When looking at German securities Buffett might be buying, I stumbled into Volkswagen. It has a market cap of 90 billion Euros and trades at a fwd PE less than 5 and div yld of 5%. It reaffirmed its 2022 targets in-spite of supply chain and Covid disruptions. Stock has taken a pounding dropping from 280 to 200.
VW is planning to IPO its Porsche business in Q4 this year. Analysts are projecting a valuation of 80 to 100 billion value for Porsche. VW has promised to pay out half the Porsche IPO as a special dividend.
VW has a complicated ownership structure with the Porsche founders owning VW group which in turn owns Porsche car company. Plus German state Lower Saxony and Qatar SWF own significant stakes.
It’s intriguing that the Porsche IPO has a valuation as high as VW itself. Of course with all the complicated cross holding it is hard to figure out how much of the IPO value of Porsche will be realized by VW individual shareholder.
Maybe one of the German denizens of this board can help with this.
German state Lower Saxony … own significant stakes.
A) The state with it’s stake has veto power, thanks to the special “VW Law” (normally 75% of the board has to agree with essential decisions, in the case of VW 80%), ensuring there are can’t be essential decisions against the interests of state/politics.
B) Decisions about factories are not possible against the votes of the employee representatives on the board.
A) The state with it’s stake has veto power, thanks to the special “VW Law” (normally 75% of the
board has to agree with essential decisions, in the case of VW 80%), ensuring there are can’t be
essential decisions against the interests of state/politics…
…which is primarily maximizing local employment at the highest possible wage rate.
Still, I suppose there’s a price for everything.
It has been quite a while, and they haven’t gone bust yet.