COMPANY PROFILE
Volkswagen AG manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific. The company operates in four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. The Passenger Cars and Light Commercial Vehicles segment develops vehicles and engines, and light commercial vehicles; and produces and sells passenger cars and related parts. The Commercial Vehicles segment develops, produces, and sells trucks and buses; and offers parts and related services. The Power Engineering segment offers large-bore diesel engines, turbomachinery, special gear units, and propulsion components. The Financial Services segment provides dealer and customer financing, leasing, banking and insurance, fleet management, and mobility services. The company also offers motorcycles. It provides its products under the Volkswagen Passenger Cars, Audi, KODA, SEAT, Bentley, Porsche, Volkswagen Commercial Vehicles, Scania, MAN, Lamborghini, Ducati, and Bugatti brands. Volkswagen AG was incorporated in 1937 and is based in Wolfsburg, Germany.
Style Factor Screening
Here’s how VW scores versus the other 199 brands in the brands 200 index. This is our investable universe for Dynamic & Core Brands.
92% in our proprietary Sustainable Yield Basket
86% in high dividend yield
100% in high FCF Yield
91% high FCF growth
90% in our proprietary value opportunities basket
99% in 3 year dividend growth
97% low price/sales
98% high total revenues TTM
96% high total free cash flow TTM
95% top EPS surprises last quarter
12/28/21 Update:
VW is one of the most under-valued brands in the brands 200 index. I generally don’t love the auto or airline businesses given they are asset heavy, low margin, high fixed cost businesses but VW is one of those sum of the parts type opportunities. These can be difficult because often management teams do not understand why their stock trades at a structural discount, nor do they like to make radical decisions to unlock value. The potential to unlock value at VW seems to obvious and attractive to ignore. When Ferrari was spun out of Fiat, the fast growing, super sexy and relevant brand of Ferrari became a growth investor darling. A spin-out of Porsche and/or Audi would be an even more attractive unlocking of value at a time when VW has massive R&D spending goals for the EV initiative, including the battery initiative. As we sit today, the value of Porsche embedded inside VW is worth more than the total market cap of VW. In my opinion, the activists will be circling the longer VW stalls on this obvious opportunity. The controlling family of Porsche has also been much more open to this unlock of value lately. Investors generally fall into two broad categories: growth and income. So why not spin-off the growth brands into 1 newco and allow growth investors to own that business while allowing income investors to own the stable, predictable portion of VW. 2 businesses that are easy to categorize for investors and that are highly relevant in their peer groups is a home run imo. In the meantime, the value in VW is too attractive to ignore. The VW stake is currently being build and <2% weight so I’ll continue to add to the position on days when the market doesn’t like the car makers.