SHORT VOLVO

SELL IP LEVERAGE

Investor briefing this afternoon as the new CEO addresses the market for the first time since he began 7 months ago. Expect the strategy to be more about vision than hard targets.

Sentiment on trucks is already very poor given numerous recent warnings, which could provide upside. Expect comments on the aftermarket opportunity, market share possibilities and margin and pricing strategy (market is hopeful of improvement here).

If there is a pop on any of this this afternoon, we would be using it as an opportunity to sell. The stock is the most leveraged to European IP. Runing -2% IP would lead to a 40% cut to earnings (marginally offset by SEK weakness) making the relatively cheap valuation meaningless.

On top of that is the 1SEK hit today from increased provisioning for the 2014 EU truck fine. The market is attacking stocks with financial and IP leverage. VOLVB falls into this bracket.