons.
First of all, I like the cars. 500 (Cinquecento) is a great small car. Fun to drive, surprisingly comfortable and shamelessly cute. On my vacation in Italy last April I drove Alfa Romeo Giulietta. Another great small car, all bells and whistles, fun to drive, beautiful and roomy. In US you can buy a version of Ala under badge of Dodge Dart. It was made longer, wider, but some of design edge was lost, unfortunately.
Yes, FIAT owns most of Chrysler. And I think that collaboration promises to create more great vehicles and more profits for shareholders.
But main reason is expected pickup of vehicle sales in Europe. Europe is coming out of crisis. The process is slow, uneven, messed up by politics, but it's going on. I expect vehicle sales to recover quite soon, because people drive cars in Europe. It might sound surprising, everybody "knows" that public transportation is so good in Europe, you don't need a car. Yeah, right. Almost every family in Western Europe has at least one vehicle, most have one for each adult member of a family. Public transportation can't beat convenience personal transportation provides.
I thought about two companies: FIAT, which is in the best financial health among European auto companies, and Peugeot (OTC:PEUGY), which is the worst. But since spring, Peugeot is up a lot, and financially doesn't look any better than before. FIAT, on other hand, is down about 10% from it's top about a month ago. So FIAT it is.
Make no mistake, no investment is sacred. I'm not sure I'll keep FIAT above 8.50. But at 7.70 (buying price) it looks great.
Disclosure: I am long OTC:FIATY.
Additional disclosure: I have no positions in PEUGY. Positions can change any time.

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