Lookback: RF Capital’s 2019 Fiat Chrysler Automobiles (FCAU) Thesis

Alex Smith
·3 min read

If you are looking for the best ideas for your portfolio you may want to consider some of RF Capital’s top stock picks. RF Capital, an investment management firm, is bullish on Fiat Chrysler Automobiles N.V. (NYSE:FCAU) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Fiat Chrysler Automobiles N.V. (NYSE:FCAU) stock. Fiat Chrysler Automobiles N.V. (NYSE:FCAU) is an automobile company.

In October 2019, RF Capital had released its Q3 2019 investor letter. The investment firm said that Fiat Chrysler Automobiles N.V. (NYSE:FCAU) was one of the top 5 holdings in Q3 2019. The stock has posted a return of 5.5% in the trailing one year period, underperforming the S&P 500 Index which returned 15.1% in the same period. This suggests that the investment firm was wrong in its decision.

RF Capital fund posted a return of -6.98% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.87% in the same quarter. Let’s take a look at comments made by RF Capital about Fiat Chrysler Automobiles N.V. (NYSE:FCAU) in the Q3 2019 investor letter.

"Fiat Chrysler (FCAU) – We believe Fiat Chrysler remains undervalued. The low earnings multiple is due to poor performance in China as well as the US-China trade war. Although Q2 profits were up compared to last year, shipments were down. The Street is concerned about growth in North America and FCAU’s struggles in Europe. Old products in Europe need to be refreshed (the average product age is over 7 years), and there is also regulatory difficulty with 2021 CO2 compliance. However, management reaffirmed their 2019 guidance of $2.98 adjusted diluted EPS and $1.65 billion industrial FCF."

2019 Chrysler 300C
2019 Chrysler 300C

2019 Chrysler 300C

In Q2 2020, the number of bullish hedge fund positions on Fiat Chrysler Automobiles N.V. (NYSE:FCAU) stock decreased by about 20% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in Fiat's growth potential. Our calculations showed that Fiat Chrysler Automobiles N.V. (NYSE:FCAU) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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