Quarterly Results around the Corner

29 October 2013

Kairos Partners managers are busy at work, as in addition to their daily monitoring of investments and ongoing evaluation of new investment opportunities, they are also involved in reporting season activities. “We are in almost constant discussion with analysts in order to arrive at a better consensus and gain a clearer understanding of what the quarterly results will be, so we can align portfolios accordingly,” explained Federico Riggio, a Kairos Partners manager who, along with the other team managers, is currently involved in back-to-back meetings, conference calls and one-on-one discussion. With respect to forecasts, no broad generalizations can be made. Indeed, Riggio believes that careful underweighting is necessary and each stock and situation should be carefully evaluated to see where risks and opportunities are hiding. “We are keeping an especially close watch on the merger of Premafin, Unipol Assicurazioni and Milan Assicurazioni into Fondiaria-Sai, currently under negotiation and which is being decided as we speak. We are favorably impressed by management’s decision to maintain a clear vocation and focus on the core business, i.e., the insurance business”.

Another file on the Kairos Partners managers’ desk reads “Fiat-Chrysler”, and Riggio explains, “This is a special situation for us, and everything hinges on the negotiations underway between the US unions and Fiat. If the outcome is positive, it could lead to interesting scenarios and we could seriously consider expanding upon the small position we already have”.

He goes on to clarify, “Considering the market rally, we believe it best to reduce small caps: we would rather invest in large caps  to keep the portfolio more liquid for coverage. Similarly, at a time of such low volatility, we are using derivatives opportunistically to cover any dips”.