CLOSING: FIAT

CLOSING TRADE +5.9%

Using strength today to close the second half of the position before a few days off. Touched our PT briefly last week of EU7.5. Would look to get back involved around 7 and any -ve noise on withdrawal rights or something concrete out of the company. This deal will happen.

 

CLOSING HALF POSITION HERE

Thursday • 14 August 2014 • 16:22

Our PT was EU7.50 in the MT. We are closing half the position here with 6% return in 3 days and hitting EU7.3. Italy closed tomorrow in voilatile mkts. Booking some profit and will look to buy back on any weakness next week around the 20th (last day to exercise the rights).

 

RECESSO TECHNICAL SELL OFF CREATES AN OPPORTUNITY

Monday • 11 August 2014 • 08:47

We do not believe shareholders that have been waiting for this deal to create real value want to block it now.

This does happen where there is a recesso and the stock trades below the put price as people get spooked. 100m of shares voted against the deal. Voting against the deal and actually exercising withdrawal rights are very different things.

Withdrawal rights being a threat to the deal but we believe these are irrelevant when you look at them in closer detail.

It is too late to buy the stock and elect for the recesso as you would need to be on the register for the record date of the EGM to be eligible.

Depending on how long you have held the stock, you would have probably paid more for the stock than the value of the recesso given the recesso was the 6 month average price of the stock prior to the date of the notice calling the EGM.

We believe that most investors who voted against the deal have done so in national interests or because they are not able to hold non-Italian listed stocks. Investors straight out against the deal have had ample opportunity to exit well before the EGM.

Geopolitical worries and the Italian technical triple dip have weighed on Fiat and the MIB. However we believe it is just a technical recession. Looking into Italian data closer we think the GDP figure will be adjusted to the upside.

Investors have been waiting for this deal to happen to unlock real value and we see 10% upside from here. Looking for EU7.5 PT.