Opinions
Mark Grammer
Volkswagen AG
VOW-GR
DON'T BUY
Nov 20, 2017
Stock price when the opinion was issued
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He is not a big fan of car companies because they don't generate much free cash flow. Cap X is very high. He would prefers LFUS-Q. It makes all the fuses that go into electric vehicles.
He's buying this week's dip. These shares fell to $30, which is obscene compared to other carmakers. Overall, FedEx and Nike are talking about supply chain issues which he hears is worsening, not improving, as rising wages will narrow margins. So, he will likely return to high cash levels.
Not a huge fan. Reasonably well managed. Slowdown in EV buying, just as it's been ramping up its EV production. The field is getting crowded, and Chinese makers have the cost advantage. These factories take so many 10s of billions of dollars of investment, so if you don't get demand in a reasonable time, EPS suffers.
Auto companies haven't been great investments over the long haul.
They will tell you that everyone was cheating but he talked to the other OEMs who said there was no way they were cheating. He wants to invest in great businesses run by great people. He cannot say this for VW so has a hard time investing. He can’t get around their corporate governance.