SHORT FIAT

FIAT has rallied 37% since the mid summer lows and +17% in the last 6 days.

The rally this week has been put down to firstly the €2.87bn mandatory and the $7.08 – $8.32 strike as the terms change and people where over hedged so they have been forced to buy back the stock (don’t ask me to explain anymore on that please!)

And secondly post Trump victory there has also been positive noises as Trump selects global warming critic to lead EPA transition team and this has led to a rally in names geared towards SUVs. EPA TEAM

However fundamentally the stock is still a SELL for us as we reach peak auto in the US and the market will not grow in 2017.

Trump may help the SUV mix but overall sales will not change and this will not lead to analysts changing their numbers.

The same argument of them being cheap vs peers is always rolled out and that has always been the case and for good reason as they make no money and leverage is an ongoing issue and the reason why it trades on cheap P/E multiples.

This is a great chance to short a structurally challenged name in a declining industry at a late stage in the cycle.