Massimo Fuggetta of Bayes Investments presented his in-depth investment thesis on Landi Renzo Group (Italy: LR) at European Investing Summit 2018.

Thesis summary:

Landi Renzo Group is one of the two leading worldwide manufacturers of alternative fuel distribution systems for the automotive sector. This is done for the OEM market, where the company develops integrated systems for LPG (liquid petroleum gas), CNG and LNG (compressed and liquid natural gas), and sells them to car and truck manufacturers around the world. The company also serves the aftermarket with LPG and CNG conversion kits and related components.

While the megatrend in this automotive space is towards electrification, alternative fuels will continue to play a bridging role, as stricter regulation is increasingly imposed on fuel emissions, especially in emerging markets and for heavy-duty vehicles, on which the company is particularly focused. LR is also well positioned to benefit from a move toward hydrogen fuel cell engines, for which its products are easily adaptable.

The company has recently emerged from a long downtrend, under the leadership of new CEO who has driven a deep restructuring of the balance sheet and operations. The stock price reflects past difficulties and is cheap relative to future prospects.

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About the instructor:

Massimo Fuggetta started his career in 1988 with JP Morgan Investment Management in London, where he was an equity portfolio manager and then the head of global balanced portfolios. In 1999 he moved to Milan, where he was CIO and then CEO of Sanpaolo IMI Asset Management. In 2004 he founded Horatius, an asset management company which he ran until 2011. In 2012 he moved back to London, where in 2014 he founded Bayes Investments, which since May 2016 has been the investment advisor to the Made in Italy Fund, a Luxembourg mutual fund dedicated to Italian Small caps. Massimo graduated in Economics at LUISS in Rome, has a D.Phil. and an M.Phil. in Economics from the University of Oxford and has taught Behavioural Finance at Bocconi University in Milan. He is a member of the CFA Institute and has served on the Editorial Board of the Financial Analysts Journal. In 2012 he started the popular Bayes blog, where he writes, among other things, about investing and probabilities.