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Fiat Chrysler Automobiles N.V. (FCAU): Greenhaven Road Capital Plans to Keep the Shares Until Its Value is Recognized

Nina Zdinjak

In its Q1 2019 Investor Letter, Greenhaven Road Capital said that it doesn't want to hold Fiat Chrysler Automobiles N.V. (NYSE:FCAU) shares through the next recession. On the other hand, expecting earnings growth in the near future, the fund doesn't want to sell its entire stake at the moment. You can download a copy of this letter here. The fund also disclosed its quarterly return of 16%, and here are the full comments on Fiat Chrysler Automobiles N.V. (FCAU) from the letter:

"Fiat Chrysler (FCAU): This is the first quarter I can remember where Fiat Chrysler is not a Top 5 holding. I replaced our stock holdings with long-term options. These options tie up less capital, but still allow us to benefit if and when Fiat Chrysler is sold and/or gets a reasonable multiple of earnings. Typically, I am happy to hold shares of a company until value is realized. Along time horizon is one of our advantages. However, I don’t love the auto industry–it is low margin, capital intensive, and cyclical, and the manufacturers are unlikely to benefit from electrification as the useful life of the vehicles should be extended dramatically. I don’t want to hold Fiat Chrysler through the next recession, and every day where there is not a sale and/or valuation is not realized, we are one day closer to that time. But, with the special dividend coming, the Jeep Gladiator launch, and earnings growth on the horizon, it is not a company I want to be fully out of either. Our long-dated options allow us to extend our exposure."

[caption id="attachment_598518" align="aligncenter" width="750"] Pixabay/Public Domain Pixabay/Public Domain[/caption]

Fiat Chrysler is the eighth largest automaker in the world. It has a market cap of $23.92 billion, and it is trading at a P/E ratio of 6.57. Over the 12 months, the company's stock lost 32.91%, and on May 7th it had a closing price of $15.23.

At Q4's end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the second quarter of 2018. By comparison, 31 hedge funds held shares or bullish call options in FCAU a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the most valuable position in Fiat Chrysler Automobiles NV (NYSE:FCAU). Tiger Global Management LLC has a $1.1719 billion position in the stock, comprising 7.8% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $240.6 million position; 0.3% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise Mohnish Pabrai's Mohnish Pabrai, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

FCAU

Disclosure: None. This article is originally published at Insider Monkey.