While Mazda’s stock price has shown some volatility lately, it’s important to consider the bigger picture. The company remains debt-free, a significant advantage in the current environment. Additionally, valuations seem reasonable. Long-term, I believe Mazda’s future is promising, particularly with its well-managed engineering division.
Current Investment Strategy:
Despite my optimism about Mazda’s engineering potential, I’ve temporarily allocated capital elsewhere. This decision stems from concerns regarding the underperforming food division.
Here’s the crux of the issue: Capital allocation is split equally between engineering and food, yet engineering generates roughly four times the revenue. Ideally, I’d like to invest solely in the thriving engineering story. However, with equal capital going towards the food division, it dilutes the overall return potential.
Future Considerations:
If Mazda decides to de-merge the engineering division, I would be very interested in revisiting the investment opportunity. A separate engineering entity could unlock significant value.
Overall, while Mazda remains a company with long-term potential, the current capital allocation strategy creates a temporary pause on our investment.
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