Fiat Chrysler and General Motors

Hi

Mohnish Pabrai currently has a very concentrated portfolio. 36% of his portfolio is in Fiat Chrysler. What are everybody's thoughts on this company? It appears as the cheapest stock on Tobias Carlisle's 'acquirers multiple' screener.

Mohnish also has a substantial amount of his portfolio in General Motors (27%). What are your thoughts on this stock in comparison to Fiat Chrysler.

Picking these two stocks would essentially outsource my portfolio to Mohnish. Meb Faber has proved this can be a profitable strategy. I'm considering this move, Any thoughts?

Comments

  • Hi King,

    This is my 2 cents on the companies since I live in the Detroit area and I can share what I am witnessing.

    I would say GM is a solid investment for the future based on the cultural changes they are doing within the company. They are focused on rebuilding the culture to bring in the younger generation and cut down cubicle walls. They are investing heavily in the autonomous sector which is where the industry is heading. They also invested 500million into Lyft ride-sharing service which is also the direction the automotive industry is heading. They don't seem to be putting out any "game changing" products but have a very diverse portfolio of vehicles, while working to put out more crossover type vehicles since no one wants to drive a minivan anymore. They seem to have a very stable CEO driving the company in the right direction and working on getting the company ready for the future.

    FCA seems to be the little kid in the back of the classroom to Ford and GM. They seem to be struggling as a company internally with the merger with Chrysler and Fiat. There has been credible talk that FCA would consider selling off Jeep and Ram which are their two most profitable brands.

    Ford is planning on laying off 10% of their salary workforce. They just outted their CEO and brought in a new CEO, Jim Hackett, from Steelcase. Jim Farley, now the new president and VP of global markets, has been quoted saying some interesting/agreesive things in the past. Surprised he has made it this high in leadership in the company saying things as "F*ck GM" in interviews and "I want to beat chevorlet with a bat". haha I mean come on. Ford is also working hard on autonomous for ride sharing applications saying they will be ready by 2021.

    Ford's Q1 Earnings down 35%
    GM's Q1 Earnings up 34%
    FCA Q1 Earnings up 34%

    Well thats my two cents on the big three automakers. 10k's aside, I think General Motors is where I would invest in automotive for the long term.

    Sources:
    http://www.fox2detroit.com/news/local-news/254866296-story
    http://www.nasdaq.com/article/ford-motor-co-q1-earnings-decline-35-20170427-00593
    http://www.cnbc.com/2017/04/28/general-motors-earnings-q1-2017.html
    http://www.nbcnews.com/business/autos/fiat-chrysler-about-sell-jeep-ram-n752361
    http://www.businessinsider.com/ford-gm-fca-q1-earnings-preview-2017-4
    http://jalopnik.com/mark-fields-out-jim-hackett-in-as-ford-ceo-in-big-exec-1795429446
    http://jalopnik.com/5823432/ford-marketing-head-fuck-gm
  • Thank you very much for your insight.

    It's interesting that Pabrai holds substantial amounts of these companies. Do you think they are necessarily long term picks?
  • I agree with Cam. The auto industry wouldn't be my first choice just because of how competitive and cyclical it is. Ford has been a major value trap in the past if you ask me. But of the three GM is the way to go. They got a bunch of stuff in the pipeline for Cadillac as well. We've got plans for a new car every 6months starting in 2018. Another big sedan (based off the escala concept) and 2 more SUVs. One smaller than the XT5 and the much needed third row SUV. I believe they spent something like $4B to increase the breath of products so we can compete with the Germans better. We've got super cruise coming in late 2017 on the 2018 CT6 as well, which is our answer to Tesla's autopilot.
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