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Español The Market: Fiat Down, Marchionne Up (with Philip Morris)
Sergio Marchionne, Philip Morris man at the head of Fiat
Fiat stock values are falling but Marchionne’s are rising, with cigarettes, those of Philip Morris. The CEO of the Lingotto is a member of the board of Big Tobacco, and he is also a stockholder. He invests in Philip Morris stocks but not in those of FIAT.
If the quotation of the Turin auto maker has dropped to almost half since the beginning of the year, Philip Morris stocks have risen and its future prospects are promising.
Marchionne has not purchased stocks of the company he directs since 2006. He has not done so even in this period, when the quotations are in free-fall. Other company directors, on the other hand, have taken advantage of the lower prices to buy stock in their companies, like Corrado Passera of Intesa, Paolo Scaroni of ENI, ENEL’s Fulvio Conti and Giovanni Perissinotto of Generali.
It is a way to send out a reassuring signal to the market. The number one is the first to believe in his group. This, in short, is the message most top managers are trying to convey. However, it is official that for two years, every month Marchionne has been buying Philip Morris stocks, building up his personal portfolio.
His first purchases were made at prices under 50 dollars, while now the quotation of the tobacco giant is close to 70 dollars; the increase since January has reached 12 per cent. This performance is considerably above the average, seeing that the Dow Jones Index has lost almost 6 percent in the same period.
And Philip Morris's prospects for the near future look even brighter, not like those of FIAT, because the tobacco giant, in spite of all the economic crises, is raking in in profits and revenue at top speed. In the second quarter of the year the company’s operating profits increased by 27%.
Philip Morris does not limit itself to taking over tobacco companies around the world; it is also one of the top companies of the food sector and it is entering all sorts of other businesses.
Comparing the giant Philip Morris and the little FIAT, one wonders which one Marchionne’s loyalty goes to.
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