Volkswagen AG (VOW-GR)

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.

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.

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 wouldn't invest in any automotive company, because we are already running ASAR (a seasonally adjusted rate of production) in the US of 16 or 17 million vehicles. Your best-case scenario to get to 18 million vehicles is extremely limited. We’ve also seen producers do a lot of subprime financing in order to place cars, which implies they have had to scrape the bottom of the barrel to find demand.

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.

It is on his radar. It has been hurt badly, although the core business is still quite good. It is in Europe and valuations there are better than in North America. It looks like auto manufacturing has peaked for this cycle. This will be number one on his list for the next cycle.

He sold it a few years ago. BMW has said one of their sport utility vehicles does not meet standards. He would avoid the sector right now. Two Canadian auto parts makers make almost nothing for VW and may be worth looking at.

It is a screaming avoid. There are so many opportunities in the market. Don’t try to catch this falling knife. There is obviously some internal cancer inside this company. It had to be a broad group of management involved. If it happens to recover, then so be it.