The old "I told you so" on DaimlerChrysler

Earlier this month I was in London visiting with several professional portfolio managers that I worked with these past 16 years. All in all, I visited with 11 professional managers who, combined, manage over $80 billion in the U.S. stock market. It's always an interesting perspective to hear the views and observations of foreigners who make their living in our markets. They do indeed bring a refreshing, nonbiased point of view.

One portfolio manager in particular was vehement that Daimler (NYSE:DCX) will not rise in value until they unload "that turkey," the Chrysler division. He explained that Daimler on its own merits is a growth company and the Mercedes-Benz brand is the jewel. His parting words to me were "as this spin-off or sell-off gets closer, DCX will lift like a balloon on Ascot Day." (Remember, he's British!)

He reasoned that profits generated by the Mercedes cars, trucks, and buses are being drained by the poorly run, bloated Chrysler division. Chrysler was the drag because of union issues, long-term health care commitments, and lousy facilities. Daimler, left alone, is a well-run and efficient auto/truck manufacturer with excellence in its engineering and production facilities. He may well be right.

Yesterday, Daimler was up $4.76 per share, and since early March when all this talk of spinning/selling off Chrysler began, the stock has moved up from $67 to $83, a huge move in a difficult market environment.

I spoke with him again this morning and, as expected, he is taking the victory lap. The "I told you so" was mentioned three or four times in our discussion between sips of tea. He exclaimed that Daimler shareholders will now demand that Chrysler be unloaded, as shareholders are now beginning to understand the power of Daimler's stock without Chrysler dragging it down. He said his price target is $100 to $110 for Daimler. He went to say, "I understand how you blokes get emotional about an American institution like Chrysler, but it is profit-proof in its current position."

He again is probably right, and he did tell me so ...

Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing. Please visit www.georgesyared.com